A Vatican representative at the meal, annoyed by the requests for more information, shouted, “How can you ask us such questions?”
The clash came amid mounting pressure on the Vatican to clean up its bank — for decades the subject of dark intrigue and linked to one mysterious death — as part of a push by the European Union to apply common rules to all the countries and micro-states like Vatican City and Monaco that use the euro.
Those pressures continued until the very last days of Pope Benedict XVI’s papacy and remain a critical issue for the cardinals now meeting to elect a new pope. As the conclave begins Tuesday, the specter of financial scandal presents a special challenge for Benedict’s successor, who must modernize the Roman Catholic Church’s finances or risk the Vatican’s access to the global banking system, undermining its moral authority and its financial stability.
Ahead of the conclave, the cardinals were briefed on the Vatican’s finances and have been debating whether a member of the Vatican hierarchy or an outsider would be better at imposing order after a papacy bedeviled by crises of governance. The battle lines are hazy, but the fight over the Vatican’s finances pits different factions inside the Vatican against one another, some seeking greater transparency and others who want to preserve the institution’s tradition of secrecy.
Founded in 1942 and housed in a small round tower at the foot of the Apostolic Palace, the Vatican bank generally does not give loans but manages deposits and patrimony for religious institutions, clerics and diplomats accredited to the Vatican, who are among the only depositors allowed to hold accounts there.
During the cold war, the bank was widely seen as a back channel to transfer money to the Eastern Bloc to help end Communism, and today the Vatican uses the bank to help it operate in sensitive areas like Cuba and China, Vatican experts say.
But largely because of the Vatican’s reluctance to reveal its account holders to outside authorities — and especially to subject itself to scrutiny of past transactions — suspicion has swirled for years about whether some of its accounts had ties to organized crime or Italian political slush funds.
In 2011, the only time for which figures have been made available, it had 20,772 clients, 68 percent of them members of the clergy, and $8.2 billion in assets under its management. The bank has said it has around 33,000 accounts.
In recent years, Italian prosecutors have become more aggressive in investigating whether accounts held there by clerics might in fact be fronts for other interests. Last July, the Italian authorities arrested a priest on charges that he allowed a lawyer to use his Vatican bank account to commit insurance fraud.
Officials at the European Union in Brussels and agencies that monitor financial institutions say the Vatican has made significant strides in meeting norms against money-laundering, but that it still has some way to go.
Some in the Vatican are eager for change, but “you should not underestimate the resistance on issues of transparency” from tradition-bound forces, the European official said.
Under Benedict, the Vatican bank pledged to join the so-called white list of countries that meet international banking standards. In one of his final acts as pope, Benedict appointed a German aristocrat, Ernst von Freyberg, as the bank’s new president.
The appointment loosened the historic grip on Vatican finances by a small and tight-knit group of Italian insiders, some of whom had fiercely resisted efforts to come under outside scrutiny. They were protective of the bank as an essentially Italian institution, which critics said was perilously close to the country’s scandal-prone political and financial establishment.
Last May, the Vatican bank ousted its president, Ettore Gotti Tedeschi, a well-connected Italian banker, in a rare boardroom coup, accusing him in a public statement of incompetence. Mr. Gotti Tedeschi had come under intense scrutiny in 2010, when magistrates in Rome impounded $30 million from two external accounts used by the Vatican bank and placed him and the bank’s director general, Paolo Cipriani, under investigation on charges related to money laundering. Both denied the charges.
The money was later restored to the Vatican bank, known as the Institute for Works of Religion, after the Vatican created its own Financial Intelligence Authority with a papal edict issued by Benedict in December 2010 to meet European anti-money-laundering directives.
Rachel Donadio reported from Vatican City, and Andrew Higgins from Brussels.
Article source: http://www.nytimes.com/2013/03/10/world/europe/power-struggle-on-reforming-vatican-bank.html?partner=rss&emc=rss