Sep 21, 2010 12:59 PM

Italian Authorities Investigating Top Officials of the Vatican Bank

VATICAN CITY (AP) - Italian authorities seized euro23 million
($30.18 million) from a Vatican bank account Tuesday and said they
have begun investigating top officials of the Vatican bank in
connection with a money laundering probe.
The Vatican said it was "perplexed and surprised" by the
Italian financial police seized the money as a precaution and
prosecutors placed the Vatican bank's director general and its
chairman under investigation for alleged mistakes linked to
violations of Italy's anti-laundering laws, news reports said.
The is probe not the first time the bank - formally known as the
Institute for Works of Religion - has faced trouble. In the 1980s,
it was involved in a major scandal that resulted in a banker,
dubbed "God's Banker" because of his close ties to the Vatican,
being found hanging from Blackfriars Bridge in London.
The Vatican expressed full trust in the chairman of the bank,
Ettore Gotti Tedeschi, and his director-general, and said it had
been working for some time to make its finances more transparent to
comply with anti-terrorism and anti-money laundering regulations.
"The Holy see is perplexed and surprised by the initiatives of
the Rome prosecutors, considering the data necessary is already
available at the Bank of Italy," it said in a statement.
News reports circulated more than a year ago that Italian
investigators were scrutinizing millions of euros worth of Vatican
bank transactions to see if they violated money laundering
In Tuesday's case, police seized the money from a Vatican bank
account at the Rome branch of Credito Artigiano Spa, according to
news agencies ANSA and Apcom. The bulk of the money, euro20 million
($26.2 million), was destined for JP Morgan in Frankfurt, with the
remainder going to Banca del Fucino.
According to the reports, the Vatican bank had neglected to
communicate to financial authorities where the money had come from.
The reports stressed that Gotti Tedeschi wasn't being investigated
for laundering money himself but for a series of alleged omissions
in financial transactions.
Prosecutors declined requests seeking confirmation of the
Gotti Tedeschi was named chairman of the bank a year ago after
serving as the head of Italian operations for Spain's Banco
Santander. A member of the conservative religious movement Opus
Dei, Gotti Tedeschi frequently speaks out on the need for more
morality in financing and is a very public cheerleader of Pope
Benedict XVI's finance-minded encyclical "Charity in Truth."
News of the investigation came just after Benedict wrapped up a
difficult trip to Britain and as the Vatican still reels from the
fallout of the clergy sex abuse scandal.
The Vatican bank, located in a tower just inside the gates of
Vatican City, isn't a typical bank. Its stated mission is to manage
assets placed in its care that are destined for religious works or
works of charity. But it also manages ATMs inside Vatican City and
the pension system for the Vatican's thousands of employees.
The bank is not open to the public. Depositors are usually
limited to Vatican employees, religious orders and people who
transfer money for the pope's charities.
Its leadership is composed of five cardinals, one of whom is the
Vatican's secretary of state. But the day-to-day operations are
headed by Gotti Tedeschi and the bank's oversight council.
The Vatican bank was famously implicated in a scandal over the
collapse of the Banco Ambrosiano in the 1980s in one of Italy's
largest fraud cases.
Roberto Calvi, the head of Banco Ambrosiano, was found hanging
from Blackfriars Bridge in London in 1982 in circumstances that
still remain mysterious.
London investigators first ruled that Calvi committed suicide,
but his family pressed for further investigation. Eventually murder
charges were filed against five defendants, including a major Mafia
figure, and they were tried in Rome and acquitted in 2007.
Banco Ambrosiano collapsed following the disappearance of $1.3
billion in loans the bank had made to several dummy companies in
Latin America. The Vatican had provided letters of credit for the
While denying any wrongdoing, the Vatican bank agreed to pay
$250 million to Ambrosiano's creditors.
Last year, a U.S. appeals court dismissed a lawsuit against the
Vatican bank filed by Holocaust survivors from Croatia, Ukraine and
Yugoslavia who alleged it had accepted millions of dollars of their
valuables stolen by Nazi sympathizers.
The court said the bank was immune from such a lawsuit under the
1976 Foreign Sovereign Immunities Act, which generally protects
foreign countries from being sued in U.S. courts.
In its statement Tuesday, the Vatican also said it was working
to join the so-called "white list" of the Organization for
Economic Cooperation and Development, which keeps tabs on financial
openness on the exchange of tax information.
The OECD divides countries into three categories: those who
comply with rules on sharing tax information (white list), those
who say they will but have not acted yet (gray list), and nations
which have not yet agreed to change banking secrecy practices
Currently the Vatican bank isn't on any OECD list.


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