The Vatican has launched a rare criminal investigation to uncover who is behind leaks of highly sensitive documents that allege corruption and financial mismanagement in Vatican City.
The documents also shed light on purported infighting over the Vatican Bank's compliance with international money-laundering regulations.
Archbishop Carlo Maria Vigano, 70, is the new papal nuncio, or ambassador, to the United States. He complained of corruption in the Vatican before he was assigned to his new post.
A television show in late January on an independent network first revealed letters addressed last year to Pope Benedict XVI from the then-deputy governor of Vatican City, Archbishop Carlo Maria Vigano.
Vigano complained of corruption within the church and protested orders to remove him from his post and send him to be the papal nuncio, or ambassador, to Washington.
Under Vigano's watch, the Holy See balance sheet went from $10 million in the red to almost $45 million in the black in just 12 months.
By being kicked upstairs, Vigano wrote, his efforts to clean up the Vatican would be stopped and would also tarnish the pontiff's image by bringing into question his resolve to establish transparency inside the Vatican.
The TV program later broadcast an interview with a man it said was a Vatican insider who had leaked some of the documents.
The man, whose face and voice were disguised, said he was motivated by anger "because there is a complicity of silence in the Vatican to prevent the truth from coming out."
A second round of leaked documents focused on financial mismanagement.
A Previous Banking Scandal
The Vatican Bank was enmeshed in scandals 30 years ago involving allegations of money-
laundering and mafia connections.
Today, it wants to join the list of countries that share financial information. That would help rid the Holy See of its reputation for shady transactions and as a tax haven.
The U.S. State Department has put the Vatican on a list of countries of concern for money laundering or other financial crimes.
Robert Mickens, correspondent for the Catholic weekly The Tablet, says the Vatican Bank is run with great secrecy.
"You know, like a Swiss bank account, hiding funds," Mickens says. "It's suspicion, but many of the regulators think it is well-founded suspicion."
Italian authorities are investigating the origin of $33 million in Vatican funds deposited in Italian banks.
The Italian media have reported that JP Morgan Chase is closing the Vatican Bank's account with its Milan branch because it felt the Holy See had failed to provide sufficient data on money transfers.
Updating Vatican Laws
Last year, under orders from the pope, the Vatican passed internal legislation to bring it in line with international standards to prevent money laundering.
But one of the leaked documents claims the Vatican Bank is sidestepping full compliance with international regulations concerning past transactions.
The Vatican has never denied the authenticity of the various leaked documents.
But Vatican spokesman Father Federico Lombardi reacted angrily on Vatican Radio.
"The U.S. government had Wikileaks, the Vatican now has its leaks," Lombardi said. "They create confusion and bewilderment, showing the Vatican and the Catholic Church in a bad light. Reporters should use reason — something not everyone in the media tends to do."
Veteran Vatican analyst Marco Politi says, "These Vatileaks are the sign of a deep crisis within the government of the pope."
He says the leaks do not reflect a dispute between liberals and conservatives within the Church, but rather a deep malaise over Benedict's governance.
"He has not the sense of the government, of the leadership, he has no geopolitical vision, there have been so many crises in his papacy like it never happened in the last 100 years of other popes," Politi says.
The Vatican has opened three separate investigations into the leaks, including a criminal probe.
But it's unclear what punishment those responsible would face.
And a public trial could pose a severe challenge for a 2,000-year-old institution accustomed to secrecy.