2 Jul 2013

Vatican bank managers quit after arrest

8:27 am on 2 July 2013

Two top managers of the scandal-plagued Vatican bank resigned on Monday following the arrest of a high-ranking cleric with close ties to the financial institution.

Director Paolo Cipriani and deputy-director Massimo Tulli stepped down from the bank on Monday, three days after the arrest Monsignor Nunzio Scarano.

The 61-year-old is accused of plotting with two other people to smuggle €20 million into Italy from Switzerland.

Monsignor Scarano worked as a senior accountant in the Vatican's financial administration and was arrested along with an Italian secret service agent and a financial intermediary.

According to transcripts from a judge's report, Scarano, who is under two separate investigations by Italian magistrates in Rome and Milan, mentioned the director in phone conversations tapped by police investigators.

The judge's report, obtained by Reuters, says Scarano controlled vast amounts of money and felt he could act with impunity because of his connections to the Vatican bank.

Ernst von Freyberg, a German who earlier this year became president of the bank, officially known as the Institute for Works of Religion (IOR), will assume the role of bank director until a permanent replacement is appointed.

Only last Wednesday, two days before the arrests, Pope Francis set up a commission of inquiry into the Vatican bank, which has been hit by a number of scandals in the past decades.

The bank has also established a new position of chief risk officer who will be charged with improving compliance with financial regulations at a bank which has long been a byword for secrecy and lack of transparency.