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Vatican backs bankers in laundering probe

September 21, 2010

By Guy Dinmore in Rome, Published: September 21 2010

The Vatican is not known for its speed in responding to attacks on its credibility. But the Holy See has reacted almost instantly to defend its two most senior bankers after they were placed under investigation over suspected money laundering.

In a statement on Tuesday, the Vatican said it was “surprised” and “perplexed” after a Rome court app­roved the seizure of €23m ($30m) held by the institution in Credito Artigiano, an Italian bank. It insisted it was committed to “full transparency” in its operations and stood by Ettore Gotti Tedeschi, the head of the Institute for Religious Works, and Paolo Cipriani, its director-general.

It said it had been working with Italian and international authorities to comply with procedures to prevent funding of terrorism and money laundering and to be included on the Organisation for Economic Co-operation and Development’s “white list” of compliant jurisdictions.

The Vatican said the funds were to have been transferred to other banks for use by IOR and that the Bank of Italy, which raised the alarm over the transfers to unnamed beneficiaries, already had the necessary information.

Whether investigators will conclude that IOR was involved in any wrongdoing remains to be seen. But a veteran Vatican commentator who asked not to be named said the case reflected the enormous task facing Mr Gotti Tedeschi as he tries to put IOR in order and dispel suspicions – widely aired by authors and the media but denied by the Vatican – that it has been used as a conduit for illicit funding, including Mafia money.

Mr Gotti Tedeschi, 65, also a professor of ethics in finance at Milan’s leading Catholic university, was appointed to head IOR a year ago to bring transparency to the Holy See’s financial operations, in line with growing international efforts to counter money laundering and organised crime. He is reported to be close to the secretive and conservative Catholic association, Opus Dei.

He worked with Pope Benedict XVI on his encyclical attacking modern capitalism and advises Giulio Tremonti, Italy’s finance minister, who has sought to restore ethics to banking.

Soon after Lehman Brothers collapsed two years ago he wrote that the crisis was the indirect responsibility of the US administration’s economic policy, which tried to cover the lack of real economic development with a booming Wall Street.

“Banks were not really responsible for the crisis,” Mr Gotti Tedeschi said in an interview with La Stampa last year. “The banks were only a means, an instrument. This crisis instead is a moral crisis, a human crisis.”

A father of five, Mr Gotti Tedeschi has also expressed regret over Italy’s declining population and spoken of the need for healthy economies to be based on ­“balan­ced demographic growth”.

IOR, said by bankers to hold assets of some €5bn, is a non-profit organisation that manages funds for the Vatican and religious institutions. With its headquarters inside the Vatican, its ATMs allow customers to choose Latin for their transactions.

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