by Barbie Latza Nadeau
Mar 21, 2012
Barbie Latza Nadeau, author
of the Beast Book Angel Face, about Amanda Knox, has
reported from Italy for Newsweek since 1997 and for The
Daily Beast since 2009. She is a frequent contributor to
CNN Traveller, Departures, Discovery, and Grazia. She
appears regularly on CNN, the BBC, and NPR.
The investment bank’s decision to close a Vatican-held account on
suspicion of money laundering is the latest financial scandal to
rock the Holy See.
The Vatican is in public-relations panic-mode... again.
But it’s not the
pedophile priest scandal or
Vatileaks that has the pope’s image-makers hopping. This
time the Holy See faces serious allegations that its curious
accounting practices are really a cover for a money-laundering
On March 30, the Milan branch of the global investment bank JPMorgan
Chase will officially close the Vatican bank’s account No. 1365 -
held by the Institute for Works of Religion, or
the IOR - on
speculation that the account is being used for less-than-immaculate
JPMorgan Chase sent a letter to the
Vatican on Feb. 15 to notify them of the closure after the Vatican
bankers were “unable to respond” to a series of requests about
questionable money transfers from the account.
The JPMorgan Chase account was a
“sweeping facility” that was zeroed out at the end of each business
The account, which was opened in 2009,
had processed some $1.5 billion in funds to other Vatican accounts -
mostly in Germany - during the short time it was open, according to
financial documents published in Italy’s leading financial newspaper
Il Sole 24 Ore.
There is nothing illegal about the use
of sweeping facilities, but in the case of the JPMorgan Chase
account, the fact that Vatican bankers couldn’t quite explain the
reason they moved so much money in such a short period of time led
the bank to close the account.
The closure is the product of an ongoing
investigation into the Vatican’s alleged creative accounting that
began in September 2010 when tax police in Rome froze $33 million in
Vatican assets after a covert investigation raised eyebrows about
the way the church moves its millions and keeps its accounting.
The assets were eventually released in
June 2011, but the investigation is ongoing.
The Vatican has not commented on the JPMorgan Chase fiasco, but
revelations in the form of leaked letters between Vatican officials
that emerged last winter seem to back up the notion that all is not
sacrosanct with the Vatican coffers.
In one leaked letter written by Cardinal
Carlo Maria Viganò, who was hastily transferred to
Washington, D.C., to head the Holy See embassy there earlier this
year, outright talk of rampant corruption within the Holy See sent
ripples around Rome.
In the letter, which was written on
Vatican letterhead and sealed with an official stamp, Viganò tried
to persuade the pope to let him stay in Rome to continue his
“Holy Father, my transfer at this
time would provoke much disorientation and discouragement in
those who have believed it was possible to clean up so many
situations of corruption and abuse of power that have been
rooted in the management of so many departments.”
Pope Benedict XVI in
St. Peter's basilica at the Vatican
Feb. 19, 2012,
Alberto Pizzoli / AFP / Getty Images
The leaked letter scandal was quickly
dubbed “Vatileaks” by the Vatican’s own spokesman. The Holy See did
not deny the authenticity of the documents. Instead they opened an
internal investigation into potential moles.
So far, no one has been named as a
source for the breach, but the document leaks have ceased for the
In one leaked letter written by a
outright talk of rampant corruption
within the Holy See sent ripples around
During the height of Vatileaks earlier this year, the Vatican
maintained it is doing what it can to prove that its records are
In late 2010 the pope christened an
anti-corruption arm within the Roman Curia called the Financial
Information Authority with an eye to securing a place on the
international Financial Action Task Force’s coveted “white list” of
states that adhere to the international standards in the fight
against corruption, tax fraud, and money laundering. Placement on
the list would have silenced the speculation that the Vatican was up
to no good.
Despite the efforts to prove otherwise, the damage to the church’s
financial reputation has already been done.
Earlier this month, the U.S. State
Department named the Holy See on a list of its own, as a
“jurisdiction of concern” for money-laundering practices in its
annual International Narcotics Control Strategy Report,
alongside countries like Honduras and Syria.
The Vatican shrugged off the State
Department’s scolding and instead said being a “jurisdiction of
concern” was far better than being a “primary concern.”
But Reuters financial columnist
Pierre Briançon disagrees.
