VATICAN CITY — Italian authorities seized $30 million from a Vatican bank account Tuesday and said they have begun investigating top officials of the Vatican bank in connection with a money-laundering probe.
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.
Italian financial police seized the money as a precaution, and prosecutors placed the men under investigation for purported mistakes linked to violations of Italy’s antilaundering laws, news reports said.
The investigation is the first major one 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.
The bank is formally known as the Institute for Works of Religion.
The Vatican said the bank had been working for some time to make its finances more transparent to comply with anti-terrorism and anti-money-laundering regulations.
Gotti Tedeschi told state run RAI television that he was “humiliated and mortified” by news of the probe, which he said had arrived just as he was implementing new transparency procedures at the bank.
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.
However, news reports circulated more than a year ago that investigators were scrutinizing millions of dollars’ worth of Vatican bank transactions to see whether they violated money-laundering regulations.
In Tuesday’s case, officials said the Bank of Italy, adhering to anti-money-laundering directives issued by the European Union, alerted them to two suspicious transfers on Sept. 6 from an account held by the Vatican bank at a Rome branch of Credito Artigiano S.p.A., a bank based in northern Italy.
The bulk of the money, $26 million, was destined for JP Morgan in Frankfurt, with the remainder, $4 million, going to Banca del Fucino. Police seized the money at Credito Artigiano.
According to the reports, the Vatican bank had neglected to communicate to financial authorities where the money had come from. The reports stressed that Gotti Tedeschi wasn’t being investigated for laundering money himself but for a series of alleged omissions in financial transactions.
Prosecutors declined requests seeking confirmation of the reports.
Gotti Tedeschi was named chairman of the bank a year ago after serving as the head of Italian operations for Spain’s Banco Santander. A member of the conservative religious movement Opus Dei, Gotti Tedeschi frequently speaks out on the need for more morality in financing and is a very public cheerleader of Pope Benedict XVI’s finance minded encyclical “Charity in Truth.”
“It’s not difficult to show that applied ethics produces more wealth,” he wrote in a July piece for the Vatican newspaper L’Osservatore Romano. “Ethical behavior means lower costs - just thinking about control measures alone - and allows for more value thanks to transparency and trust, which alone produce more certainty and fewer risks.”
News of the investigation came just after Benedict wrapped up a difficult trip to Britain and as the Vatican still reels from the fallout of the clergy sex-abuse scandal.
The Vatican bank, in a tower just inside the gates of Vatican City, isn’t a typical bank. Its stated mission is to manage assets placed in its care that are destined for religious works or works of charity. But it also manages automated teller machines inside Vatican City and the pension system for the Vatican’s thousands of employees.
The bank is not open to the public. Depositors are usually limited to Vatican employees, religious orders and people who transfer money for the pope’s charities.
Its leadership is composed of five cardinals, one of whom is the Vatican’s secretary of state. But the day-to-day operations are headed by Gotti Tedeschi and the bank’s oversight council.
The Vatican bank was famously implicated in a scandal over the collapse of the Banco Ambrosiano in the 1980s, in one of Italy’s largest fraud cases. Banco Ambrosiano lent more than $1 billion to companies in Central America that existed mostly on paper. The Vatican bank had backed the loans with letters of credit.
Roberto Calvi, the head of Banco Ambrosiano, was found hanging from Blackfriars Bridge in London in 1982 in circumstances that still remain mysterious.
London investigators first ruled that Calvi committed suicide, but his family pressed for further investigation. Eventually murder charges were filed against five defendants, including a major Mafia figure, and they were tried in Rome and acquitted in 2007.
Banco Ambrosiano collapsed after the disappearance of $1.3 billion in loans the bank had made to several dummy companies in Latin America.
The Vatican bank insisted that it had done nothing wrong regarding its backing of the loans, but agreed to pay $250 million to Ambrosiano’s creditors.
The then-president of the Vatican bank, American Archbishop Paul Marcinkus, was charged as an accessory to fraudulent bankruptcy in the scandal but was never prosecuted.
He left a villa in Rome, two hours before police arrived, for the safety of the Vatican, an independent city-state. Italy’s Constitutional Court eventually backed the Vatican in ruling that under Vatican-Italian treaties Marcinkus enjoyed immunity from Italian prosecution. Marcinkus long asserted his innocence and died in 2006.
Last year a U.S. appeals court dismissed a lawsuit against the Vatican bank filed by Holocaust survivors from Croatia, Ukraine and Yugoslavia who alleged it had accepted millions of dollars of their valuables stolen by Nazi sympathizers.
The court said the bank was immune from such a lawsuit under the 1976 Foreign Sovereign Immunities Act, which generally protects foreign countries from being sued in U.S. courts.
The Vatican said it was surprised by the new investigation because its bank had been in discussions with global financial bodies on how to join the worldwide “white list” of institutions that conform to clean-banking standards.
“The authorities of the Holy See have long been known for the goodwill they have shown in the transparency of financial operations of the Institute for Religious Works,” the Vatican said in a statement.
The Organization for Economic Cooperation and Development divides countries into three categories: those who comply with rules on sharing tax information (white list), those who say they will but have not acted yet (gray list), and nations which have not yet agreed to change banking secrecy practices (blacklist).
Currently the Vatican bank isn’t on any of the group’s lists.
Information for this article was contributed by Nicole Winfield and Victor L. Simpson of The Associated Press; by Rachel Donadio of The New York Times; and by Henry Chu and Maria De Cristofaro of the Los Angeles Times.
Front Section, Pages 1 on 09/22/2010