Italian investigators are trying to identify "numerous individuals" who appear to have received more than €2m (£1.7m) through an account at the Vatican bank.
On Tuesday, Ettore Gotti Tedeschi, the president of what is properly known as the Institute for the Works of Religion (IOR), and his director general were formally placed under investigation by prosecutors in Rome, suspected of violating Italy's money-laundering regulations.
The Vatican has expressed astonishment at the move, which related to attempts to transfer some €23m (£19.5m) from an Italian bank account, allegedly without disclosing the identity of the party for which it was acting.
A Vatican statement said the bank was merely moving its own money around. And a front-page article in the Holy See's semi-official newspaper, L'Osservatore Romano, said: "The nature and scope of the operations now under investigation could have been cleared up simply and swiftly [by the Bank of Italy]."
Extracts from the judge's warrant that blocked the transfers, published in the Italian media, suggest there is more to the affair than a simple misunderstanding or oversight, though not necessarily anything that indicates Vatican wrongdoing.
La Repubblica quoted the warrant as saying that between January 2008 and November 2009 the IOR's account with Credito Artigiano received bank drafts worth €2,132,297. But the deposits "referred to drafts drawn by other people on third-party banks in favour of numerous individuals ... none ever coinciding with the IOR".
The investigators were also reported to be intrigued by three substantial deposits of between €22m (£18.7m) and €25m (£21.2m) that appeared to come from the closure of other IOR accounts. Corriere della Sera said this was partly because the other accounts had ostensibly been closed by "withdrawal using counter forms", so presumably in cash.
The paper said that contrary to what was originally reported the IOR's account had been frozen by Credito Artigiano for five months when the Vatican bank ordered the money transferred. Most of it was to have been sent to Germany, the rest to another Italian bank.
La Repubblica reported that prosecutors had waited for five days for an explanation from the IOR before going public. It said the bank may have kept quiet for fear of conceding to the Italian authorities the right to inspect its books.
The Italian Government on Tuesday moved to confiscate nearly 20 million Euros ($26 million) from the Vatican Bank on suspicions of money laundering. Italian authorities have been observing the Vatican Bank for a year and often attempted to investigate the reclusive bank. The money in question was seized from the Credito Artigianato, and was being sent to JP Morgan Chase and another Italian bank.
The Vatican says that this was a misunderstanding and that the only thing wrong that occurred was that they didn't clarify before hand what the transfer was for. Another source I read claimed that some funds was being wired to Frankfurt for the purpose of buying German government bonds.
The specific news at hand is not important, as so much as the broader issue. The Vatican Bank, formally the Istituto per le Opere di Religione, "Institute for Works of Religion", or IOR for short, has often been a complicated case in Italian banking and international banking as a whole. In the past the IOR had been implicated in a number of scandals, including,
-The collapse of Banco Ambrosiano in 1982. The IOR, headed by Archbishop Marcinkus at the time, was a major shareholder in this bank. Its collapse was estimated at $3.5 billion dollars- a significant sum at the time that wiped out many people's savings. There were suspicions of banking fraud and irregular activities before hand, though not followed upon well. A journalist, Carmine Pecorelli, who was investigating and shadowing Archbishop Marcinkus, was found murdered in 1979, possibly by the mafia.
Subsequent investigations that took place in the aftermath of the collapse on the banking books and ledgers would reveal troubling things. A major client was the Masonic lodge (I know), Propaganda Due (P2), whose account as an intermediately for Sicilian Mafia by laundering money from mob drug deals. More over, the powerful Chairman of the Bank, Roberto Calvi, sometimes called "God's Banker" was also a member of P2. P2 was also believed to have financed far-right terror groups, notably the 1980 bombing in Bologna by the neo-fascist Nuclei Armati Rivoluzionari, as well as funding the faction of Solidarity grouped around Lech Walesa, and the Contras in Nicaragua. It is also believed they may have provided support for the military dictatorships in South America.
Due to P2's reach and the influence of Banco Ambrosiano, numerous figures from the government were implicated too. Most notably, the corruption ridden Prime Minster Benito Craxi was convicted of connection to this in 1994.
A conspiracy theory lays out that P2 may have been responsible for the murder of Pope John Paul I.
Calvi, the chairman of the bank, fled the country shortly before the bank imploded. His body was found in the United Kingdom. While ruled a suicide, it was later revised to murder.
The court trials would drag on until the Vatican reached a settlement with creditors.
What of Archbishop Marcinkus? Because of diplomatic immunity, he was not charged. He returned back to his native Chicago, and from there retired to Arizona where he died peacefully in 2006.
-In 1999, a class action lawsuit was filed by Holocaust survivors against the IOR. The plaintiffs accused the IOR of first supporting, and rather storing away gold and other loot stolen by the Ustaše (Nazi collaborators in Croatia). This tied into a larger issue of accusations against the Vatican during its activities in WW II.
This came on the heels of another case and tensions between the United States and Switzerland over the issue of bank accounts that were held by victims of the Holocaust but were not turned over to their descendants because of a legal requirement to produce a death certificate. It was accused in this case that the Swiss banks involved may had destroyed the accounts of holocaust victims, though this was not proven. At any rate this event led the United States to a full disclosure of its WW II activities and records in 1997, and later joined by many other nations. This also led to a spike in interest around the so-called Nazi gold and conspiracies surrounding that.
