This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2013/06/29/world/europe/cleric-and-2-others-arrested-in-vatican-bank-investigation.html

The article has changed 12 times. There is an RSS feed of changes available.

Version 5 Version 6
Cleric and 2 Others Arrested in Vatican Bank Investigation Cleric and 2 Others Arrested in Vatican Bank Inquiry
(about 5 hours later)
ROME — The Italian police on Friday arrested a prelate, a financial broker and an agent of the Italian Secret Service on corruption charges as part of a complex plot in which the priest — who is already under investigation on suspicion of money laundering involving the Vatican Bank — is accused of trying to repatriate millions of euros from Switzerland to Italy in a private plane. ROME — A Vatican official. A private plane. And 20 million euros in cash.
Those arrested were charged with fraud, corruption and slander as part of a broad investigation tied to the famously secretive Vatican Bank. Claiming to have foiled a caper worthy of Hollywood, or at least Cinecittà, the Italian police on Friday arrested a prelate and two others on corruption charges as part of a complex plot last summer in which they say the priest — already suspected of money laundering — plotted to help wealthy friends sneak the money, the equivalent of about $26 million, into Italy while evading financial controls.
Prosecutors say that the broker and the Secret Service agent had been plotting to help the priest bring 20 million euros, or $26 million, into Italy from Switzerland in a private jet, the ANSA news agency reported. It said that the 20 million euros belonged to “some friends of the monsignor.” The plot never went through. Along with the prelate, a financial broker and a military police agent deployed to the Italian Secret Service were arrested and charged with corruption, and the priest also with slander, in an investigation that developed out of a broader three-year inquiry into the Vatican Bank. The case is the latest black mark on the bank, which under Pope Francis and Benedict XVI has been trying to shake its image as a secretive offshore haven and bring itself into compliance with European norms so that it could use the euro.
In a statement, the Vatican spokesman, the Rev. Federico Lombardi, said that the priest, Msgr. Nunzio Scarano, had been suspended from his position at one of the Vatican’s main financial departments “more than a month ago, ever since his superiors were informed that he was under investigation.” Rome prosecutors say the three men hired a private plane last July with the intention of bringing the cash into Italy from Locarno, Switzerland. The money was to be carried by the Secret Service agent, who would not be required to declare it at the border. But the scheme fell through, the prosecutors said, as the three began bickering and, eventually, lost their nerve. Cellphones used by the three in arranging the money transfer were later burned, prosecutors said.
The Vatican spokesman said that the Holy See had not received any requests from the Italian authorities, but confirmed its “willingness for full collaboration,” and that the Vatican’s internal financial watchdog was following the matter and would take appropriate measures “if necessary.” Those would include requesting that the Vatican’s internal prosecutor open an internal investigation into the monsignor. The European Union and the United States have served notice in recent years that they will no longer tolerate tax havens like Switzerland, Luxembourg and the Cayman Islands, and the wall of secrecy they flourished behind. As a result, major account holders have been growing increasingly nervous.
A Vatican official said Monsignor Scarano had been suspended from his position as an accountant at APSA, a department that oversees the Vatican’s real estate holdings, after prosecutors in Salerno opened a separate investigation into money laundering. The official indicated that the suspension was a sign that the Vatican was stepping up its internal vigilance. Nello Rossi, the Rome prosecutor who led the investigation, said that wiretaps had picked up people discussing how the 20 million euros in Switzerland was tied to the D’Amico family, Salerno shipping magnates.
Only priests, religious, Catholic institutions, employees of Vatican City State and diplomats accredited to the Holy See are allowed to have accounts at the Vatican Bank, known as the Institute for Works of Religion, but rumors have long swirled about whether accounts were used as fronts for other interests, including organized crime and Italian politicians. Even before his arrest on Friday, the prelate, Msgr. Nunzio Scarano, was no stranger to the authorities. An employee of Deutsche Bank before entering the priesthood, and until recently an accountant in a top Vatican financial office that oversees the Catholic Church’s real estate holdings, Monsignor Scarano was under investigation by magistrates in Salerno on accusations that he had illegally moved $730,000 in cash from his account in the Vatican Bank to Italian banks, his lawyer said.
In the past, the Italian prelates who controlled the Vatican Bank tended to see any inquires into possible malfeasance as an attack on its sovereignty. Pope Francis and his predecessor, Benedict XVI, have tried to make the Vatican Bank more transparent. In a statement on Friday, the Vatican spokesman, the Rev. Federico Lombardi, said that Monsignor Scarano had been suspended from his position at the Vatican “more than a month ago, ever since his superiors were informed that he was under investigation.”
It was not immediately clear whether the Vatican was cooperating with Italian authorities or whether the arrests stemmed from several suspicious transactions — six in 2012 and seven in the first half of 2013 — that Vatican officials said they had flagged and brought to the attention of the Vatican’s own internal prosecutors. He added that the Holy See “has not yet received any requests from the competent Italian authorities, but confirms its willingness for full collaboration,” and that the Vatican’s internal financial watchdog was following the matter and would take “if necessary, the appropriate measures in its competency.” That could include requesting that a Vatican prosecutor open an internal investigation into the monsignor.
