City Focus: Iniquity at Vatican Bank with Accusations of Money Laundering and Alleged Links to the Mafia and Masonic Groups

By Peter Campbell
Daily Mail - Thisis Money
July 3, 2013

http://www.thisismoney.co.uk/money/markets/article-2353687/Unholy-See-iniquity-Vatican-Bank.html

Eight days after disappearing from his office, the body of an Italian financier known as ‘God’s banker’ was found hanged from Blackfriars Bridge in London.

Roberto Calvi, 61, was the President of Italy’s Ambrosiano Bank when it collapsed after making £1bn of unsecured loans to brass-plate companies in Latin America.

It is still not known for certain whether Calvi’s death, which happened three days after his secretary jumped to her death from a window of the Milan bank, was murder or suicide.

Rather than an extract from a dark thriller, this is really what happened in 1982 – just one of the controversies that has embroiled the Vatican Bank, Ambrosiano’s largest shareholder.

Three decades later, the plot surrounding the Holy See’s finances remains no less thick.

Accusations of money laundering, alleged links to the Mafia and Masonic organisations and the arrest of senior bank officials alongside former secret service agents all offer sufficient ingredients to whet any budding novelist’s appetite.

The most recent scandal sees three men accused of trying to move £17m, money allegedly stored by a family of Neapolitan ship owners trying to avoid tax, illegally from Switzerland to Italy.

In the wake of two high profile resignations, announced on Monday night, the Vatican Bank’s president Ernst von Freyberg said it was time for ‘new leadership’.

Pope Francis, for whom the furore will be seen as a test of both his mettle and leadership, has set up a commission to review bank’s activities.

The bank, officially called the Institute for the Works of Religion, was established in 1942 to handle the deposits of church organisations and clerics. Located in a tower in the gates of the Vatican City, it is open only to employees, religious orders and diplomats accredited to the city. Because it does not lend money, it is not technically classed as a bank.

But the term ‘Vatican Bank’ has stuck, as have decades-old allegations of misdemeanours.

Some of its earliest controversies involved financial transactions taking place directly after the Second World War.

Several books, including Unholy Trinity: How The Vatican’s Nazi Networks Betrayed Western Intelligence To The Soviets and The Vatican’s Holocaust, were published in the 1990s linking the bank to Croatian atrocities.

Just before the turn of the century, a lawsuit was filed by Holocaust survivors from Croatia, Ukraine and Yugoslavia claiming it stored the looted assets of Jews, Serbs and Gypsies captured or killed by the Nazi-backed Ustasha regime.

A report from the US State Department in 1998 also stated that billions of pounds of funds from Croatia were transferred to the Vatican Bank in the immediate aftermath of the war. Although the Vatican denied the claims, it has so far refused to open up its wartime records for scrutiny. The largest banking scandal came in 1982, when Ambrosiano bank, an Italian giant with assets worth £12bn, collapsed.

Ambrosiano was accused of laundering drug money for the Sicilian Mafia and having links to Propaganda Due, a Masonic lodge.

It made loans worth £1bn to dummy organisations in Panama – loans that were allegedly underwritten by the Vatican Bank.

But even though Archbishop Paul Marcinkus, head of the Vatican Bank from 1971 to 1989, was implicated in the collapse of the bank, he could not be prosecuted in Italy as he was a member of the Church.

He protested his innocence ever since, and died in 2006.

The latest scandal, smuggling £17m from Switzerland into Italy, draws in a host of colourful characters. Nunzio Scarano, a Vatican accountant known as ‘Don 500’ by the Italian media for his love of the largest euro banknote, was arrested last week over alleged corruption and money laundering. He was arrested alongside an Italian secret service agent and a financial broker. It is claimed Scarano moved large amounts of money in and out of two bank accounts – a personal account and one designed to receive charitable donations to help the elderly.

On Monday the director and deputy director of the Vatican Bank – Paolo Cipriani and Massimo Tulli – stepped down over the affair.

Traditionally the bank has refused to co-operate with Italian authorities investigating financial crimes – citing the independence of the Vatican city state. But it is thought Pope Francis, keen to reform the corruption image that has dogged the bank, will be more open to co-operation than his predecessors.

Nobody from the Vatican’s press office was available last night.

Whatever the outcome of the latest episode in the scandal-strewn history, it marks the latest in a long line of iniquities critics would say prove the Biblical adage that you cannot serve both God and Mammon.