Pope’s top banker in money laundering probe

Pope’s top banker in money laundering probe
By Guy Dinmore in Rome
Copyright The Financial Times Limited 2010
Published: September 21 2010 15:25 | Last updated: September 21 2010 15:25
http://www.ft.com/cms/s/0/39b1cbb6-c587-11df-9563-00144feab49a.html


Italy’s finance police have seized €23m held by the Vatican in an Italian bank while Ettore Gotti Tedeschi, the pope’s top banker, has been placed under investigation for suspected money laundering.

Police confirmed Italian media reports that they had confiscated the funds held by the Institute for Religious Works (IOR) – the Vatican’s bank – in an account at Credito Artigiano, an Italian bank, following suspicions raised by the Bank of Italy over two attempted transfers.

Mr Tedeschi, formerly Bank Santander’s head of operations in Italy and a professor of ethical finance, was appointed head of IOR a year ago. According to sources close to the Vatican, one of his main mandates was to bring the bank in line with international norms and regulations on tax havens and money laundering.

The Vatican expressed its full confidence in Mr Gotti Tedeschi. In a statement it expressed surprise at the investigation and said it remained committed to financial transparency.

The Credito Valtellinese group, which owns Credito Artigiano, said it had no comment.

According to the Italian media reports, the central bank raised concerns last Wednesday over two attempted transfers of Vatican funds, totalling €23m, from its account at Credito Artigiano to unnamed beneficiaries at JP Morgan Frankfurt and Banca del Fucino.

The investigation is being led by magistrates in Rome.

Originally founded in 1887 and housed within a medieval bastion within the Vatican, IOR was thrown into crisis following the suspected murder of Roberto Calvi, director of Banco Ambrosiano who was found hanging from London’s Blackfriars bridge in June 1982.

The Vatican was a major shareholder in Banco Ambrosiano and invoked a treaty that gave it immunity from Italian investigations. In 1984 the Vatican denied all wrongdoing but IOR paid $244m to creditors of the collapsed bank in exchange for the dropping of further claims against the Vatican.

Angelo Caloia, Mr Gotti Tedeschi’s predecessor, was appointed in 1989 in an attempt to restore IOR’s health and credibility, but in the early 1990s its activities once again came under scrutiny during the so-called Enimont corruption trial involving Italian officials. IOR co-operated with the investigation and was not prosecuted.

IOR, which does not publish its accounts, is believed by bankers to hold assets of some $5bn. It is overseen by five key cardinals, has no shareholders and its profits are used for charitable purposes. Mr Caloia said two years ago the bank had not invested in derivatives and had survived the global crisis through prudent management.