The arrests Friday were the most dramatic events to emerge from the Rome prosecutors’ investigation into the Vatican Bank since 2010, when prosecutors seized 23 million euros from two external accounts used by the Vatican Bank and placed its then-president and director general under investigation. Rome prosecutors accuse Monsignor Scarano of having engaged Giovanni Maria Zito, a military police officer at the time working for Italy’s domestic secret service, to recover the $26 million in Switzerland and bring it to Italy, said Silverio Sica, Monsignor Scarano’s lawyer.
It had been acting on a warning from the Bank of Italy urging Italian banks to be more vigilant in their dealings with the Vatican, which has not come into full compliance with European banking norms, making it costly and problematic for other banks to do business with it. The money belonged to friends of the prelate, who had invested the sums in Switzerland with Giovanni Carenzio, a broker, but now wanted the money back. Monsignor Scarano entrusted the task to Mr. Zito, who as a secret service officer would not have to pass through customs. “Don Nunzio was only an intermediary to try and recover this money,” Mr. Sica said.
In recent years, the Vatican has been under pressure to meet European norms as a condition for using the euro. In 2010, it created an internal financial watchdog and last year appointed as its director a Swiss lawyer who had helped Liechtenstein clean up its murky banking system. When he got to Switzerland last year, Mr. Zito was unable to retrieve the funds because disagreements arose with Mr. Carenzio, so he returned to Italy and demanded the $780,000 that he had been promised to act as the courier.
This month, Pope Francis appointed a trusted prelate to a top post at the bank and on Wednesday, the pope took a further step and created a committee of prelates and a Harvard Law School professor to report directly to him on the bank’s progress. “Don Nunzio had no choice but to pay,” said Mr. Sica, and the prelate issued two checks, one for $520,000, which was cashed. But Monsignor Scarano blocked the second check, reporting it as lost. “He didn’t want to pay the remaining $260,000,” his lawyer said.
In an interview last month, the new president of the Vatican Bank, Ernst von Freyberg, who was appointed in February by Benedict in one of his last acts as pope, said that he was committed to making the bank more transparent and compliant. Prosecutors accuse the prelate of making a false claim, pretending the check was lost when he knew otherwise. He is also accused of corrupting Mr. Zito.
Last year, a report by Moneyval, a monitoring agency under the Council of Europe, said that the Vatican had made progress but still needed to improve in terms of compliance and customer due diligence. The Vatican must submit a new progress report to Moneyval this fall. “I am certain he will want to speak to prosecutors to clarify his position,” Mr. Sica said of his client. He added that Monsignor Scarano had no previous dealings with the police or with judicial investigations.
Vatican officials have said that the Vatican needs a bank to help Catholic institutions operate around the world, including in politically sensitive areas. The bank had total assets of 7.1 billion euros under management in 2012, most of it invested in government bonds, and turned a net profit of 86.6 million euros. Only priests, members of religious orders, Catholic institutions, employees of Vatican City State and diplomats accredited to the Holy See are allowed to keep accounts at the Vatican Bank, known as the Institute for Works of Religion. But rumors have long swirled about accounts being used as fronts for other interests, including organized crime and Italian politicians.
In the Salerno case, prosecutors accuse Monsignor Scarano of having illegally moved 560,000 euros, equivalent to $730,000, from his account in the Vatican Bank. He told prosecutors that the money had come from a “generous donor.”
According to Mr. Sica, the prelate needed the sum to pay off a mortgage on a personal apartment. Because of “controversial reasons of a family nature,” Monsignor Scarano had been advised to ask 56 friends to accept 10,000 euros apiece, in exchange for money transfers in the same amount, Mr. Sica said. All 56 are also being investigated by Salerno prosecutors.
The authorities, who have accused Monsignor Scarano of laundering the money, said he had another reason. “He split the money up so it wouldn’t be as noticeable,” said Franco Roberti, the chief prosecutor of Salerno.
The investigation came about after Monsignor Scarano reported a break-in at his apartment late last year, during which the thieves made off with precious paintings and silver artifacts. Prosecutors investigating the theft “became interested in establishing where the works of art had come from, and how they had come into his possession,” Mr. Sica said. That led to the discovery of the movement of 560,000 euros that set off the investigation.
Mr. Sica said that Monsignor Scarano’s aims were purely altruistic. The money came from a donor, and he wanted to put the apartment up for sale and use the proceeds to finance a hospice for terminally ill patients in Salerno.
The arrests Friday were the most dramatic events to emerge from the Rome prosecutors’ investigation into the Vatican Bank since 2010, when prosecutors seized 23 million euros from two external accounts used by the Vatican Bank and placed its then-president and director general under investigation. The money was later ordered unfrozen after the Vatican created its internal financial watchdog in 2010, but it has not yet been released.
Vatican experts said that the collaboration between the Vatican and investigators in the case was unprecedented, Giacomo Galeazzi, the Vaticanista for Turin-daily La Stampa, said in a telephone interview. In the past, the Vatican had always resisted when asked to assist in judicial matters, he said, citing a famous kidnapping case that involved the daughter of a Vatican employee, Roberto Calvi, known as God’s Banker, as well as the investigation into the assassination attempt on Pope John Paul II.
“This time the collaboration is real, and the Vatican has announced that it would do its own internal investigation. That marks a real change of climate,” Mr. Galeazzi said. That change can in part be attributed to Pope Francis, but also to the influence of the American Catholic church. “The American cardinals who were decisive in electing Bergoglio were very upfront about the need to clean up the Vatican Bank. This pope could not deny the prosecutors any assistance,” he said.