Vatican bank director, deputy resign amid scandal

The director of the embattled Vatican bank and his deputy resigned today following the latest developments in a broadening finance scandal that has already landed one Vatican monsignor into prison and added urgency to Pope Francis' reform efforts.

The Vatican said in a statement that Paolo Cipriani and his deputy, Massimo Tulli, stepped down "in the best interest of the institute and the Holy See."

Cipriani, along with the bank's then-president, was placed under investigation by Rome prosecutors in 2010 for alleged violations of Italy's anti-money-laundering norms after financial police seized 23 million euro (USD 30 million) from a Vatican account at a Rome bank. Neither has been charged and the money was eventually ordered released.
 

But the bank, known as the Institute for Religious Works, has remained under the glare of prosecutors and now Francis amid fresh concerns it has been used as an offshore tax haven.

Last week, a Vatican accountant was arrested as part of Rome prosecutors' broadening investigation into the IOR.

Monsignor Nunzio Scarano is accused of corruption and slander in connection with a plot to smuggle 20 million euro (USD 26 million) into Italy from Switzerland without reporting it to customs officials.

Scarano, dubbed "Don 500" by the Italian media because of his purported favourite euro banknote, acknowledged under questioning today that his behaviour was wrong but that he was only trying to help out friends, attorney Silverio Sica told The Associated Press.

According to wiretapped phone conversations, Scarano was in touch regularly with both Cipriani and Tulli to get the required bank approval to move large amounts of cash into and out of his IOR accounts.

Scarano had two such accounts: a personal one and one called "Fondo Anziani" to receive charitable donations for projects to help the elderly, prosecutors say.

In addition to his Rome arrest, Scarano is also under investigation in the southern city of Salerno for alleged money-laundering stemming from a 560,000 euro cash withdrawal he made from his IOR charity account in 2009.

Sica, the attorney, has said Scarano arranged complicated transactions with dozens of other people and eventually used the money to pay off a mortgage.

The group of five cardinals overseeing the IOR accepted the resignations of Cipriani and Tulli and tapped the IOR's current president, German financier and aristocrat Ernst von Freyberg, to serve as interim director, a Vatican statement said.