Pope Francis could shut down Vatican Bank

NEW YORK – On the eve of the Rome trial of a senior cleric accused of money laundering, Pope Francis has moved a trusted aide and a top banking professional to the inner circles of Vatican Bank management in an attempt to balance the impression of past corruption with the promise of future reform.

Still, the corruption within the Vatican Bank, otherwise known as the Institute for Religious Works, or IOR, has historically run deep, and Francis continues to make clear he has little tolerance of worldly corruption.

As WND reported last week, in his apostolic exhortation “Evangelii Gaudium,” or “The Joy of the Gospel,” Francis expressed disdain for market capitalism and set an agenda to return the Roman Catholic Church to the humility Christ showed in his devotion to the poor.

The question remains whether Francis will succeed in reforming the Vatican Bank, or whether he will despair of the effort, deciding instead to close the bank altogether.

The trial of Monsignor Nunzio Scarano, an accountant in a Vatican department known as APSA, the Administration of the Patrimony of the Apostolic See, a top Vatican financial office that overseas Catholic Church real estate holdings, is scheduled to begin Dec. 13.

As WND reported in August, Scarano, along with Giovani Carenzio, a financial broker, and Giovanni Maria Zito, described as a military police agent deployed to the Italian Secret Service, were implicated in a scheme to sneak the equivalent of about $26 million in cash into Italy. Working on behalf of a Neapolitan ship-owning family, they allegedly evaded international financial controls by hiring a private plane to bring the cash into Italy from Locarno, Switzerland.

The New York Times reported that prior to his arrest in June, Scarano, a priest from Salerno in southern Italy who has served a long-time tenure at the Vatican, was under investigation for illegally moving approximately $730,000 in cash from his account in the Vatican Bank to Italian banks.

According to a BBC report in June, Scarano has also been under investigation by Italian police for a series of suspicious transactions involving the recycling through the Vatican Bank of a series of checks described as church donations.

This week, Agence France-Presse reported lawyers for “Mr. 500,” a nickname Scarano acquired for the large amounts of 500 euro notes he was reported to be carrying when arrested, kept donations in several accounts he owned at the Vatican Bank.

Scarano, who continues to protest his innocence, remains under house arrest in Salerno.

Pope changes Vatican Bank team

On Nov. 28, Francis appointed his private secretary, Alfred Xuereb, a prelate from Malta, as supervisor over the activities of the Vatican Bank. The assignment is to oversee the activity of the special investigative pontifical commission established in June to study Vatican Bank reform. He also is to oversee the activity of a second pontifical commission Francis organized in July to study the organization of the economic-administrative structure of the Holy See.

Two days later, the Vatican Bank announced it had appointed Rolando Marranci, a 60 year-old long-time outside consultant to the Vatican, to be the general-director of the Vatican Bank. He is responsible as the bank’s new manager to take charge of operations as the Vatican Bank seeks to implement a series of expected reforms.

Marranci, has been acting as deputy director of the Vatican Bank since July, when Scarano was arrested and Francis called upon the then director-general of the Vatican Bank, Paolo Cipriano, and his No. 2 assistant, Massimo Tulli, to resign.

The Times of Malta reported that Marranci, formerly the chief financial officer for Italy’s Banca Nazionale del Lavoro and subsequently an executive with the Promontory Financial Group advising the Vatican Bank, was appointed top manager of the Vatican Bank. He task is to position the Vatican Bank with the Council of Europe’s Moneyval, an EU financial watchdog agency that has been critical of the Vatican Bank for dragging its feet in improving transparency standards, ahead of Moneyval’s next scheduled evaluation.

The Herald Sun in Australia reported the Vatican Bank is scheduled for another round of Moneyval evaluations on its progress complying with international norms to fight money laundering and terror financing. The bank passed Moneyval’s first test in the summer of 2012, despite receiving poor or failing grades on various watchdog activities.

The changes occur against the backdrop of the papal decree known as a “Motu Proprio,” issued Aug. 8. It authorizes the Vatican’s Financial Information Authority to have increased supervisory powers over the Vatican Bank and other Vatican departments involved in financial activities.

Despite stating his intentions clearly and putting in place a new, more trusted management team, Francis has no assurance that his efforts to reform the Vatican Bank will be successful.

Accusations that the Vatican Bank continues to be involved in questionable, if not criminal, international banking transactions continue to surface.

As WND previously reported, on Aug. 2, HSBC bank in London announced a decision to close the Vatican Bank’s account along with dozens of diplomatic accounts.

The world press speculated HSBC was reluctance to handle the large volume of cash frequently transacted in diplomatic accounts in the wake of paying a record fine of $1.9 billion in 2012 to U.S. government authorities. The agreement enabled HSBC to avoid prosecution for having engaging in massive money laundering to facilitate transactions by terrorists and drug cartels.

WND, in a series of exposé articles beginning in February 2012, was the first to report on billions of dollars in money laundering activities being run through HSBC.

Still, the question remained: Why would HSBC close the Vatican Bank’s account unless the Hong Kong-headquartered bank had reason to suspect the Vatican was engaged in money-laundering activities?

Clearly, the EU officials in charge of Moneyval will be watching Scarano’s upcoming trial in Rome carefully for any additional Vatican Bank transgressions not already scheduled to be examined in the next round of Vatican Bank inspections.

Reform a risky business

On Nov. 14, WND reported an Italian prosecutor warned that the Mafia is considering assassinating Pope Francis for his anti-corruption agenda and his threats to reform or possibly even close the Vatican Bank.

The prosecutor, Nicola Gratteri, said members of the Calabrian Ndrangheta Mafia are concerned about the pope’s crusade against corruption, “wearing his iron crucifix, as he rails against worldly goods and plans a total clean up, the London Daily Mail reported.

Careful Vatican observers note an official decision to investigate money-laundering activities at the Vatican Bank has historically been a risky enterprise.

Pope John Paul I, who died in his sleep on Sept. 28, 1978, after only 33 days as pope, was believed at the time of his death to be getting ready to launch a major investigation into Vatican Bank corruption.

The Institute for the Works of Religion was a major shareholder in Banco Ambrosiano, a major Italian bank that collapsed in 1982 with losses of more than $3 billion.

On June 18, 1982, the chairman of Banco Ambrosiano Bank, Roberto Calvi, a banker with close ties to the Vatican Bank, was found hanging from the Blackfriars Bridge in London in what was widely suspected as a murder disguised as a suicide.

It was widely suspected at the time of Calvi’s death that the Mafia was using Banco Ambrosiano for money-laundering purposes.

Calvi was known as “God’s Banker” because of his close ties to the Vatican.

Founded in 1942 as the Institute for the Works of Religion, the Vatican Bank is one of the most secretive banks in the world, operating with 114 employees and over $7 billion in assets.

Traditionally, the Vatican Bank has refused to cooperate with Italian banking authorities and international monetary authorities on the basis that the Vatican is a sovereign.