13 Mar 2013

For any new Pope: the challenge of the Vatican Bank

Nothing so defines the mystery and suspicion that lies at the heart of the Catholic church than the Vatican Bank. For all its secrecy and lack of transparency, you might think St Peter had set it up himself.  In reality it was set up in 1942. Today it symbolises one of the core practical challenges for any incoming Pope.
Since the bank’s foundation, it has seen suicide, unexplained death, allegations of money laundering for the Mafia, and seen priests and several of its own directors investigated by US and Italian fraud and organised crime police.

When I was based here in the late 1970s, an American archbishop led the Vatican Bank, Paul Marcinkus. I met him several times. He exuded an eery air of arrogance and self satisfaction.

As far back as 1973, Marcinkus was questioned by a US federal prosecutor – William Aronwald, and the head of the US organised crime and racketeering section of the US Department of Justice. As head of the Vatican Bank, the US authorities wanted to know what Marcinkus knew about fake bonds totalling $14.5m, which had been delivered to the Vatican Bank in 1971. They had uncovered a  demand on Vatican headed notepaper for $990m of the stuff.

A freelance journalist, Mino Pecorelli, whom I had met and talked to about the bank, and who had been investigating Marcinkus himself, was found dead in mysterious circumstances in 1979.

It was at this point that the US authorities gave up on the bank, having failed to penetrate its extreme secrecy. But then in 1982, the body of Roberto Calvi, head of the collapsed Banco Ambrosiano, was found hanging from London’s Blackfriars Bridge. Once again the Vatican Bank and Marcinkus were in the frame. It transpired that surprisingly this grand cleric had been an overseas director of the bank located in an office in the Bahamas. Italian police tracked activity involving Banco Ambrosiano to both the Mafia and a masonic lodge in Italy. The Vatican Bank denied any involvement but still paid out $25om to Banco Ambrosiano’s creditors.

Marsinkus died seven years ago, his secrets went to the grave with him.

Ironically, it was the birth of the euro, and Italy’s decision to join in 1999, that forced the Vatican Bank’s hand. They had to join too. Assorted EU officials have described the intense difficulty in persuading the bank to comply with EU anti-money laundering regulations.

The truth is that during the Cold War the Vatican Bank had proved a convenient conduit for laundering money to anti-communist movements beyond the Iron Curtain. There was a culture of international permissiveness where the bank was concerned.

It was only in 2009 that the Vatican Bank finally signed up to the jurisdiction of the European Court of Justice for the settling of disputes involving their compliance with EU rules. The bank’s director told reporters that it did so in order to be able to continue issuing euros emblazoned with the image of the Pope.

But the trouble with the bank continued. The Bank of Italy this year put a block on Deutsche Bank Italy from managing any financial activities on behalf of the Vatican Bank. This was because the Vatican had failed to meet another deadline for signing further compliance agreements with Brussels.

Interestingly, one of Pope Benedict’s last acts was to remove the bank’s Italian director and replace him with an outsider – a German aristocrat. The previous incumbent had come under huge pressure after a case with the Italian authorities in which 20m euros had been impounded by magistrates concerned with its origins. The cash has now been released.

But talk to anyone in this town, and no-one is convinced that a bank, designed to hold the donations and gifts of the faithful, is yet complying with the highest spiritual and temporal aspirations of Catholic worshippers.

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9 reader comments

  1. Anne Jane Morgan says:

    Want to donate money to the Vatican Bank

  2. chris gibbs says:

    Dear John, I was surprised and annoyed that firstly, C4 News should send you, senior presenter, to Rome for the Papal Conclave. I don’t know if you are a Roman Catholic but your presence has made it a little more important than it really is. The pope is no longer a major world figure no matter how you might argue for it. His faith is responsible for so much heartache over the centuries but over recent years Catholisicism is a clearly guilty of unacceptable practises.
    Worst of all was your celebration, worthy of a Lionel Messi goal, while waiting for the first sight of the new pontiff. Watch and listen to yourself.
    If you wish to retain enough credibility to front a major news programme then may I suggest you create space between yourself and your subject;

  3. Robert Sully says:

    Yes Jon you are absolutely right, the Vatican Bank continues to live by its own infallible set of rules. Fortunately even the elaborate smokescreen of constant sex scandals has not discouraged dogged journalists from resurrecting the true facts.

  4. Andrew Dundas says:

    What a pity Paul Krugman’s contribution to current economic analysis was cut short. Ask him back!

    Ask Pope Francis 1 too. I suspect he’s seen the very evil effects of national economic mis-management. Argentina = land of silver! More like the land of chronic inequality and misery.

    PK may have something helpful to say about Argentina too.

  5. Alex Watson says:

    Dear Jon,

    A pity you could not made more of this in tonight’s report, giving some meaningful context instead of a lot of unscripted gushing about the entirely predictable theatricals in the Vatican. A 5 minute throw to your correspondant Gary Gibbon in St. Peter’s Square at 7.30 could have provided all the little information we ended up with, and left some time for real news. Who cares who the Pope is? The office defines the person – it will always be an old man who doesn’t do male clothing, women priests, gay marriage, contraception or abortion, and claims God speaks through him – that’s the job. Which schmuck is currently wearing the frock has no news value. Shame on you for uncritical PR for one of the richest and most corrupt organizations on Earth.

  6. Moonbeach says:

    I am neither a Roman Catholic nor very religious but I thought that your performance from Rome last night was not your finest hour.

  7. Graham Davis says:

    I am normally a great fan of Jon Snow and C4 news but his grovelling sycophancy during the program that featured the naming of the new Pope was most irritating. Rather than retaining a professional distance he seemed swept away by the occasion. The idea that any institution can claim moral authority is of course absurd and that the Catholic Church should still claim it is nothing short of disgraceful. But he offered no critique, no scepticism, surely this was the time to at least challenge the fact that as 90% of Catholics in the developed world reject it’s teaching on contraception, the church must change or die. The scandals in which the Catholic Church is embroiled prove only one thing and that is that it only cares about its so called “reputation”, the children whose lives have been ruined are collateral damage.

    Just because it is their “big day” is all the more reason to question the entire edifice that is the Catholic Church and not to succumb to the hysteria. Next time you let JS out of the studio please remind him that he is still a journalist.

  8. Graham Davis says:

    @Chris Gibbs


    We have been independently thinking along the same lines.

    I am afraid much of the media is still in thrall to religion, even old atheist Humphrys on Today introduces Thought for the Day in hushed, reverential tones.

  9. Alex Watson says:

    My apologies to Jonathan Rugman for confusing him with Gary Gibbon, and vice versa.

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