Tuesday, September 21, 2010

Oh Shock, The Vatican Is Implicated In A Money Laundering Scheme

Somewhere in there is the scandal plagued Vatican Bank.  JPI was determined to do something about this bank, but then he conveniently died.

It might be that on Benedict's next foreign trip to Spain, he will have to provide a few more smiles, make a few more apologies, and kiss a few more babies.  I'm sure his Opus Dei spin meisters (and money managers) will help him refurbish his and the Church's image once again.  However, one can only hide so many things for so long before what's below the tip of the iceberg becomes plainly visible.

Italian police seize $30 mln from Vatican in probe
Nicole Winfield - AP - Rome - 09/21/2010

VATICAN CITY – Italian authorities seized euro23 million ($30 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 investigation. (Amazing how the Vatican is always 'perplexed and surprised' when evil secular authorities investigate their less sanctified actions.)

Italian financial police seized the money as a precaution and prosecutors placed the Vatican bank's chairman and director general under investigation for alleged mistakes linked to violations of Italy's anti-laundering laws, news reports said.

The investigation is not the first trouble for the bank — formally known as the Institute for Works of Religion. 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, identified by the Vatican directory as Paolo Cipriani. It said the bank 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.

Gotti Tedeschi told state-run RAI television that he was "humiliated and mortified" by news of the probe, which he said had arrived just as he was implementing new transparency procedures at the bank. (Easy for him to say this now.)

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 regulations.

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 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 reports.

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." (no comment)

"It's not difficult to show that applied ethics produces more wealth," he wrote in a July piece for the Vatican newspaper L'Osservatore Romano. "Ethical behavior means lower costs — just thinking about control measures alone — and allows for more value thanks to transparency and trust, which alone produce more certainty and fewer risks."

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. (This would be Benedict's right hand man from the CDF Cardinal Bertone.  This could explain questions about why he was appointed Secretary of State when he had little diplomatic experience.)

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 loans.

While denying any wrongdoing, the Vatican bank agreed to pay $250 million to Ambrosiano's creditors.

The late Archbishop Paul Marcinkus, an American prelate who headed the Vatican bank at the time, was charged as an accessory to fraudulent bankruptcy in the scandal.

He left a villa in Rome two hours before police arrived for the safety of the Vatican, an independent city-state. Italy's Constitutional Court eventually backed the Vatican in ruling that under Vatican-Italian treaties Marcinkus enjoyed immunity from Italian prosecution. Marcinkus long asserted his innocence and died in 2006.

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. (Anybody still wonder why the Vatican insists it is a foreign state?)

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. (I imagine working on 'Vatican time' this will take another century or so.)

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 (blacklist)

Currently the Vatican bank isn't on any OECD list.  (How terribly convenient.)


I really feel badly for Catholics who truly want to believe this pope and this Vatican are pure as the driven snow.  They aren't, haven't been for a long long time, and God is not pleased.


  1. I love how the European Union has already pointed to this bank as in need of special scrutiny. Since they refuse to adhere to rules all other banks in Europe have agreed to!

    Ah yes... one more example of trying to be above the law at time when the law is finally beginning to treat the Vatican and its representatives and operatives as very much under scrutiny of the law.

    I suspect we will see this more and more. As the Vatican tries to tap-dance its way out of such scrutiny.

    So much for being a moral beacon!

  2. My comment above is related to this:

    Since last September, the Bank of Italy has classified the Vatican bank as a non-EU institution whose dealings with other banks are thus subject to especially close scrutiny.

    From The Guardian:


  3. I like this line too because it's true. Some moral beacon.

    "The Vatican has a long history of withholding co-operation from Italian investigators seeking access to its bank's books."

  4. More scandal from the Vatican and the Pope's Cardinals, that "only the Pope" can question?

    I wonder why they are laundering money in the first place, since they are supposed to be so "moral" and all that religious and spiritual stuff?? If the Vatican Bank has nothing to hide, then why and what are they hiding in their transactions?

    If they were "pure as the white driven snow" then why the heck is the Vatican State harboring pedophiles, suspects in a murder case and the Vatican Bank answerable to no one, a law unto itself, not accountable to anyone?

    "All things shall be revealed." Amen and the sooner the better.

  5. Ah, yes, why launder money? Well, of course, they will deny doing that! But I just love that the courts are no longer deferential.

    The Vatican: Taking itself down before anyone else can!

  6. I wonder if the Italian authorities will dig up info re: the money brought in by the Legionaries and/or Opus Dei and paid to various officials, including Cardinal Angelo Sodano. If the Italian authorities do so, it will be despite the best efforts of the Vatican to stop them. It does not surprise me that Gotti Tedeschi (Tedeschi means German in Italian) is an Opus Dei member. Apparently they and the Vatican are entitled to ignore laws they regard as inconvenient. Unfortunately for them, they are living in an age of comparative transparency.

  7. Beloved Canadian humorist and economics professor, Stephen Leacock wrote a great short story on "How to borrow money" in his 1928 book "Short Circuits".


    The process is quite easy, provided you borrow enough...

    ...The Pingpoint Syndicate blew up and failed for ten million dollars.
    And the international loan got mixed up with a lot of others, was funded, equated, spread out over fifty years, capitalized funded again - in short, it passed beyond all recognition.
    And the moral is, when you borrow, borrow a whole lot."

    We'd like to think the big bank frauds are the ones most likely to be punished. They aren't.

    A Canadian bank was defrauded of an amount between $10 million and $100 million by one of their own loans officers. He had been the model employee. When caught he quickly confessed, made a guilty plea and went to jail. He served only 1/3 of his 6 year sentence because he was the absolute model prisoner and received a reduction in sentence for good behavior. When he returned to society it was to big earnings as a security consultant advising banks on how to avoid fraud. He wrote a book which became a movie: Owning Mahowny


    We'd love to see justice. It just isn't going to happen. When the corruption is on this scale it is too big to fail. Everyone else will be brought down too.


    sarcastic word verification: sureo

  8. Isn't it interesting that the amount of money the Italian government has seized from the Vatican bank is almost the same amount we're being told was just spent on the big Opus Dei love-fest in Britain?

    This is like some karmic retribution for this pope's continued choice to play the sovereign-state game rather than to reform the church.

    Where your treasure is, there will your heart be also.

  9. Something tells me interpol is in on this too. Such a tiny "state" cannot be laundering money without it being "international" in scope.

    On the bbc news last night they also mentioned Vatican bank dealings with the Mafia. Likely that's from long ago, but no way is this good publicity!

  10. Nice point Bill. The Vatican surely has been playing the sovereign state game to their advantage. That's an advantage they seem to be losing which is probably a good thing. Christian accountability should not be determined by one's relative secular status.

  11. TheraP I see zero reason to believe that the Mafia connection, especially with the Vatican bank, are a thing of the past.

  12. I didn't "catch" what they said about the Mafia... therefore wasn't willing to take a stab... but what you say makes sense to me. Once one is willing to launder money, one is willing to consort with thieves of all stripes.

  13. The Vatican is a moral beacon? More like a coin-o-matic wash-o-mat.
    And it's no surprise that Gotti Tedeschi is in Octopus Dei.