Controversies
Historical allegations
When the Holy See, whose tax-exempt status on income from Italian investments was revoked in 1968, decided to diversify its holdings, it employed as financial adviser Michele Sindona. Once among the country's most powerful businessmen, subsequent investigations into his business affairs brought to light questionable associations with the Mafia as well as the secret P2, a Masonic lodge that the Italian Parliament classified as a subversive organization. The 1974 failure of Sindona's Franklin National Bank and the subsequent collapse of his financial empire, into which he had channeled part of the Holy See's investments, entailed losses for the Vatican estimated by one source at 35 billion Italian lire (£20 million).
In 1982, a political and financial scandal connected with the collapse of Banco Ambrosiano involved the head of IOR from 1971 to 1989, Archbishop Paul Marcinkus, who allegedly had given "letters of patronage" on behalf of the IOR in support of the failed bank. In 1987, an Italian court issued a warrant against Marcinkus, whom they accused of being an accessory to fraudulent bankruptcy. Marcinkus evaded arrest by staying inside Vatican City until the warrant was dismissed in 1991, whereupon he returned to his home country, the United States. Chairman of the Banco Ambrosiano and member of the illegal Masonic lodge P2, Roberto Calvi was convicted of violating Italian currency laws and fled on a false passport to London where he was found murdered under Blackfriars Bridge in London some days after he went missing from Milan. The Istituto per le Opere di Religione, then a 10% shareholder of Banco Ambrosiano, denied legal responsibility for the Banco Ambrosiano's downfall but acknowledged "moral involvement", and paid US$224 million to creditors.
Several works published during the 1980s and 1990s were highly critical of the Institute for the Works of Religion's historical relations with anti-communist governments.
In reference other alleged covert activities, Tony Abse, writing in The Weekly Worker, an organ of the Communist Party of Great Britain, has said that the CIA used the Institute for the Works of Religion to funnel funds to the Solidarity Polish trade union "as part of the final offensive against the Soviet Union". The organization American Atheists says covert United States funds were channelled in the same way both to Solidarity and to Contra guerrillas.
Alperin v. Vatican Bank was a class action suit by Holocaust survivors against the Institute for the Works of Religion filed in San Francisco, California on 15 November 1999. The case was dismissed as a political question by the District Court for the Northern District of California in 2003, but reinstated in part by the Ninth Circuit Court of Appeals in 2005. That ruling has attracted attention as a precedent at the intersection of the Alien Tort Claims Act (ATCA) and the Foreign Sovereign Immunities Act (FSIA). The complaint against the Vatican Bank was dismissed in 2007 on the basis of sovereign immunity.
Judicial events and reorganisation (2010–2018)
On 22 September 2010, Italian magistrates seized €23 million from the IOR, on the grounds that the anti-money laundering laws in force had been violated. The money was originally to be transferred from the Italian Credito Artigiano to JPMorgan Chase and another Italian bank, Banca del Fucino. Both the origin and destination of the funds were accounts under the control of the IOR. It was furthermore declared that Gotti Tedeschi and another IOR manager were under investigation for money laundering charges. On 31 May 2011, Rome's attorney general released the €23 million in assets which had been seized in September, apparently in acknowledgment of the steps taken in the following months to conform the Institute to international standards.
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On 24 May 2012, Ettore Gotti Tedeschi was ousted as Head of the Vatican Bank because of his alleged "failure to fulfill the primary functions of his office". In July 2013, the money laundering case against Gotti Tedeschi was dropped. In March 2014, he was again acquitted by the Roman court that followed the public prosecutor's position and relieved Gotti Tedeschi from any responsibility in that operation.
On 15 June 2013, with the approval of Pope Francis, the Cardinals' Commission appointed Monsignor Battista Mario Salvatore Ricca as the Institute's Prelate ad interim. There was also speculation that opponents of reform might have withheld information about possible scandals in Ricca's past or that they might have made up unfounded rumours about Ricca's past. It was reported that Ricca had offered his resignation because of the controversy, but the head of the Holy See's Press Office declared the accusations as "not credible" and Pope Francis himself informed journalists that an inquiry "found nothing".
On 28 June 2013, three persons were arrested by the Italian police on suspicion of corruption and fraud. Allegedly, they had planned to smuggle €20 million in cash from Switzerland into Italy. One of the arrested was Monsignore Nunzio Scarano, previously senior accountant at APSA, the Vatican's Administration of the Patrimony of the Apostolic See. Subsequently, he was indicted with corruption and slander and set under house arrest.
On 21 January 2014, he was further charged with money laundering through IOR accounts in yet another investigation. According to a police statement, millions of euros in "false donations" from offshore companies had moved through Scarano's accounts. Already in July 2013, the IOR had frozen the money in Scarano's accounts. As news agency Reuters reported, Elena Guarino, the Salerno magistrate who led the investigation, told reporters "the Vatican was fully cooperative and gave her much information on Scarano's bank movements.". In January 2016, Scarano was acquitted of allegations of corruption, but was given a two-year sentence after being convicted of lesser charges of making false allegations. His money laundering trial in his hometown of Salerno was still pending at this time. The other person arrested was a bank person and a former secret service agent.
In February 2017, a court in Rome convicted two former top Vatican Bank officials Paolo Cipriani and Massimo Tulliof for omissions in communications involving three small transfers. Cipriani was a former Vatican bank director and Tulliof was Cipriani's former deputy. They were, however, acquitted of a more serious money laundering charge, which involved $60 million in transfers, and were sentenced to four months and ten days in prison. They were also forced to return $6,000 each.
In 2018, Vatican prosecutors indicted former Vatican Bank President Angelo Caloia, and an attorney, Gabriele Liuzzo, for embezzling $62 million, using a real estate scam, between 2001 and 2006. Caloia and Liuzzo were convicted and sentenced to 8 years and 11 months in prison in 2021.
