God’s Racket: Why It’s High Time to Shut Down the Vatican Bank
by Lynn Stuart Parramore
It’s a place where angels fear to tread; where criminals, frauds and mysterious corpses turn up as regularly as rats in the metro. The Institute for Works of Religion, commonly known as the Vatican bank, was set up in 1942 by Pope Pius XII to manage the vast Vatican finances. Often referred to as the world’s most secret bank, the operation is run by a CEO and overseen by five cardinals who report directly to the Pope.
The bank’s official role is to safeguard and administer property intended for works of religion or charity. The actual activities of the bank are somewhat different. They include money laundering for narcotics traffickers, bribery, skimming charitable funds to enrich priests, and tax evasion for wealthy Italians.
The scandals associated with the Vatican bank, particularly over the last four decades, are so sordid and improbable as to strain the creativity of a supermarket tabloid. The Church’s past offenses of selling indulgences and charging fees for sacraments have been updated for the world of modern finance, complete with shell companies, speculation and secret transfers. (For more on the antecedents of the current bank, see Betty Clermont’s handy synopsis  at Daily Kos.) Last year, Italian journalist Gianluigi Nuzzi published a book  delving into the intrigue and corruption swirling in a bank that has been answerable to no one. It was an eye-opener.
In May 2012, Pope Benedict XVI’s butler was arrested for leaking documents bristling with claims of financial corruption and criminal activity involving major Italian companies. The last Vatican bank chairman, Ettore Gotti Tedeschi, was shown the door when it was revealed that the bank was running afoul of international money-laundering standards. Leaked material and reporting reveals a bank that appears to be a kind of rogue offshore vehicle favored by various kinds of miscreants, including right-wing politicians, mafia types and tax evaders who wish to hide their financial transactions. Kind of like HSBC, only with God’s imprimatur.
Subsequent investigations have resulted in a shutdown of credit card transactions at all Vatican venues; right now, God can only take cash. In an attempt to restore relations with the international financial community, outgoing Pope Benedict appointed  a new director of the bank, German lawyer Ernst von Freyberg, as one of his final acts. So far that’s not looking so good, as Freyberg has been revealed to have unfortunate links  with a company with a history of making warships, including those produced for Nazi Germany.
Skeletons In the Vault
The same month the butler story broke, sinister echoes of earlier scandals emerged when the Catholic Church’s top exorcist (yes, you got that right) claimed  that a pile of bones buried in the tomb of a notorious gangster – and church doner -- belonged to a missing schoolgirl who was forced to perform for priests' sex parties. The gangster’s girlfriend at the time claimed that American monsignor Paul Marcinkus, the scandal-ridden chief of the Vatican bank from 1971 to 1989, was behind the abduction. Whether or not that’s true, the years of Marcinkus’ reign were certainly unusual.
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