by Barbie Latza Nadeau
Mar 21, 2012

from TheDailyBeast Website

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 scheme.

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 financial deeds.

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 day.

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 anti-fraud work.

“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 moment.
 

In one leaked letter written by a cardinal,

outright talk of rampant corruption

within the Holy See sent ripples around Rome.
 

During the height of Vatileaks earlier this year, the Vatican maintained it is doing what it can to prove that its records are clean.

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 blog post.

 

“Barring such a radical exorcism, a clean sweep is in order.”

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 despite being 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 Morgan

-   Image May Be Hurt   -
by Philip Pullella and Lisa Jucca

March 19, 2012

from HuffingtonPost Website

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.

 

"VATILEAKS" SCANDAL

The public image of the bank has also been harmed by the so-called "Vatileaks" 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 Ambrosiano chairman 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".