July 3, 2012
Embroiled in another financial scandal pertaining to the laundering of money, the Vatican bank has been called by Forbe’s “the most secret bank in the world” and faces international scrutiny in its highly secretive banking model. Although details are limited to the public, it is clear that the Vatican bank is facing pressure from Italian and European officials over its innerworkings. In short, the bank has laundered billions of dollars. It has had help of course, in the deeply interwoven network of high finance, and none other than US bank JPMorgan abetted highly suspicious transactions, although the bank has yet to be accused of laundering itself. Though, this is a no-brainer considering the accounts the bank hosted for the Vatican.
This part of the story begins when Gottii Tedeschi, now former head of Vatican bank, was relieved when four men waiting for him in the street while he was on his way to work were not hit men. They were investigators with the Carabinieri, Italy’s national military police force. Before he had reached his car, they had served him a search warrant. They escorted him back to his house, where they for many hours searched through his home office. Simultaneously, the military police force was searching through Gotti Tedeschi’s office in Milan. They confiscated two computers, two cabinets’ full of binders, a planner and his briefcase. The documents confiscated from Gotti Tadeschi, who was once a confidant of the pope, “provided Italian law-enforcement officials insight into the innermost workings of the Vatican bank.” According to Germany’sDer Spiegel:
The secret dossier includes references to anonymous numbered accounts and questionable transactions as well as written and electronic communications reportedly showing how Church banking officials circumvented European regulations aimed at combating money-laundering.
Tedeschi came under pressure from high-level Vatican officials for his running of the Vatican bank. He was pushing a model more transparent than the Vatican establishment could allow. In short, he upset powerful forces within the Roman Curia, the Vatican’s administrative and judicial apparatus. Where fore?
The bank, officially called the Institute for Works of Religion (IOR), has functioned for centuries as a trust company “for clandestine monetary transactions.” The bank is not only used by the Church, but also the mafia, corrupt politicians and transnational corporations. One of Tedeschi’s seized memos purportedly reads: “I’ve seen things in the Vatican that scare me.”
Correspondence from May 22 by a member of the bank’s supervisory board to the Vatican’s Secretariat of State reads that the Vatican bank is currently “in an extremely fragile and precarious position.” The situation, the memo reads, had by then reached “a point of imminent danger.”
On Wednesday, July 4, money-laundering experts from the Council of Europe are set to present a preliminary report on the Vatican in Strasbourg. The group is likely to indicate, in most likely a vague and resigned manner, that the IOR has seemingly taken insufficient steps against money-laundering. Or, the committee will be wholesale bought off and will present a glowing review of the bank, thus “white-listing” the Vatican bank.
Because the bank has kept accounts hidden from Italian authorities, it’s bid for inclusion on the Organization for Economic Cooperation and Development’s so-called “white list” of financial institutions not suspected of money-laundering or terrorism financing remains dubious. Gotti Tedeschi apparently lamented, “If we continue…we’ll never get off the black list.” Der Spiegel maintains:
The Vatican leadership is alarmed. Archbishops and cardinals are far from thrilled that Italian officials are now rummaging around in their secret affairs. Papal spokesman Federico Lombardi has openly threatened Italy’s law-enforcement apparatus and urged it to kindly respect “the sovereign rights of the Holy See.” In other words, he believes that all those documents including confidential details about the Vatican bank that were seized during the search of Gotti Tedeschi’s home should not be in the hands of Italian investigators.
The incidence, when one looks through an historical episteme, should come as no surprise, as, for more than 40 years, the IOR (founded in 1942) has oft gotten caught up in scandal, such as bribery, money in political campaigns, mafia money-laundering and anonymous accounts. For nearly twenty centuries before that, the same was true.
Many persons stuck in the middle of illegal business dealing with the Vatican bank have been killed. Others have spent many years behind bars. Riding the coattails of history, the Vatican remains a cesspit of money-laundering. The bank’s modus operandi is to remain shrouded in mystery, keeping everything possible away from public light. At the bank, many times anonymity is guaranteed, and so capital gains go untaxed, financial statement undisclosed.
The bank is headquartered within a medieval defensive tower called Niccolo V. It sits abutting the Apostolic Palace, the pope’s official residence. On the record, 33,000 accounts totaling $7.6 billion reside at the bank. The direct beneficiary is the pope and the Church. Officially, reported earnings in 2010 for the bank were 55 million euro. These are merely estimates, as the Vatican has yet released its business practices of decades. “There is fear that, owing to the transparency necessary today, one will find something in the past that one doesn’t want to,” says Marco Politi, a Rome-based Vatican expert.
