A new
scandal threatens to engulf the Catholic Church and this time the focus is
money. Senior Vatican officials are battling over the future of the Vatican
bank. While some would like total transparency, dubious transactions from the
past and present could harm the Church's image.
The Vatican
scandal over shady bank accounts and millions in suspect transfers began
shortly before sunrise on June 5 on Via Giuseppe Verdi, a picturesque street in
the old part of Piacenza, a town in northeastern Italy. An elderly gentleman in
a tailor-made suit had just left his house with a leather briefcase dangling
from his right hand. He was on his way to his car.
It was to
be an important day for Ettore Gotti Tedeschi, who had recently been fired as
the head of the Vatican bank -- even if it turned out differently than he'd
expected. Tedeschi was planning to go to the Vatican on that morning, but he
never got there. The 67-year-old banker missed the high-speed train to Rome,
meaning he couldn't, as he had planned, get into a taxi at the Italian
capital's central station for the short journey across the Tiber River to the
Vatican. There, he had hoped to take the documents out of his briefcase and
hand them over to a confidant of the pope.
Instead,
Gotti Tedeschi found four men waiting for him in the street -- not a hit squad
as he feared at first, but investigators with the Carabinieri, Italy's national
military police force. Even before he reached his car, they presented him with
a search warrant and escorted him back to his house. For several hours, they
searched through his sparsely furnished, cloister-like home office. At the same
time, other officers were searching through Gotti Tedeschi's office in Milan.
Among the objects they confiscated were two computers, two cabinets' full of
binders, a planner and his briefcase.
The
investigators were pleased. While they made but little headway in their
corruption investigation involving a client of a company Gotti Tedeschi had
once headed, an Italian subsidiary of the Spanish banking giant Santander, they
stumbled upon something else in there search which proved to be spectacular.
The
documents confiscated from Gotti Tadeschi, a former confidant of the pope,
provided Italian law-enforcement officials insight into the innermost workings
of the Vatican bank. The secret dossier includes references to anonymous
numbered accounts and questionable transactions as well as written and
electronic communications reportedly showing how Church banking officials
circumvented European regulations aimed at combating money-laundering.
A Possible
Motive
The drama
unfolding in the Vatican is now heading toward a climax. First, it was "il
corvo," the raven, whose revelations about life in the court of the
embattled and exhausted Pope Benedict XVI caused months of unease. Then came
the arrest of Paolo Gabriele, the pope's butler, whom the Vatican has fingered
as the source of the private papal correspondence that was leaked to the
public. And now the scandal surrounding Gotti Tedeschi is providing a possible
motive for the Catholic soap opera: money.
The pope
had apparently tasked the financial executive with making the Vatican bank more
transparent. But by approaching his task with perhaps an excess of zeal Gotti
Tedeschi upset powerful forces within the Roman Curia, the Vatican's
administrative and judicial apparatus. Several high-ranking officials within
the Curia viewed the bank, officially known as the Institute for Works of
Religion (IOR), as something akin to a trust company for clandestine monetary
transactions that is not only used by the Church, but allegedly also by the
mafia as well as corrupt politicians and companies. In one of the seized Gotti
Tedeschi memos, he wrote: "I've seen things in the Vatican that scare
me."
It is a
clear turning, one which transforms the so-called "Vatileaks" affair
into a financial scandal that could seriously damage the reputation of the Holy
See. Internal correspondence dated May 22 from a member of the bank's
supervisory board to the Vatican's Secretariat of State notes that the Vatican
bank is presently "in an extremely fragile and precarious position"
and that the situation had reached "a point of imminent danger."
The next
act in the drama is set for Wednesday. Money-laundering experts from the
Council of Europe will present a preliminary report on the Vatican in
Strasbourg. It currently looks as though they will indicate serious misgivings
about whether the IOR has taking sufficient precautions against
money-laundering.
Their
worries are corroborated by the work of Italian authorities. In questioning
sessions sometimes lasting several hours, Gotti Tedeschi told public
prosecutors whom he trusted in the Vatican, other than Pope Benedict XVI, and
whom he didn't. The banker reportedly fingered Secretary of State Tarcisio
Bertone as the ringleader of his "enemies," accusing him of doing
everything possible to keep the Curia's accounts hidden from Italian
authorities. The Vatican has been trying to make its bank eligible for
inclusion on the Organization for Economic Cooperation and Development's
so-called "white list" of financial institutions not suspected of
being involved in money-laundering or terrorism financing. But Gotti Tedeschi
reportedly complained that: "If we continue with Bertone's line, we'll never
get off the black list."
Alarmed
Vatican Leadership
Fabio
Palazzo, Gotti Tedeschi's Milan-based lawyer, has declined to discuss details
of the interrogations and the content of the documents seized from his client.
Nevertheless, he stresses that the documents contain "useful facts"
that would indicate that there were no legitimate grounds for sacking Gotti
Tedeschi as head of the bank.
The Vatican
leadership is alarmed. Archbishops and cardinals are far from thrilled that
Italian officials are now rummaging around in their secret affairs. Papal
spokesman Federico Lombardi has openly threatened Italy's law-enforcement
apparatus and urged it to kindly respect "the sovereign rights of the Holy
See." In other words, he believes that all those documents including
confidential details about the Vatican bank that were seized during the search
of Gotti Tedeschi's home should not be in the hands of Italian investigators.
The fears
of the pope and the Curia are well-founded. In the past, every time Italian
prosecutors have stepped in and confidential documents have found their way to
light, the secretive ways of the Vatican bank have always ended up damaging the
Church's prestige. For more than 40 years, the IOR, founded in 1942, has been
regularly embroiled in scandals, including bribery money for political parties,
mafia money-laundering and, repeatedly, anonymous accounts.
Many who
have become ensnarled in illegal business dealings with the Vatican bank have
been forced to pay with their lives, while others have spent years behind bars.
Despite all of its sacred and solemn promises, the Vatican has succeeded in
keeping the pope's bank a haven for money-launderers. And instead of being on
some Caribbean island, this one is right in the middle of Europe, in the heart
of Rome.
Its
business model depends on keeping things as shrouded as possible from all
financial authorities. Capital gains are untaxed, financial statements are not
disclosed and anonymity is guaranteed. The bank's exotic status of belonging to
a religious monarchy in a sovereign state the size of a city park has shielded
it from investigations and unpleasant external monitoring.
The bank's
headquarters are housed in a medieval defensive tower known as Niccolò V
nestled right against the Apostolic Palace, the pope's official residence, and
is home to a vast amount of money and commercial papers. Here, roughly 100
employees look after 33,000 accounts with total deposits of some €6 billion
($7.6 billion). The direct beneficiary is the pope and his Church; 2010
earnings from the bank were €55 million. Such revenues help make up for a
decline in donations from members of his global congregation.
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