Banking scandal has embarrassed Vatican

Press, 13 December 1982, Page 40

Banking scandal has embarrassed Vatican

By

JOHN EARLE

of “The Times." through NZPA • Rome Does the Vatican need a bank? The question has arisen as a result of the discredit thrown on the Roman Catholic Church by the tangle in international financial scandals of the Istituto per le Opere di Religione (1.0. R. under Archbishop Paul Marcinkus. its controversial American chairman. No other Church or religion has its own banking structure. Why. the argument runs, should not the Vatican also rely on the international amenities offered by leading commercial banks? Had it done so, the Vatican would perhaps have avoided the embarrassment of a claim by the Italian Government for the reimbursement of $1287 million allegedly due as a result of transactions with the late Signor Roberto Calvi’s Banco Ambrosiano group. The 1.0. R. has been linked with other banking scandals since Archbishop Marcinkus became chairman in 1971. It had business links with Signor Michele Sindona. the Sicilian financier now serving a 25-year sentence for fraud in New York. In 1974. undisclosed sums were lost in speculations at the 1.0.R.'s 51 per cent con- , trolled Banco di Roma per la Svizzera, which was revealed when the body of a Lugano executive was found dead on a Swiss railway. The small. Left-wing radical political parties are among the most hostile towards the 1.0. R. In a motion tabled in the Italian chamber last month, the radical deputies called for an end to the 1.0.R.'s banking activities which, they said, gave a loophole for transferring Italian capital abroad. If the Vatican refused, they suggested that Italy -should set up frontier controls along its border with the Vatican state. A call for the 1.0. R. to be declared bankrupt has been made by Signor Avvocato

Guiseppe Melzi. a Milan lawyer, who claims the backing of about 250 small shareholders in the now insolvent Banko Ambrosiano. He asked the Milan public prosecutor last month, to start bankruptcy proceedings against the 1.0. R.. the Ambrosiano’s affiliates abroad, and the Panamanian Shell companies through which many of the mysterious transactions passed. He ended his application by quoting St John's account of Christ throwing the moneylenders out of the temple. Italian opinion does not object, however, to the existence of a Vatican bank. The Vatican, after all, is a sovereign State, into whose affairs Italy has no right to interfere. A problem arose over the relationship between the 1.0. R. and the Italian monetary authorities. The Vatican does not have its own currency, but uses lire. No customs or other physical barriers exist. The Italian authorities have never made clear whether an Italian resident may open with the 1.0. R. an account in

lire, which is freed from Italy's strict currency controls. No one knows how much money well-to-do Italian Catholics have syphoned out abroad. San Marino is another sovereign state which, in the absence of its own currency, uses lire. In San Marino the situation is regulated satisfactorily by an inter-governmental agreement which stipulates that, for foreign business, San Marino banks work through Italian banks. The Vatican’s needs involving moving money round the world are on a different scale to those of San Marino, and a similar arrangement x would be impracticable. Now, in the wake of the Calvi and Sindona scandals, the Italian authorities are pressing for the relationship with the 1.0. R. to be put on a new basis. Senator Nino Andreatta. the outgoing Treasury Minister and a Catholic, has suggested in the Italian Parlia- . ment that the 1.0. R. should establish an Italian branch. This would require an agreement between the Italian , Government and the Vatican. The branch would be outside Vatican territory, presumably in Rome, and would operate like the Italian branch of any foreign bank, from Britain, the United States and Japan. It would be subject to Italian exchange regulations and to Bank of Italy supervision. Meanwhile, the parent 1.0. R. would continue to operate on an international scale from the Vatican, outside the concern of the Italian authorities. Such an arrangement would be supported by most political parties. For the opposition. Professor Gianni Manghetti. the Communist Party’s banking expert, said that he found the proposal interesting. Negotiations, he said, should start soon on establishing a new relationship, without waiting for the outcome of the Ambrosiano affair. It is assumed in Rome.

that the Vatican intends to reform the 1.0. R., in the light of a report on the bank compiled for Cardinal Agostino Casarol, the secretary of state, by an inquiry commission of three lay Catholic financiers, from Switzerland, the United States and Italy. The 1.0. R. was set up as a bank by Pope Pius XII in June. 1942. Its results are not published. The Milan financial newspaper “Il Sole-24 Ore." mouthpiece of Italian industrialists. published recently extracts from the original, confidential statute which, it said. Pope Pius XII gave the 1.0. R.. but which was later put on one side. The 22-article statute set out the 1.0.R.'s purpose as “the custody and administration of capital, deposited in stocks or also cash, and destined for works of religion and Christian piety.” How, it might be asked, could one harmonise with such a purpose the capital transfers made on behalf of third parties in the Ambrosiano affair, the issue of letters of comfort to Signor Calvi. and the presence of Archbishop Marcinkus on the board of the Ambrosiano's offshore subsidiary -in Nassau. Bahamas? If Pope Pius's statute had not been left buried under decades of dust, much of the 1.0.R.’s troubles would probably have been avoided.