“The best way for the Vatican to
come clean would of course be to close the bank: it’s hard to
see why it’s needed other than to shroud the Church’s financial
dealings in a veil of obsessive secrecy,” he wrote in a recent
“Barring such a radical exorcism, a clean sweep is in
This is not the first time the Vatican
bank has been named in immoral activities.
Three decades ago, the Holy See faced
its first battle against allegations of money laundering and
corruption, and it was named in the
mysterious death of Roberto Calvi, known then
as “God’s Banker.”
Calvi was president of Banco Ambrosiano
a Freemason with alleged mafia ties. The bank
collapsed amid allegations of sinister activities, and Calvi was
found hanging from a rope with bricks in his pockets under the
Blackfriars Bridge in London.
The Vatican was able to redeem its
reputation back then - at least temporarily. Whether it will be able
to save face this time may depend on divine intervention, or at
least a better accountant.
Vatican Bank Account Closed At JP
Image May Be Hurt -
by Philip Pullella and
March 19, 2012
VATICAN CITY/MILAN, March 19 (Reuters)
JP Morgan Chase is closing the Vatican
bank's account with an Italian branch of the U.S. banking giant
because of concerns about a lack of transparency at the Holy See's
financial institution, Italian newspapers reported.
The move is a blow to the Vatican's drive to have its bank included
in Europe's "white list" of states that comply with international
standards against tax fraud and money-laundering.
The bank, formally known as the Institute for Works of Religion (IOR),
enacted major reforms last year in an attempt to get Europe's seal
of approval and put behind it scandals that have included
accusations of money laundering and fraud.
Italy's leading financial daily Il Sole 24 Ore reported at the
weekend that JP Morgan Chase in Milan had told the IOR of the
closing of its account in a letter on Feb. 15.
The letter said the IOR's account in Italy's business capital would
gradually be phased out starting on March 16 and closed on March 30.
In Milan, JP Morgan Chase declined to comment and the Vatican also
had no comment. It was not possible to contact IOR officials because
Monday was a holiday in the Vatican.
Il Sole said JP Morgan Chase informed the IOR that the account was
being closed because the bank's Milan branch felt the IOR had failed
to provide sufficient information on money transfers.
The financial newspaper, which gave the number of the IOR account,
said some 1.5 billion Euros passed through it in about 18 months. It
said the account was a "sweeping facility," meaning that it was
emptied out at the end of each day with funds transferred to another
IOR account in Germany.
The closure move by JP Morgan Chase, which was also reported by two
leading general newspapers on Monday - Corriere della Sera and La
Stampa - was a further blow to the IOR, whose image has been
tarnished by a string of scandals.
In September, 2010, Italian investigators froze 23 million Euros
($33 million) in funds in two Italian banks after opening an
investigation into possible money-laundering.
The bank said it did nothing wrong and was just transferring funds
between its own accounts. The money was released in June 2011 but
Rome magistrates are continuing their probe.
The public image of the bank has also been harmed by the so-called
scandal, in which highly sensitive documents, including letters to
Pope Benedict, were published in Italian media.
Some of the leaked documents appear to show a conflict among top
Vatican officials about just how transparent the bank should be
about dealings that took place before it enacted its new laws.
The IOR, founded in 1942 by Pope Pius XII, handles financial
activities for the Vatican, for orders of priests and nuns, and for
other Roman Catholic religious institutions.
Last year, the Vatican adapted internal laws to comply with
international standards on financial crime.
The 108-acre sovereign state surrounded by Rome now complies with
the rules of the Paris-based Financial Action Task Force (FATF).
It also established an internal Financial Information Authority
(FIA) along the lines of other countries and has committed to comply
with international anti-money laundering standards and liaise with
the group and law enforcement agencies.
The IOR was entangled in the collapse 30 years
ago of Banco Ambrosiano, with its lurid allegations about
money-laundering, freemasons, mafiosi and the mysterious death of
Roberto Calvi - "God's banker".
The IOR then held a small stake in the Ambrosiano, at the time
Italy's largest private bank and investigators alleged that it was
partly responsible for the Ambrosiano's fraudulent bankruptcy.
Several investigations have failed to determine whether Calvi, who
was found hanging under Blackfriars Bridge near London's financial
district, killed himself or was murdered.
The IOR denied any role in the Ambrosiano collapse but paid $250
million to creditors in what it called a "goodwill gesture".