Santa Casa: 5 historical clues to understand the crisis today – Portugal

Financial problems, political appointments, diversion of money from social action: these are problems of 2024 at Santa Casa da Misericórdia de Lisboa (SCML), as they were 200 years ago. At a time when SCML is accumulating more than 100 million euros in losses, and when those responsible for management and supervision are fighting in public, here are five clues to understand how today’s crisis comes from an ancient culture – and how the money from games finances half the world.

Compassion? Just in name.

It will be a surprise to most people – but it is a 190-year-old surprise. The Santa Casa da Misericórdia of Lisbon was extinguished as such in 1834: it ceased to be a self-governed brotherhood of lay people, to be an institution under State supervision. In History of Portuguese Misericórdias, co-author Maria Antónia Lopes explains that the Peninsular War – against Napoleon Bonaparte’s France – led to the “abrupt and total emptying” of the nobility, which was one of the pillars of the SCML’s functioning. From the beginning of the 19th century, the Santa Casa no longer had enough brothers for elections to the Board or administration.

“In 1834, due to a lack of voting brothers at the Misericórdia de Lisboa, the poll workers in office asked the government to appoint a Board that was installed (…) with the task of analyzing the situation”, explains Maria Antónia Lopes. The Board appointed by the government encountered a situation of financial and management chaos, which led to the decision written in a decree-law of August 11, 1834: the Board was dissolved and the SCML brotherhood, the oldest Misericórdia in the country, was extinguished .

The Santa Casa da Misericórdia of Lisbon, which kept its name, thus has a very different status from the other Misericórdias – these passed, after the revolution of April 25, 1974, under the supervision of the bishops of the Catholic Church and are organizations of canon law. They all have a mission to assist those most in need.

Government: appointing providers since 1834

Because it began to depend on government supervision, the choice of leaders no longer involved elections among the members of the brotherhood, as was the case in other misericordias – and began to be made by direct appointment by the government. “Henceforth [a partir de 1834] its appointed leaders will be people trusted by governments”, reads the Brief History of Portuguese Misericórdias. A reform in 1851 created the figure of the provider, appointed by the government.

The provider now dismissed by the AD government, Ana Jorge, was PS health minister and was appointed by a socialist government. Edmundo Martinho, who was a provider between 2017 and 2023, also held several appointment positions in socialist governments and was close to minister Vieira da Silva (who appointed him). Pedro Santana Lopes, a PSD politician, was appointed in 2011 by a PSD/CDS government and also reappointed by the PSD/CDS in 2014 (and maintained, from 2016, by the PS government until the end of the term). Rui Cunha was a historic PS activist (he died last year) and was appointed ombudsman by the José Sócrates government in August 2005. Before him, between 2002 and 2005, was the centrist Maria José Nogueira Pinto (who died in 2011) the provider, appointed by a PSD/CDS government. Her predecessor, Gertrudes Jorge, was a PS politician (deputy) appointed by a socialist government, as was Maria do Carmo Romão, provider between 1996 and 2001. Between 1992 and 1996, the provider was Fernanda Mota Pinto, from the PSD, appointed by Cavaco Silva’s PSD government.

The current AD government is still looking for the cast for the SCML Board, including the role of the ombudsman. A SATURDAY has already reported that one of the possible names in the pipeline is Pedro Mota Soares, former CDS minister.

Santa Casa wasting social assistance money? It comes in the books.

SCML’s financial problems have been at the center of the news for months and it’s no wonder: between 2020 and 2022 alone the institution accumulated more than 105 million euros in losses. The 2023 report is yet to be published, but according to the Observer the situation remains very delicate, with the project to internationalize the House’s games recording expected losses of more than 52 million euros. In recent years, Santa Casa has spent money on projects unrelated to its social mission.

In 2020, for example, it rescued the Hospital da Cruz Vermelha, which Parpública (which manages the State’s holdings) wanted to dispose of because it was a loss-making operation – since then it has committed millions of euros in capital increases and bank guarantees. Santa Casa also supported projects such as Casa da Asia (to house a private art collection) – and lost, on a smaller but symbolic scale, half a million euros in the virtual art market (in a project by a company where the provider’s son worked). In terms of personnel, the institution saw the number of directors rise by 50% by 2020 – and a culture of appointments that included family relationships and political connections.

None of this is unprecedented in the history of Santa Casa – quite the opposite. When the Board appointed by the government in 1834 assessed the situation, it found “chaos” described in the book by Maria Antónia Lopes: “The state of the house was pitiful with enormous active and passive debts, an absolute lack of credit from suppliers, degraded urban buildings and deplorable assistance provided to those in need. On the other hand, there was excessive spending on chaplains and masters of ceremonies”. These financial difficulties – resulting from poor management and damaging social assistance activities – were aggravated by the peninsular war, but were also far from unprecedented.

In Normativity and Economy in Portugal, the adaptation of the doctoral thesis in economic history by Luís Aguiar Santos, at ISEG, the widespread practice of “ruinous sensitivity credits to the borrowers’ ‘social capital’ is noted”. In other words: the Santa Casa lent a lot of money to aristocratic families who were members of the brotherhood and were part of its governing bodies, and who often did not pay back the credits. It was already during the time of the Marquis of Pombal that the crown decided to put an end to the practice – with a catch.

The State going to the Santa Casa coffers? It’s not new either.

The Marquis limited many credits and ended up putting an end to them, but the crown “positioned itself as the main beneficiary of the funds involved” from Santa Casa, notes Luís Aguiar Santos: the idea was not just to safeguard the mercies, like Lisbon, but prevent them from ceasing to finance several government policies. The work of Maria Antónia Lopes cites several examples of how the institution was used, alongside other mercies, to solve other problems.

“Once again, Pombal uses the liquidity of mercy to pursue his political objectives, which range from war and diplomacy to the conservation of great noble houses, the rebuilding of Lisbon and the clearing of uncultivated lands”, he points out, adding the financing of newly created Companhia de Agricultura das Vinhas do Alto Douro.

Over the last few years, there have been several examples of Santa Casa financing public policies and private interests: the attempt (failed, after public pressure) to rescue the Associação Mutualista Montepio Geral in 2016; the rescue of the Ricardo Espírito Santo Foundation; the rescue of the Red Cross hospital in 2020, imposed by the top of the government at the time, according to the SATURDAY; the Asia House; or, in social action, the assumption of municipal or State responsibilities without due funding.

Does Santa Casa have a gaming monopoly? Yes and no

Euromillions, Totobola, scratch cards – the “social games” are so called because in theory the revenues collected serve to finance SCML’s social work, in the capital and on the outskirts. The institution has a monopoly on the operation of games – it is the one who manages and, in conjunction with the government, who launches the games – but it is far from having a monopoly on net revenues, that is, profits. Santa Casa receives 34% of the profits – and the majority goes to different spheres of the State.

More than 40% of the revenue goes to the Social Security Financial Management Institute (which then channels it to various social policies), the Youth and Sports Institute receives around 11%, the SNS another 16% – on the list of Beneficiary entities of the games include the autonomous regions, the Cultural Promotion Fund, the Internal Administration (firefighters and police – the policing of football games is paid for here), among others.