God’s Bankers is a rare exposé by Gerald Posner and an astounding saga marked by poisoned business titans, murdered prosecutors, mysterious deaths of private investigators, and questionable suicides; a carnival of characters from Popes and cardinals, financiers and mobsters, kings and prime ministers; and a set of moral and political circumstances that clarify not only the church’s aims and ambitions, but reflect the larger dilemmas of the world’s more recent history. Part thriller, part financial tell-all, this book shows with extraordinary precision how the Vatican has evolved from a foundation of faith to a corporation of extreme wealth and power. Here are excerpts from the book:
The Vatican approached its obligations under the December 2009 Monetary Convention in its typical unhurried manner, in no rush to begin the hard work of qualifying for the white list. The IOR (Vatican Bank)had performed well for decades without outside interference. Few in the church believed that getting the OECD’s formal blessing would make much of a difference in its bottom line. Officials in Brussels, meanwhile, were not accustomed to the slow shuffle. The EU was focused on a promise they had secured during the negotiations: Pope Benedict was to issue a decree by which he acknowledged the church’s willingness to comply with Europe’s money laundering and antiterrorism laws. For several months, EU officials bristled as queries went unanswered or came back with unresponsive information. In the late spring, the IOR and OECD met twice. But according to Jeffrey Owens, the OECD’s director of the Center for Tax Policy and Administration, the discussions were so generic as to be nothing more than a primer about how the church might one day get on the white list. “They know what the standards are,” said Owens.
“Do they want to advance the dialogue with the aim of committing to thestandards?”
The EU believed that the Holy See had no incentive to live up to its Monetary Convention obligations, in part since its sweetheart relationship with Italy meant there was little strict enforcement of rules and regulations against IOR accounts held at Italian banks. So in the summer of 2010, Brussels nudged Italy’s central bank to tighten its controls when dealing with the Vatican Bank.
There was soon evidence that the pressure was working. On September 9, the Bank of Italy distributed an internal notice advising Italian banks to moreaggressively scrutinize their business with the IOR. The memo emphasized that the Vatican Bank was a non–European Union bank and that it was not on the OECD’s white list. Italy had recently ruled that the Vatican itself was a “non-equivalent extracommunitarian country.” That meant it was subject to tougher standards.It was the clearest sign to date that the incestuous relationship between the Vatican and Italy was ending. Still, the church did not pick up its pace in addressing its duties under its new Monetary Convention. Gotti Tedeschi and his crew did not seem particularly concerned.
They should have been. In mid-September 2010, Italian state television (RAI), citing unnamed “judicial sources,” reported that Gotti Tedeschi and the bank’sdirector general, Paolo Cipriani, were under investigation in a criminal investigation of possible violations of Italy’s beefed-up 2007 money laundering law. Some in the Vatican dismissed the report as baseless. On September 20 Italian prosecutors froze $30 million at an IOR account held at a Rome branch of Credito Artigiano S.p.A.
The IOR had wanted to transfer most of that money to J. P. Morgan’s Frankfurt branch, and the rest to the Rome-based Banca del Fucino.6 Credito Artigiano had followed the letter of the law by asking the IOR the identity of the account holder and the reasons for the transfer. The Vatican Bank ignored those requests. That had prompted Credito Artigiano to inform Italy’s central bank that there were “irregularities.”
The Bank of Italy’s financial intelligence unit in turn tipped off Rome’s prosecutors. The day after the $30 million was frozen, all Benedict’s public relations team could muster was to buy some time with a note published in its newspaper,L’Osservatore Romano: “The Holy See, therefore, is perplexed and astonished by the initiative of the Prosecutor of Rome, especially since the information necessary is already available from the relevant offices of the Bank of Italy. . . .” Gotti Tedeschi had been on the job only a year. “The Holy See expresses its maximum confidence in the president and director general of the IOR.”
Two days later, press spokesman Father Federico Lombardi released a longer statement to the Financial Times. Now he claimed it was all “a misunderstanding” and “could have been clarified with great simplicity.” Lombardi raised eyebrows in Brussels and Rome when he claimed, “The IOR is located within the territory of Vatican City State, beyond the jurisdiction and surveillance of various national banks.” That seemed a throwback to the defense the church employed to avert the service of arrest warrants on Archbishop Marcinkus. But everyone seemed to agree with Lombardi’s conclusion: “The IOR is not a bank in the normal definition of the term.”
Bank of Italy officials thought the expressions of surprise were feigned. Theirpervasive view was that the Vatican had deliberately failed to answer Credito Artigiano’s queries about the $30 million. Maybe, contended some, the IOR wanted to test what would trigger Italy’s enforcement mechanism. “A well-placed Italian official, who asks not to be named,” told the Financial Times, “Perhaps they want to go back to their past special status. But the world is more complicated these days. Perhaps it is just their culture of secrecy. Who knows?”
The following month Rome prosecutors widened their money laundering probe to include $1.3 million in withdrawals from IOR accounts at two of Italy’s largest banks, UniCredit and Intesa Sanpaolo.12 In a separate case, police arrested six people in Sicily on fraud and money laundering charges. One of them was an
Italian priest who helped his father launder $350,000 in European Union grant money for a nonexistent fish farm development through an IOR account. The Vatican Bank distributed the money to a mobster uncle of the cleric. It highlighted the fear in Brussels that the IOR accounts held in Italian banks were still easily disguised to hide the flow of illicit cash. “IOR cannot work like this anymore,” an unidentified Italian official told the Financial Times. “People have used the IOR as a screen.”
(This book is available at: https://www.amazon.in/Gods-Bankers-History-Money-Vatican/dp/1416576576)
