Vatican official arrested in money-flight probe

Spy and broker also in custody, IOR woes continue

Vatican official arrested in money-flight probe

(By Denis Greenan). Rome, June 28 - Italian police on Friday arrested a prelate in charge of Vatican accounts, a member of Italy's domestic intelligence service and a financial broker in a probe into a failed attempt to fly 20 million euros of alleged tax-evasion proceeds from Switzerland back to Italy. Msgr Nunzio Scarano was until recently head of analytic accounts at the Holy See's asset-management agency APSA. He was arrested "on suspicion of corruption and fraud" in currency dealings along with Giovanni Maria Zito, an agent in the AISI intelligence agency, and Rome broker Giovanni Carenzio. Police said Scarano and Zito got a private jet to fly the cash for three Salerno-based shipowner brothers who were friends with Scarano. Zito is suspected of getting 400,000 euros for arranging cover for the flight. Scarano was suspended a month ago after being named in a separate probe into receiving money in Salerno. Police said brothers Paolo, Cesare and Maurizio D'Amico, whose fleet is based in Salerno but who are prominent in Rome business circles, were the alleged beneficiaries of what they called "a complex and expensive operation to evade airport customs controls and bring back into Italy money that is believed to be the fruit of tax evasion". Scarano was in custody in Rome's Regina Coeli prison while Zito is being held in a military prison at Santa Maria Capua Vetere near Naples and broker Giovanni Carenzio in Naples' Poggioreale jail. Prosecutors said they were probing Scarano's "huge" financial and property assets. "The office has started a series of checks to clear up the origin of the huge financial and property holdings of Msgr Nunzio Scarano," the prosecutors' office said. The Vatican itself said it would cooperate "fully" with the probe, Spokesman Father Federico Lombardi told reporters. Lombardi stressed that Scarano had been suspended after the initial probe was opened "more than a month ago". The Holy See has yet to receive a formal request from relevant Italian authorities, Lombardi added. Police said the probe into Scarano's attempt to circumvent laws on importing foreign currency was part of a wider investigation into suspected irregularities at the Vatican Bank, the Istituto per le Opere Religiose (Institute for Religious Works, IOR). That probe concerns alleged shady transactions at IOR, in which former president Ettore Gotti Tedeschi and his former No.2 were placed under investigation. IOR, to which APSA is indirectly linked, told ANSA Friday it aimed to "cooperate fully with Italian authorities" and launch an internal inquiry "in line with the zero-tolerance policy promoted by (new) president Ernst von Freyberg". German aristocrat and industrialist von Freyberg, appointed in February by Pope Benedict XVI in one of his last official acts as pontiff, last month vowed to bring greater transparency to an "august" institution which has been touched by "unwarranted" money-laundering accusations. Von Freyberg said the bank planned to open up and be more transparent through the publication of its profit and loss accounts online by the year's end and by running checks on its 19,000 account holders. In addition, the bank will start to have a different "communication policy", and plans to give interviews with "qualified representatives of the international press", von Freyberg said. The Vatican Bank has made a series of moves to show greater transparency since Argentinian Jesuit bishop Jorge Mario Bergoglio became Pope Francis in March, succeeding Benedict XVI, the first pontiff to voluntarily abdicate in 700 years. As a new broom with a reputation for plain-talking rigour and a lily-white image after being cleared of links with the infamous 1970-'80s 'Dirty War' junta in his country, Francis is reportedly keen to remove stains from IOR's reputation and get it onto the 'white list' of countries with unimpeachable anti-money-laundering credentials. The new pope has vowed to take on power elites in the Curia, or central governance, of the Catholic Church, and recently admitted he would even have to tackle a gay lobby. Two days ago Francis set up a pontifical commission on IOR, to brief the pontiff on the bank's activities and make sure it operated in harmony with the "Church's mission". After coming into the prosecutors' cross-hairs, IOR has started working with the Council of Europe's Moneyval anti-money-laundering agency in a bid to make it onto the white list. In a report last July, Moneyval said that the Holy See had made progress on financial transparency, but added that more reforms were needed. The Italian press has increasingly speculated on the fate of the scandal-plagued bank, wondering whether the pontiff might reorganize or shut it down. The new IOR panel will be chaired by Cardinal Raffaele Farina, and it will include another three prelates and Harvard Law Professor Mary Ann Glendon, a former United States Ambassador to the Holy See. Last month the Vatican's financial watchdog published its first annual report on the Holy See's efforts to combat money laundering and funding terrorism. In it, the Financial Information Authority (AIF) said it had uncovered six cases of suspect transactions in 2012, a notable increase since 2011 when only one such case was flagged. Two of those cases were sent on to Vatican prosecutors for a probe. AIF Director Rene' Bruelhart did not go into the specifics of the transactions, specifying only that "they were not tied to financing terrorism". Established by Benedict XVI in 2010, the AIF is charged with monitoring the commercial and monetary activities of Vatican agencies like the Vatican Bank. Over the years the Vatican Bank has acquired a murky image on transparency. There have been allegations that IOR was used to launder money most notably by 'God's Banker' Roberto Calvi, the former head of Italy's biggest private bank, whose body was found hanging under Blackfriar's Bridge in London in 1982, a suspected victim of the Sicilian mafia. IOR was also named in kickbacks probes stemming from the 1990 collapse of public-private chemicals colossus Enimont, part of the Clean Hands investigations that swept away Italy's old political establishment. More recently, there has been a series of Italian TV reports and a best-selling book claiming to show how individuals have used IOR to squirrel away money, dodging Italian regulations. A Vatican report to Moneyval is due in December on the basis of a questionnaire the Holy See will receive in September.

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