Machinations in the Vatican Bank

Money Laundering Inquiry Touches Vatican Bank

Excerpt:

Italian monetary authorities said Tuesday that they had impounded $30 million from the Vatican bank and placed its top two officers under investigation in connection with a money-laundering inquiry. The announcement amounted to another potential storm confronting the papacy of Benedict XVI, who is struggling with the effects of a priestly abuse scandal.

In a statement, the Vatican expressed “perplexity and surprise” that the bank’s chairman, Ettore Gotti Tedeschi, and its director general, Paolo Cipriani, had been placed under investigation. It added that it had the “greatest trust” in the two men and that it had been working for greater transparency in its finances.

The investigation is the first into the Vatican bank since the early 1980s, when it was implicated in the collapse of an Italian bank whose chairman, nicknamed “God’s banker,” was mysteriously found dead, hanging from Blackfriars Bridge in London.

Italian authorities have historically shied away from investigating the Vatican’s finances — owing as much to a sense of deference to the church as to the complex relationship between Italy and the Holy See, a sovereign state.

“The era of omertà is over,” said Gianluigi Nuzzi, the author of the 2009 best seller “Vaticano S.p.A.,” using the Italian term for the code of silence. S.p.A. stands for joint-stock company in Italian.

The investigation was undertaken because of a new practice by the Bank of Italy. Aimed at preventing financing of terrorist groups and money laundering, it requires all foreign banks operating in Italy, including the Vatican bank, to provide detailed information about the origins of the money they transfer.

Officials said Mr. Gotti Tedeschi and Mr. Cipriani were under investigation for having failed to adequately explain the origins of funds transferred from one account held by the Vatican bank to two others it holds. They said that the seizure of money was preventive and that neither man had been formally charged or placed under arrest. In the coming months, a judge is expected to rule on whether to proceed with the investigation.

Comment: Life imitating art - Godfather 3. Plot point:

Michael busies himself with the biggest deal of his career: he has recently bought up enough stock in Immobiliare, an international real estate holding company known as "the world's biggest landlord", to control six of the 13 members of the company's board of directors. He now makes a tender offer to buy the Vatican's 25% interest in the company, which will give him majority control. Knowing that Archbishop Gilday, who serves as head of the Vatican Bank, has run up a massive deficit, he offers to pay $600,000,000 to the Bank in exchange for the shares.