Vatican Bank accused of money laundering

POLITICS/RELIGION - The head of the Vatican Bank is being investigated for money laundering and police have frozen 23 million euros ($30.2 million USD) of the bank's funds.

Ettore Gotti Tedeschi, who has been head of the Vatican Bank (aka the Institute for Religious Works or IOR) for a year, and another executive from IOR are under investigation because of suspicious bank transactions.

One of the transactions was a transfer of 20 million euros to a German branch of a U.S. bank and another of 3 million euros to an Italian bank.

Gotti Tedeschi, a devout Catholic, is also a close adviser to Italian Treasury Minister Giulio Tremonti, heads the Italian unit of the Spanish Banco Santander, and serves on the board of several major Italian banks. If he is found guilty of money laundering it could hurt his business partners.

This is hardly the first scandal within the Vatican Bank.

In 1982 the Vatican Bank was involved in the fraudulent bankruptcy of Banco Ambrosiano, then Italy’s largest private bank. The Vatican Bank owned a stake in the bank. Banco Ambrosiano's president Roberto Calvi was found hanged under London’s Blackfriars Bridge in 1982 and allegations of conspiracy and murder have swirled ever since.

Investigators could not determine whether Calvi was murdered or committed suicide. The head of the Vatican Bank at the time was American Archbishop Paul Marcinkus, who later died in 2006.

The Vatican denied any responsibility for the falsified collapse of Banco Ambrosiano and denied all knowledge of where the missing funds went.