Pope Francis addresses an audience of ambassadors at the Vatican. The new… (Tony Gentile, Pool Photo )
VATICAN CITY — As he begins work, Pope Francis will find a pile of files in his in-tray on sex abuse and squabbling cardinals. But he will also come across a thick dossier on the Vatican's secretive bank, which his predecessor, Pope Benedict XVI, tried to drag into the daylight after years of suspicion that it was a haven for money launderers.
After struggling to get the Vatican onto a coveted European "white list" for clean banks, Benedict suffered a setback last year when his top manager, Ettore Gotti Tedeschi, was fired by the bank's board, officially for incompetence. Gotti Tedeschi saw things differently, contending that "an honest person [at the bank] who wants to do good is ousted!"
Then, in January, the Vatican was humbled into using a Swiss firm to process credit card payments after the Bank of Italy warned Italian banks not to do business with the Holy See, temporarily forcing visitors queuing at the Sistine Chapel to pay cash if they wanted to get in.
It was the latest in a series of mishaps at the institution that prompted Italy's biggest-selling Catholic magazine, Famiglia Cristiana, to urge the Vatican to dump the bank altogether.
The Institute of Religious Works "is not essential to the ministry of the pope, who is the successor to St. Peter," said Cardinal John Onaiyekan of Nigeria, adding, "I don't know if St. Peter had a bank."
"Cardinals have been talking about how to bring the bank out from under its rock," said Father Thomas Reese, a Jesuit priest and Vatican expert, "and some are saying, 'Do we need a bank?'"
John Thavis, a Vatican watcher and author, said Pope Francis' focus on helping the poor when he was Cardinal Jorge Mario Bergoglio of Argentina would make him an outspoken opponent of Vatican corruption and the right man to look into the inner workings of the bank, known as the IOR.
"He lived in an apartment, rode the bus, cooked his own meals — I think he will bring a simplicity to the Vatican, which has acted like a royal court," Thavis said.
In fact, during a conference with assembled reporters after his election, Francis said with a sigh: "Oh, how I would like a church which is poor, and for the poor!"
Set up in 1942, the bank has 33,000 accounts and $7 billion in assets, all run from a former Vatican prison building. It is intended to serve priests, dioceses and religious orders, but its high volume of cash transactions, global activity and limited information about account holders have set off several alarm bells.
And the IOR's record is far from glowing.
A former bank governor, U.S. Archbishop Paul Marcinkus, was indicted in 1982 when the bank was implicated in the collapse of Italy's Banco Ambrosiano, in which the IOR held a stake. Roberto Calvi, then the chairman of Banco Ambrosiano, was found hanged to death under London's Blackfriars Bridge. Investigators alleged the death was a homicide and linked the case to purported money laundering by the Mafia.
Three decades later, in 2010, prosecutors again alleging money laundering seized $30 million from two accounts at other banks used by the IOR, after claiming official inquiries had been met with "deafening silence." The cash was handed back when the Vatican set up an internal watchdog to keep an eye on the IOR, part of a papal edict issued by Benedict in December 2010 to move the bank toward meeting European transparency rules.
Next, in a sign the pope was serious about cleaning house, the Vatican asked in February 2011 for an evaluation by Moneyval, a Council of Europe money-laundering monitor.
Moneyval's report in 2012 deemed the IOR compliant on nine of the 16 key grades, putting the Vatican on par with Germany and Italy. But even though it was seen as heading in the right direction to get on the "White List" — which would mean no "empirical evidence of corruption" was found — Moneyval complained that the Vatican's new internal watchdog over the IOR still had little power to lift the lid on the names of account holders.
The identities of those account holders have long been a hot topic in Italy, with the Vatican denying that it has allowed nonreligious account holders to take advantage of its banking secrecy.
"I believe they have now stopped taking nonreligious accounts, but I understand people who had them were allowed to keep them," said Thavis. He added it was sometimes hard to define exactly who is a "religious" customer, likening it to the Vatican's supermarket, which is officially reserved for employees and priests but commonly used by Romans who have borrowed a Vatican pass from a friendly priest.
In much the same way, priests have been regularly accused of allowing their IOR accounts to be used by money launderers.
In 2011, magistrates investigating a group of construction entrepreneurs suspected of paying off senior civil servants for contracts stumbled across a Rome priest who they alleged was parking large sums of cash in an IOR account on behalf of one of the contractors.