'It's like the end of the Berlin Wall," said a
high-ranking Vatican official last week after an invisible financial
barrier marking the legal separation between the Vatican and Italy was
breached for the first time.
According to officials at the Bank of Italy, the Institute for
Works of Religion – the Vatican's own offshore bank – has for years been
allowing organised criminals, even terrorists, to launder money with
impunity.
On Friday, Italian tax police arrested a high-ranking Italian prelate, Monsignor Nunzio Scarano, who until last month was working as a senior accountant inside the Vatican's financial administration.
They also arrested a financial intermediary and an agent from Italy's secret services on charges of conspiring with Mgr Scarano to commit crimes of embezzlement and money laundering.
Msgr Scarano is alleged to have masterminded a plot that sounds like an airport novel. He attempted to bring €20m in cash belonging to a wealthy family of shipowners from a Swiss bank to Rome in a private plane, thereby evading customs and tax controls.
Italian prosecutors have had their eye on the Vatican bank for several years but have had great difficulty in obtaining any information from the Holy See, which has pleaded diplomatic immunity and exemption from normal international banking rules on the grounds that the Institute for Works of Religion "is not a bank in the normal sense of the word".
After the arrest of Msgr Scarano, however, the Vatican spokesman, Father Federico Lombardi, promised "full collaboration" with Italian justice authorities.
Under previous popes, the Vatican has taken refuge behind the Lateran Pacts signed with Italy in 1929 that provide for the complete independence of the Vatican City State and of the institutions of the Holy See under international law.
The American prelate Msgr Paul Marcinkus was in charge of the Vatican bank in the 80s during the time of its association with dodgy Italian financiers such as Roberto Calvi, the chairman of Banco Ambrosiano, who was found hanging from Blackfriars Bridge in London in 1982.
It is believed that he was a victim of a Mafia hitman taking revenge for funds lost through the bank's collapse. The Vatican was the bank's main shareholder, and Calvi was dubbed 'God's banker' due to his close ties with the Holy See.
Msgr
Marcinkus evaded the serving of court documents by Italian justice
authorities by taking refuge inside Vatican City and claiming diplomatic
immunity.
Msgr Scarano, who comes from Salerno, south of
Naples, had a late vocation to the priesthood. He was employed by a big
Italian commercial bank before taking Holy Orders, and was nicknamed
'Monsignor 500' inside the Vatican thanks to his habit of flashing his
wallet to show colleagues that he only carried €500 banknotes.
Even
before Msgr Scarano's arrest, Pope Francis revealed that he was
determined to clean up the Vatican Bank and its highly secretive
operations, which in recent decades had been engulfed in scandal.
Only
two days prior to the monsignor being hand-cuffed and taken away, the
Pope announced the creation of an internal commission of inquiry into
the running of the bank, set up in 1943 to hold the funds of cardinals,
bishops, priests, Catholic charities and religious orders from around
the world.
The five-member commission includes a Harvard
law professor and only one Italian – Cardinal Renato Farina, the former
head of the Vatican Library and Secret Archive.
Pope Francis has given
the commission powers to question anyone working inside the Vatican and
ordered it to report back to him personally and "promptly".
The
new Pope has already revealed himself as a person who can make quick
decisions if necessary and is not easily impressed by the pomp and
circumstance of time-honoured Vatican ceremony and protocol.
He finds
the court-like Vatican administration suffocating and failed to turn up
to a symphony concert organised in his honour earlier in the month
because he had more urgent business.
"I'm not a Renaissance prince," he
is reported to have said, somewhat snottily.
In 2010,
former Pope Benedict set up a Financial Information Authority to monitor
all the Vatican's international transactions and to ensure that
international rules relating to money laundering and the financing of
terrorism were being respected.
But inspectors from
Moneyval, a Council of Europe banking watchdog authority based in
France, went through the bank's books last year and reported that it
sometimes failed to ensure "due diligence" in monitoring suspect
transactions.
Another serious problem facing Pope Francis
is what he referred to during a recent meeting with clerics from Latin
America as the Vatican's 'gay lobby'.
"It's true, it's there," he is
reported to have said. "We need to see what we can do."
He
has his work cut out. Last week, Patrizio Poggio, a former Catholic
priest, claimed that he had evidence of misconduct by a group of Roman
priests with young Romanian male prostitutes, informing the police that
he had "grave information harming the integrity of the church" and
giving them a list of alleged clients – all Roman clerics.
Poggio
claimed they had used the services of the prostitutes, who frequented a
club near Rome's main railway terminal. He alleges that a former
policeman took the male escorts in a van marked "Medical emergency –
blood transport" to an abandoned chapel in the suburbs, where they met
with the clerics.
The priest, who served five years in
jail for sexual crimes committed 15 years ago, was arrested on Friday on
charges of criminal defamation.
But the presence within the Vatican
hierarchy of gay prelates is an open secret in Rome.
Pope
Francis is quoted as saying: "In the Curia, there are also holy people,
really, there are holy people. But there is also a stream of
corruption, there is that as well, it is true."
The new
more frugal Vatican of Pope Francis will shortly begin to take shape –
and he doubtless hopes that the whiff of financial and sexual scandal
that has besmirched the Vatican in recent years will begin to blow away.