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Vatican cleric was 'front for bank transfers'

The headquarters of the Institute for Religious Works, the Vatican's bank, seen on February 18, 2012
The headquarters of the Institute for Religious Works, the Vatican's bank, seen on February 18, 2012. A senior cleric arrested last week is suspected of acting as a front for suspicious payments made through the Vatican bank from Monaco, according to Ital

A senior cleric arrested last week is suspected of acting as a front for suspicious payments made through the Vatican bank from Monaco, Italian newspapers reported on Wednesday, citing leaked documents.

Monsignor Nunzio Scarano "is a real screen in front of the actual economic beneficiary of the operation and he interrupts the traceability of the money," said one financial police document, quoted by the Corriere della Sera daily.

The investigators allege that Scarano had used Vatican bank accounts to make transfers on behalf of his friends, including an attempt to move 20 million euros ($26 million) on behalf of a Neapolitan shipowning family.

Scarano's lawyers have rejected the charges.

Scarano, who worked as an accountant for APSA, an agency that manages Vatican assets, is also heard in a series of wiretaps published by Il Messaggero.

In one call to a friend after he was asked by the Vatican bank to indicate the reason for taking out 15,000 euros in cash, he is heard saying: "I had to tell them it was for charity. Can you believe it? You have to tell them your personal shit!"

Nunzio Scarano (2nd left) was arrested in Rome, on June 28, 2013
A picture taken from a video released by the Guardia di Finanzia Italian police on June 28, 2013 shows Nunzio Scarano (2nd left) being escorted by policemen after his arrest in Rome.

In another, he reassures a friend about the beginning of a money laundering investigation against the Vatican bank, which is officially known as the Institute for Religious Works (IOR).

"They told (the investigators) I was a Vatican manager, that those were my personal funds that depend on my activities and they are also donations. That's it," he is reported saying.

He said IOR's management had told him: "They cannot ask us the balance of your account and it's obvious that we are never going to tell them the rest so as not to create any more trouble".

Scarano also allegedly asked the head of the Vatican gendarmerie police, Domenico Giani, to retrieve from an Italian secret service agent cheques totalling 600,000 euros.

The reports also said Italian police had found 13 more suspicious money transfers to US bank JP Morgan from the Vatican bank totalling more than 1.0 million euros ($1.3 million).

The operations were similar to a 23-million-euro transfer that triggered the investigation that is shaking up the bank.

Pope Francis, seen here celebrating a mass on June 29, 2013, has set up a commission to review the Vatican bank
Pope Francis celebrates mass at Saint Peter's basilica in the Vatican, on June 29, 2013.

The Corriere said the inquiry over that operation will likely wrap up within days and prosecutors are expected to file charges against the bank's then director general Paolo Cipriani and his deputy Massimo Tulli, who both resigned this week.

What has been hailed as a potential revolution by many religious watchers began with the appointment last month of cleric Battista Mario Salvatore Ricca to oversee the IOR's management -- effectively placing one of Francis's trusted allies in a key position.

Last week, the 76-year-old pontiff followed this by installing a special five-member commission tasked with investigating the bank and reporting their findings directly back to him personally.

The commission's first report is expected in October, and may spark wide reforms of the bank.

The IOR, which does not lend money, handles funds for all the Vatican departments, Catholic charities and congregations as well as priests and nuns living and working around the world.

It manages assets of around 7.0 billion euros ($9.3 billion).

Rene Bruelhart, the new director of the Vatican's Financial Intelligence Authority, said earlier this year that there had been six reports of suspicious financial activity in the Vatican in 2012, although he did not give any details.

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