In other words, there is more going on at the bank beyond the already discovered array of ghost accounts and shell companies discovered as Archbishop Paul Casimir Marcinkus was its head in the 1980s. Back then the bank was involved in foreign currency and weapons with the Milanese banker Robert Calvi as well as mafia financier Michele Sidona. The bank helped to launder illegal profits the mafia made via drug-trafficking. Bribes were also paid to Christian-conservative Italian.
Calvi was found hanged beneath Blackfriars Bridge in London. His private secretary fell to her death from the window of his Banco Ambrosiano. In 1986, four years later, Sidona died in prison after a morning espresso came with cyanide. The bank continued its money-laundering activities. On a weekly basis, suitcases were brought to the Vatican filled with “donations” from Italian companies as cash and securities. The origin of the money would be hidden using accounts with numbers, like 001-3-14773-C, which was owned by the nonexistent “Cardinal Spellman Foundation.”
Three years ago, 4,000 documents came to light. They had been amassed and hidden by Vatican financial expert Renato Dardozzi before his death in 2003. In his will Dardozzi wrote: “These documents should be published so that everyone can learned what has happened here.”
In 2009, the year Gotti Tedeschi took over as president of the IOR, the bank opened up an account with the Milan-based branch of JPMorgan Chase. According to Spiegel:
From that point on, millions started flowing on an almost daily basis from JPMorgan’s Milan office to the one in Frankfurt, where the IOR also had a JPMorgan account. Vatican officials opted for a special account in Milan with the number 1365, a so-called “sweep facility account,” which was automatically zeroed out at the end of each day. The Vatican bank confirmed the existence of this account late last week, though it said it was primarily used for handling securities transactions.
This financial account allegedly processed more than a billion euros for the Vatican bank through last year. Italian investigators suspect the account was used to launder funds from “dubious sources.” According to the strict anti-money-laundering laws to which financial institutions are supposed to be held, JPMorgan should be considered a primary suspect in massive money-laundering operations in Europe, centered at the Vatican bank. Considering the blatant record amassed by the Vatican – it’s fraudulent and illegal dealings – JPMorgan worked as one of the pope’s banksters with complete disregard for moral hazard. It was not until JPMorgan was caught naked in bed with the pope, engaging in massive and illegal transfers, did the bank begin scrutinizing the Vatican’s financial dealings to which it was an accomplice. To this point, the mainstream media has focused on the shadyness of the Vatican – an age old story, literally – and not directly implicated JPMorgan in yet further financial crimes.
The transfers did not come with information regarding account holders or purposes for the transfers. Of that amount, 20 million pounds apparently was heading to the Vatican’s JPMorgan account in Frankfurt. The other 3 million euros were heading for an account at a different bank in Rome.
Federal prosecutors in Rome froze the funds. Investigations followed implicating Tedeschi, for one, in violating anti-money laundering regulations. Then, JPMorgan leaped into action late, and “started asking Vatican officials where the money that had been regularly flowing through the Milan account was actually coming from. But they didn’t get any satisfactory answers. As a result, the bank then gave the IOR an internal classification as a high-risk client and started monitoring its transactions for clues that might point to money-laundering.”
By the end of 2010, Pope Benedict issued a decree. The Vatican bank would now abide by EU anti-money-laundering policies. The Financial Information Authority came into existence through this decree. Italian officials released the 23 million euros in frozen IOR funds.
The tempest has not cleared, however. First, there are Strasbourg-based Council of Europe money-laundering experts. The Vatican had to let them investigate their operations. A slew of other agencies out of Europe have evaluated the bank. Further, federal prosecutors in Rome are continuing their investigations. In October of last year, they requested German assistance in obtaining information related to the IOR account at the JPMorgan branch in Frankfurt. A judge in Frankfurt, in November, struck down the request due to “lack of evidence.”
Early this year, JPMorgan closed the IORs transfer account in Milan. The bank wrote that anti-money-laundering regulations no longer make available “additional deposits or withdrawals via account No. 1365.” Cardinal Secretary of State Bertone rewrote Benedict’s decree, restating that monitoring of the Vatican bank is only permissible with the consent of Bertone himself. An undated and anonymous document, which, according to the Roman daily Il Fatto Quotidiano, comes from “the very top,” reads that there is a “concrete risk of a rating downgrade and, thereby, of a significant loss in the prestige of the Holy See.”
It is clear that JPMorgan is complicit in money-laundering in Europe with the Vatican, having abetted Vatican bank money-laundering and fraud by allowing IRS-defined suspicious transactions pass through their institution. The bank, knowing fullwell what it was dealing with, shucked its financial responsibility and put the Vatican’s critical transfers through, never questioning or putting the transactions through the basic financial scrutiny. The US Press has been silent, and the banks $9 billion loss has taken over the headlines – a rehash of an old story. In the meantime, JPMorgan has partaken in the illegal and unconscionable with some of civilization’s deepest-entrenched institutions, in this case the twenty century-old religious center of Catholicism.