Vat­i­can bank hits by fi­nan­cial scan­dal

The Pak Banker - - Company& -

VAT­I­CAN CITY: The Vat­i­can calls the seizure of as­sets a "mis­un­der­stand­ing" and ex­presses op­ti­mism that it will be cleared up quickly. But court doc­u­ments show that pros­e­cu­tors say the Vat­i­can Bank de­lib­er­ately flouted an­ti­laun­der­ing laws "with the aim of hid­ing the own­er­ship, des­ti­na­tion and ori­gin of the cap­i­tal". The doc­u­ments also re­veal in­ves­ti­ga­tors' sus­pi­cions that clergy may have acted as fronts for cor­rupt busi­ness­men and the Mafia. The doc­u­ments pin­point two trans­ac­tions that have not been re­ported: one in 2009 in­volv­ing the use of a false name, and an­other in 2010 in which the Vat­i­can Bank with­drew €650,000 from an Ital­ian bank ac­count but ig­nored bank re­quests to dis­close where the money was headed.

The new al­le­ga­tions of fi­nan­cial im­pro­pri­ety could not have come at a worse time for the Vat­i­can, al­ready hit by rev­e­la­tions that it shel­tered pae­dophile priests. The cor­rup­tion probe has also given new hope to Holo­caust sur­vivors who tried un­suc­cess­fully to sue the Vat­i­can in the US, al­leg­ing that Nazi loot was stored in the bank.

Yet the scan­dal is hardly the first for the cen­turies-old bank. In 1986, a Vat­i­can fi­nan­cial ad­viser died af­ter drink­ing cyanide-laced cof­fee in prison. An­other was found dan­gling from a rope un­der London's Black­fri­ars Bridge in 1982, his pock­ets stuffed with money and stones. The in­ci­dents black­ened the bank's rep­u­ta­tion, raised sus­pi­cions of ties with the Mafia, and cost the Vat­i­can hun­dreds of mil­lions of dol­lars in le­gal clashes with Ital­ian au­thor­i­ties. On 21 Septem­ber, fi­nan­cial po­lice seized as­sets from a Vat­i­can Bank ac­count at the Rome branch of Cred­ito Ar­ti­giano. In­ves­ti­ga­tors said the Vat­i­can had failed to fur­nish in­for­ma­tion on the ori­gin or des­ti­na­tion of the funds, as re­quired by Ital­ian law. The bulk of the money, €20m, was des­tined for the Amer­i­can JP Mor­gan's Frank­furt branch in Ger­many, with the re­main­der go­ing to Banca del Fu­cino, an Ital­ian bank. Pros­e­cu­tors al­leged the Vat­i­can ig­nored reg­u­la­tions that for­eign banks must com­mu­ni­cate to Ital­ian fi­nan­cial au­thor­i­ties where their money has come from. All banks have de­clined to com­ment. In an­other case, fi­nan­cial po­lice in Si­cily said in late Oc­to­ber that they had un­cov­ered money laun­der­ing in­volv­ing the use of a Vat­i­can Bank ac­count by a priest in Rome whose un­cle was con­victed of as­so­ci­a­tion with the Mafia. Au­thor­i­ties say some €250,000, il­le­gally ob­tained from the re­gional govern­ment of Si­cily for a fish-breed­ing com­pany, was sent to the priest by his fa­ther as a "char­i­ta­ble do­na­tion", then sent back to Si­cily from a Vat­i­can Bank ac­count us­ing a se­ries of home-bank­ing op­er­a­tions to make it dif­fi­cult to trace.

The pros­e­cu­tors' of­fice stated in court pa­pers last month that while the bank has expressed a "generic and stated will" to con­form to in­ter­na­tional stan­dards, "there is no sign that the in­sti­tu­tions of the Catholic Church are mov­ing in that di­rec­tion". It said its in­ves­ti­ga­tion had found "ex­actly the op­po­site".

Le­gal wa­ters are murky be­cause of the Vat­i­can's spe­cial sta­tus as an in­de­pen­dent state within Italy. This time, Ital­ian in­ves­ti­ga­tors were able to move against the Vat­i­can Bank be­cause the Bank of Italy clas­si­fies it as a for­eign fi­nan­cial in­sti­tu­tion op­er­at­ing in Italy. How­ever, in one of the 1980s scan­dals, pros­e­cu­tors could not ar­rest the then bank head Paul Marcinkus, an Amer­i­can arch­bishop, be­cause Italy's high­est court ruled he had im­mu­nity. -PB News

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