A money laundering case on Vatican Bank’s road to renovation

Visit of José Manuel Barroso, President of the European Commission to the Holy See/Vatican City State. (From left to right) Leonor Ribeiro da Silva, Deputy Spokesperson of the EC and Spokesperson of José Manuel Barroso, Johannes Laitenberger, Head of cabinet of José Manuel Barroso, José Manuel Barroso, Pope Francis, Laurence Argimon Pistre, Head of Delegation of the EU to the Holy See, to the Order of Malta and to the United Nations Organisation in Rome, Arianna Vannini, Adviser to José Manuel Barroso, and Ricardo Borges de Castro, Member of the cabinet of José Manuel Barroso. (EC Audiovisual Services 15/06/2013).

Visit of José Manuel Barroso, President of the European Commission to the Holy See/Vatican City State. (From left to right) Leonor Ribeiro da Silva, Deputy Spokesperson of the EC and Spokesperson of José Manuel Barroso, Johannes Laitenberger, Head of cabinet of José Manuel Barroso, José Manuel Barroso, Pope Francis, Laurence Argimon Pistre, Head of Delegation of the EU to the Holy See, to the Order of Malta and to the United Nations Organisation in Rome, Arianna Vannini, Adviser to José Manuel Barroso, and Ricardo Borges de Castro, Member of the cabinet of José Manuel Barroso. (EC Audiovisual Services 15/06/2013).

Scandals, rumors, money laundering allegations, connections to Sicilian Mafia, lights and then shadows. This might sound as the recipe for the perfect gangster-movie, even another sequel to The Godfather, but it’s just what most of the people – I guess – can recall if asked to list a few tags about the Vatican Bank’s history. It’s just thanks to a meticulous investigation conducted during the last few years by some stubborn TV reporters like the ones working for “Report”, that people got to know something about the Institute for the Works of Religion (Italian: Istituto per le Opere di Religione), the IOR. Something about 30 years of scandals at least.

Turbulent history

Founded in 1942 by Pope Pius XII, The Vatican Bank has been linked to many controversies, as the employment of the financial advisor Michele Sindona – which turned out to be a financial swindler linked to the Mafia-, the collapse of Banco Ambrosiano – supported by the head of the IOR, Paul Marcinkus, which had been also director of Ambrosiano Overseas (based in Nassau, Bahamas)-, and the death of former chairman of Banco Ambrosiano, Roberto Calvi – which was found hanging from Blackfriars Bridge in London in 1982. And a few more things.

Age of renovation?

After such a glorious past, the bank is now undergoing a major reorganization on the orders of Pope Francis. Since he was appointed Bishop of Rome he has nominated a pontifical commission to make proposals on the future of the bank and hired an American financial services company to ensure that international rules against money laundering are being correctly observed, as recently reported by the BBC. In January he also overhauled the membership of the panel of cardinals that oversees the IOR, and the institute announced that it is shutting down accounts that does not belong to either clerics or employees or pensioners of the Vatican City State. Something is changing, and this is true, but apparently the “Bank of God” is not yet done with alleged scandals and rumors on its activities.

The old and the new come together

Rome prosecutors on Friday requested that the former director of the IOR, Paolo Cipriani, be held accountable for allegedly breaking Italian laws against money laundering. They also requested Cipriani’s former deputy, Massimo Tulli, to be also implicated. Tulli and Cipriani are accused of having violated the anti-money laundering law in connection to the transfer of 23 million Euros from an IOR account at an Italian Account. Italian authorities allegedly seized the funds that IOR asked to be transferred already in 2010.

Another man was placed under investigation at those times: Ettore Gotti Tedeschi, Italian economist, banker and president of the Vatican Bank from 2009 to 2012. Gotti Tedeschi was fired in 2012 due to a no-confidence vote by the board of directors at the heights of the “Vatileaks” scandal, when Pope Benedict’s butler made the pontiff’s personal correspondence and papers public. His dismissal was never fully explained. The Vatican only stated that Tedeschi was removed “because he failed to fulfill the primary functions of his office” and he was ineffective manager. Gotti Tedeschi affirms he was ousted because he was asking for more transparency.
Be this last explanation true or not, he was cleared of all charges by a court in Rome in 2013. Mr. Gotti Tedeschi’s lawyers threatened legal action last Friday to clear his name and show that he was unfairly dismissed.

The proceedings of the trial of Mr. Cipriani and Mr. Tulli may reveal brand new (and “old fashioned” at the same time) threats for the Vatican’s Bank. All the efforts undertaken during the last few months, following Pope Francis’ new rules, can vanish under the pressure of the next scandal. It’s not true that people don’t have faith in change, but many think that it’s better to be careful.

But that’s not all in what we can call “quite a week” for the Institute.
A massive bank fraud was foiled at the gates of the Holy See, last Saturday. Two men carrying a briefcase filled with fake bond certificates tried to make their way into the exclusive Vatican bank. The sum, even though only symbolic, was astronomical: fake bonds with a face value of €3 trillion. The two suspects, a middle-aged Dutchman and an US citizen, tried to convince the Swiss guards that they had an appointment with Cardinals and bank officials. The suspects were reportedly hoping to open a line of credit at the bank in order to make investments on international capital markets. IOR press officer Max Hohenberg said the two men – which had been previously investigated for attempted fraud in Asian countries – “are neither clients of the bank, nor were they expected”.

That was an apparently awkward attempt, but there are many open questions which are much less funny. Will there be more transparency? Will Pope Francis be the man of the big change for the Vatican’s Bank? His mission is to prove that the Church remains a touchstone of integrity, people say. However dealing with a €5.4 billion in assets Institute things will not be at all easy.

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