The Popes Banker Weathers the Storm, The Chiesa, September 24, 2010

The Pope's Banker Weathers the Storm

The Chiesa
September 24, 2010

http://chiesa.espresso.repubblica.it/articolo/1344863?eng=y

A judicial investigation hits the Vatican Bank and its president, Gotti Tedeschi. But he has been working for a year precisely to purge it of malfeasance. With the full mandate of Benedict XVI, and with many external and internal enemies

ROME, September 24, 2010 – Ever since, one year ago, Ettore Gotti Tedeschi was called by the secretariat of state and by the pope to head the Istituto per le Opere di Religione, IOR, the Vatican bank, all of his efforts have been aimed, in his words, at "making every operation more transparent and in line with international standards."

But last September 21 was for him a "black Tuesday." just when a book he has written on how to shape the economy according to Christian moral criteria was being released in bookstores, Gotti Tedeschi was put under investigation by Roman authorities for omission of procedures against money laundering, in one of the IOR's own accounts deposited with an Italian bank.

The Vatican authorities immediately closed ranks in defense of their banker, first with a statement from the secretariat of state, then with a note in "L'Osservatore Romano," and finally with a letter from Fr. Federico Lombardi, director of the press office of the Holy See, in the "Financial Times."

"The integrity and expertise of Professor Gotti Tedeschi are well known in Italian and international financial circles," the note concluded. And it's true. Just as there can be no dispute over the steps Gotti Tedeschi has taken both within the IOR and with the Banca d'Italia and the appropriate international organisms to finally enroll the Holy See in the "White List" of countries that adhere to the norms against money laundering.

For this purpose – the Vatican authorities have stated – the IOR has been equipped with "an office of financial information under the control of Cardinal Attilio Nicora," president of the administration of the patrimony of the apostolic see.

Not only that. The same authorities have also guaranteed that "no new account has been opened by the IOR without strict observance of the rules dictated by Bankitalia."

But what about the old accounts? Those accounts of unclear ownership and suspicious transactions that marked the darker pages in the history of the IOR evidently do no belong exclusively to its past.

With Gotti Tedeschi as president, it is known that many accounts of dubious transparency have been closed, and many others have been regularized. But the judicial proceedings of recent days – like other irregularities that emerged a few months ago in IOR accounts deposited with the Roman branch of Unicredit on Via Conciliazione – have revealed that some areas remain shady.

In the unfolding of the legal action that has now snared Gotti Tedeschi as president of the IOR – and with him Paolo Cipriani as general director – there in fact appear clear failures in the operation of the Vatican bank.

It is as if there are still systems and persons working in this bank to damage and halt the work of integrity and transparency undertaken by the new president. It must be noted that Gotti Tedeschi, when he arrived at the IOR a year ago, did not bring any new coworkers along with him: the personnel with whom he is working are the same who were working at the Vatican bank before his arrival.

To these internal obstacles and barriers must be added the hostile actions taken by external agents to harm the IOR, which are also visible in the legal proceedings.

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One obscure first point concerns the relationship between the IOR and Credito Artigiano, the Italian bank that is in turn controlled by Credito Valtellinese, at which, in a Roman branch, the IOR account under investigation was deposited.

On January 18 of this year, the Banca d'Italia asked Credito Veltellinese to demand detailed information on the ownership of the accounts of the IOR and the recipients of the transactions.

Three months later, in absence of such information, Credito Valtellinese and Credito Artigiano froze the account of the IOR number 49557, effective April 19. As of this date, the account totals 28.3 million euro.

On April 23, there was a meeting between executives of the IOR and of Credito Artigiano. After several months, on September 6, with two faxes, the IOR ordered Credito Artigiano to make two transfers with the money in that same account: one of 3 million to an account at Banca del Fucino in Rome, and another of 20 million to a JP Morgan account in Frankfurt. Both of the recipients were identified only by their IBAN codes.

But the IOR account in question is the one that has been frozen. On September 14, Credito Artigiano informed the Banca d'Italia of the transfers ordered by the IOR, and of the continued lack of information on the ownership of the account and the recipients of its transfers.

On September 15, the office of financial information at Bankitalia notified Roman authorities about a possible violation by the IOR of the norms against money laundering.

On September 20, the court of Rome ordered the preventive seizure of the entire sum deposited in the account of the IOR, and issued two notices of investigation of the president and director general of the Vatican bank, for omission of procedures against money laundering.

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The Vatican authorities and Gotti Tedeschi himself have acknowledged that "the inconvenience has been caused by a misunderstanding that is being cleared up "between the IOR and Credito Artigiano.

But if nine months have not been enough to clarify a simple "misunderstanding" between two banks used to working in concert in the past, it is a sign that to the noncompliance of the IOR has been added the hostile attitude of the bank at which the account is deposited.

The Vatican authorities have also clarified that the transfers ordered were "simple accounting operations within the IOR itself, in accounts belonging to it at other banks." And Gotti Tedeschi has added that the money transferred was supposed to be used to buy German bonds.

But it remains unclear why a simple bond purchase should be preceded by a double accounting shuffle, which in any case was impossible because the account in question was frozen.

Just as unclear are the reasons for the friction that has come to light between the IOR and the Banca d'Italia.

The Vatican authorities assert that the two "have been working in close collaboration since the beginning of this year, precisely in view of bringing the operations of the IOR into line with the procedures against money laundering." And they maintain that "the nature and scope of the operations" that have come under official investigation "could have been clarified simply and quickly."

But if that is the case, it is not clear why the IOR did not clarify things immediately, in direct talks with the Italian financial authorities. Since this clarification has not come, it is natural to think of culpable inertia on the part of the IOR, and of a punitive attitude toward it on the part of the Banca d'Italia.

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The work of getting the IOR back to good health and good working order, entrusted to Gotti Tedeschi by the Vatican authorities, therefore appears more difficult than previously foreseen.

This does not change the fact that the faith put in him by Benedict XVI and by the secretariat of state is now stronger than ever.

Pope Joseph Ratzinger's esteem for "his" banker is also proven by the role that he had in the drafting of the encyclical "Caritas in Veritate."

For confirmation of this, it is enough to leaf through the book-length interview with Gotti Tedeschi that has been released in Italian bookstores precisely in these tempestuous days, with the title: "Denaro e paradiso. I cattolici e l'economia globale."

The book opens with an impassioned preface by Cardinal Tarcisio Bertone. And it closes with an extensive chapter dedicated to the analysis of "Caritas in Veritate."

The following selection is taken from this last chapter. And it touches on a key point of the analysis that Gotti Tedeschi makes of the financial and economic crisis that has shaken the world.

Ettore Gotti Tedeschi is president of the IOR, economic adviser to Italian treasury minister Giulio Tremonti, a board member of Cassa Depositi e Prestiti, president of the Italian infrastructure fund F2i, president of Santander Consumer Bank, a professor at the Catholic University of Milan, and an editorialist for "L'Osservatore Romano" and "Il Sole 24 Ore."