BOSTON (CBS) – For years, Catholic Church parishioners have given generously to help retired nuns and priests. But a new report by The Economist says the Archdiocese of Boston, under Cardinal Law, misused the donations.

A spokesman for the Archbishop of Boston Cardinal Sean O’Malley calls the report a lie. But with the Boston Archdiocese still laboring to rebuild trust and its financial footing in the wake of the sex-abuse scandal, when a respected international magazine like The Economist of London raises questions about church practices, answers are called for.

Cardinal Law ruled the Boston Archdiocese for 18 years before resigning in disgrace in 2002.

But during that time, especially when the sex-abuse scandal left its finances in ruins, did Cardinal Law play fast and loose with precious church resources?

The Economist magazine says he and other church leaders did just that, by engaging in financial mismanagement and questionable business practices.

They claim parishioner donations for clergy pensions, a staple of Easter and Christmas services that have raised tens of millions over the years, were diverted from their intended use by the Archdiocese.

“The money wasn’t diverted,” said Terry Donilon.

Donilon is the communications secretary for the Archdiocese. He said that the money was never misused, and has a 2009 outside audit as proof.

But while that audit found “no evidence of misappropriation of funds,” it also says the lack of internal financial controls makes it impossible to be certain.

“It was an old model mentality. We had to break through that barrier, there’s a way to do this and a better way,” said Donilon.

The magazine also claims controversial church closings may have been a money grab by church officials scrambling to cover sex-abuse liability.

“There was no money used from the parish closings for sex abuse settlements which is what that article was implying which was completely erroneous,” said Donilon.”To our deepest critics I can only say, stop selling the lie because we’re not lying to people about how we spend their money.”

Donilon says that under Archbishop Cardinal Sean O’Malley, who succeeded Law in 2003, church financial practices have been professionalized, and after years of deep deficits, their pension fund is now running in the black.

One sign of that: retired priests now use the Medicare program they paid into for years for their health care, something local priests rarely if ever did under the old regime.

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