by David Willey
29 June 2013
Vatican’s own offshore bank has
organized criminals, even terrorists, to
launder money with impunity
Can Pope Francis call a halt to
the corruption gnawing at the heart of
the Catholic Church?
now the Vatican has been able
to hide behind a
cloak of diplomatic immunity
"It’s like the end of the Berlin Wall,” said a high-ranking
Vatican official last week after an invisible financial
barrier marking the legal separation between the Vatican and
Italy was breached for the first time.
According to officials at the Bank of
Italy, the Institute for Works of Religion - the Vatican’s
own offshore bank - has for years been allowing organized criminals,
even terrorists, to launder money with impunity.
On Friday, Italian tax police arrested a high-ranking Italian
prelate, Monsignor Nunzio Scarano, who until last month was
working as a senior accountant inside the Vatican’s financial
They also arrested a financial
intermediary and an agent from Italy’s secret services on charges of
conspiring with Mgr Scarano to commit crimes of embezzlement and
Mgr Scarano is alleged to have masterminded a plot that sounds like
an airport novel. He attempted to bring €20million in cash belonging
to a wealthy family of ship-owners from a Swiss bank to Rome in a
private plane, thereby evading customs and tax controls.
Italian prosecutors have had their eye on the Vatican bank for
several years but, until now, have had great difficulty in obtaining
any information from the Holy See, which has pleaded
diplomatic immunity and exemption from normal international banking
rules on the grounds that the Institute for Works of Religion,
“is not a bank in the normal sense
of the word”.
After the arrest of Mgr Scarano,
however, the Vatican spokesman, Father Federico Lombardi,
promised “full collaboration” with Italian justice authorities.
This in itself marks a 180-degree turn from the past. Under previous
the Vatican has taken refuge behind
the Lateran Pacts signed with Italy
in 1929 that provide for the complete independence of the Vatican
City State and of the institutions of the Holy See under
Collaboration with the Bank of Italy and
with Italian justice has hitherto been considered as an attack upon
the independence and sovereignty of the Vatican.
The American prelate Mgr Paul Marcinkus was in charge of the
Vatican bank in the Eighties during the time of its association with
dodgy Italian financiers such as Roberto Calvi, the chairman
of Banco Ambrosiano, who was found hanging from Blackfriars Bridge
in London in 1982. It is believed that he was a victim of a Mafia
hit man taking revenge for funds lost through the bank’s collapse.
The Vatican was the bank’s main
Calvi was dubbed “God’s banker”
due to his close ties with the Holy See.
Mgr Marcinkus evaded the serving of court documents by Italian
justice authorities by taking refuge inside Vatican City and
claiming diplomatic immunity.
Mgr Scarano, who comes from Salerno, south of Naples, had a late
vocation to the priesthood. He was employed by a big Italian
commercial bank before taking Holy Orders, and was nicknamed
“Monsignor 500” inside the Vatican thanks to his habit of flashing
his wallet to show colleagues that he only carried €500 banknotes.
Even before Mgr Scarano’s arrest,
revealed that he was determined to clean up the Vatican bank and its
highly secretive operations, which in recent decades had been
engulfed in scandal.
Only two days prior to the Monsignor
being hand-cuffed and taken away, the Pope announced the creation of
an internal commission of inquiry into the running of the bank, set
up in 1943 to hold the funds of cardinals, bishops, priests,
Catholic charities and religious orders from around the world.
The five-member commission includes a Harvard law professor and only
one Italian - Cardinal Renato Farina, the former head of the
Vatican Library and Secret Archive. Pope Francis has given
the commission powers to question anyone working inside the Vatican
and ordered it to report back to him personally and “promptly”.
The new Pope has already revealed himself as a person who can make
quick decisions if necessary and is not easily impressed by the pomp
and circumstance of time-honored Vatican ceremonial and protocol.
He finds the court-like Vatican
administration suffocating and failed to turn up to a symphony
concert organized in his honor earlier in the month because he had
more urgent business.
“I’m not a Renaissance prince,” he
is reported to have said, somewhat snottily.
In 2010, former
set up a Financial Information Authority to monitor all the
Vatican’s international transactions and to ensure that
international rules relating to money laundering and the financing
of terrorism were being respected.
But inspectors from
Moneyval, a Council of Europe
banking watchdog authority based in France, went through the bank’s
books last year and reported that it sometimes failed to ensure “due
diligence” in monitoring suspect transactions.
There is still some way to go before the
Vatican bank can be granted full “white list” status, the Moneyval
Another serious problem facing Pope Francis as he prepares major
reforms in the running of the Roman Curia, the headquarters of the
Catholic Church, is what he referred to during a recent private
meeting with clerics from Latin America as the Vatican’s “gay
“It’s true, it’s there,” he is
reported to have said. “We need to see what we can do.”
He has his work cut out.
Last week, Patrizio Poggio, a
former Catholic priest, claimed that he had evidence of misconduct
by a group of Roman priests with young Romanian male prostitutes,
informing the police that he had “grave information harming the
integrity of the Church” and giving them a list of alleged clients -
all Roman clerics.
Poggio claimed that they had used the services of the prostitutes,
who frequented a club near Rome’s main railway terminal.
He alleges that a former policeman took
the male escorts in a van marked “Medical emergency - blood
transport” to an abandoned chapel in the suburbs, where they met
with some of the clerics. The priest, who served five years in jail
for sexual crimes committed 15 years ago, was arrested on Friday on
charges of criminal defamation.
But the presence within the Vatican
hierarchy of gay prelates is an open secret in Rome.
From time to time, stories emerge in the
local media alleging affairs between monsignori and young men, and
it is perhaps worth pointing out that in other reported remarks to
the same group of clerics at the Vatican, Pope Francis is quoted as
“In the Curia, there are also holy
people, really, there are holy people. But there is also a
stream of corruption, there is that as well, it is true.”
The fact that Pope Francis has chosen to
start his new-broom act as leader of the universal Church with a
shake-up at the Vatican bank is significant.
During discussions among cardinal
electors that preceded the conclave at which he was chosen to
succeed Pope Benedict, time and time again the cloud of scandal that
has been swirling around the Vatican bank came up.
Pope Francis plans no long summer break, as has always been
customary for popes and their senior Vatican functionaries.
Except for a week-long journey to Rio to
attend a Catholic World Youth Festival at the end of July, and brief
day trips to Sardinia and to the shrine of his namesake, Saint
Francis, at Assisi later in the year, he intends to be at his desk
during most of the summer holidays.
The most important choice that Pope Francis now has to make is that
of his number two, the Cardinal Secretary of State.
The present incumbent, Cardinal
Tarcisio Bertone, selected by former Pope Benedict, is unlikely
to continue in his post. Cardinal Bertone has been an unpopular
Secretary of State because of his lack of experience in papal
Earlier this month, Pope Francis called to Rome all the papal
diplomats representing the Holy See in countries around the world.
It is from their ranks that he is expected to choose his new
Secretary of State.
The new, simpler, more frugal Vatican of Pope Francis will shortly
begin to take shape - and he doubtless hopes that soon the whiff of
financial and sexual scandal that has besmirched the Vatican in
recent years will begin to blow away.