These records showed that members of the Ustaše had hidden themselves in a Vatican covenant in Croatia. From there it was alleged by the plaintiffs that the IOR helped to transfer gold and loot from the Ustase into bank accounts. As summarized by a State Department document,
The Vatican, which maintained an "Apostolic visitor" in Zagreb from June 1941 until the end of the War, was aware of the killing campaign, which started with the internment of most of the 35,000 to 45,000 Croatian Jews in the spring and summer of 1941, and continued with the flight of up to 5,000 Jews from the German-occupied areas of the Croatian state to the Italian portion of the protectorate, and the deportation to Germany of all remaining Croatian Jews beginning in July 1942. Croatian Catholic authorities condemned the atrocities committed by the Ustashi, but remained otherwise supportive of the regime. During his March 1943 visit to Croatia, German Interior Minister Heinrich Himmler demanded that the few remaining Jews be deported to Germany (including those who had been baptized Catholics or married to Catholics). Germany continued its efforts throughout the War to compel the Italians to deport those Jews who had found sanctuary in Italian-occupied Dalmatia. Many of them ultimately found safety on the island of Rab off the Dalmatian coast.The German occupiers boasted that the Jewish population of Croatia had been wiped out by early 1944 (except for those who managed to gain Italian protection or escaped to join the Partisans).
According to information gathered at various times by U.S. intelligence, the College of San Girolamo degli Illirici in Rome, which provided living quarters for Croatian priests studying at the Vatican during and after World War II, was a center of Ustasha covert activity and a Croatian "underground" that helped Ustasha refugees and war criminals to escape Europe after the War.24 British intelligence information of March 1946 also identified San Girolamo as the church for the Ustashi managed by a brotherhood of Croatian priests, the "confraternita di San Girolama." This brotherhood issued identity cards with false names to the fugitive Ustashi, allowing them to evade arrest or detention by the Allies.Monsignor Juraj Madjerec, identified in intelligence reports as an Ustasha supporter, was head of the College, but the prime mover behind this Ustasha activity in Rome was the secretary of the College, Father Dr. Krunoslav Stefano Dragonovic, who was also an Ustasha colonel and former official of the Croat "Ministry for Internal Colonization," the agency responsible for the confiscation of Serb property in Bosnia and Hercegovina.
Regarded by U.S. intelligence officers as Ante Pavelic’s "alter ego," the Croatian-born Father Dragonovic had been a Professor of Theology at Zagreb University. In 1943 he went to Rome allegedly as the representative of the Croatian Red Cross, but probably to coordinate Ustasha affairs in Italy. Taking advantage of contacts inside the International Red Cross and other refugee and relief organizations, Dragonovic helped Ustasha fugitives emigrate illegally to South America by providing temporary shelter and false identity documents, and by arranging onward transport, primarily to Argentina. U.S. intelligence reports make much of Father Dragonovic’s role in helping the Ustashi who sought protection in Rome after the War. He was also reportedly entrusted with the safeguarding of the archives of the Ustasha Legation in Rome, which he hid somewhere in the Vatican, as well as with all the valuables brought out ofCroatia by the fleeing Ustashi.
The figure of 350 million Swiss francs (over $80 million) of Ustasha gold that U.S. intelligence reported in 1946 remains the only attempt to estimate the total financial resources available to the Ustashi at the end of World War II. This figure refers to sums in Italy and Austria and probably does not include those funds sequestered by the Ustasha regime in Switzerland. Moreover, it remains unsubstantiated and may not include some or all of the sums reported elsewhere. Although the amount of the total financial resources available to the Ustasha leadership at the end of World War II cannot be determined, it seems clear from the available information that there was some quantity of gold at their disposal in Rome, Austria, and Switzerland. From the character of the Ustasha regime and the nature of its wartime activities, this sum almost certainly included some quantity of victim gold.
The largest estimate of Ustashi treasury reaching Rome was made in the October 1946 U.S. intelligence (SSU) report to the Treasury Department, which estimated that 200 million Swiss francs (about $47 million) "was originally held in the Vatican" before being moved to Spain and Argentina. Another October 1946 intelligence report summarizing information on the whereabouts of former Ustasha officials identified an "Ustashi Financial Committee" living in Rome with a large amount of gold at its disposal.38 On the other hand, a report derived from an alleged January 1947 interview with Ante Pavelic at his quarters in the monastery in Rome, claimed the Ustashi had only 3,900 gold Napoleons (some $25,000) in all of Italy.
Ante Pavelic, Father Dragonovic, and other Ustasha leaders in Rome also derived moral and financial aid from many other countries, including from Ustasha sympathizers in the United States. U.S.intelligence was also informed that the Ustashi in Italy were active on the black market.41 Dragonovic may also have personally profited from his illegal activities, charging refugees as much as $1,500 for false documents and realizing $625 from each refugee he helped transport to Argentina.
The case became a class-action lawsuit termed "Alperin v. Vatican Bank". The trial was kicked around the legal system for quite sometime, though in 2006 suffered a setback when the court declared that the IOR could not have charges pressed against it due to diplomatic immunity. The class-action lawsuit still is active though, and was admitted and re-submitted.
Though this issue is no where near as major as the two I described, the Italian bank firms and the Italian State have been for quite some time attempting to reign in the IOR in line with their interests. Even if the Vatican shows that this was an issue with them not declaring it, the Italian state will continue watching the IOR and the Vatican's activities regardless, as it is running contrary to their own interests.