Vatican Bank Chief Ousted after Money-laundering Scandal

By Flavia Krause-Jackson
Bloomberg Business Week
May 24, 2012

Head of the Vatican bank Ettore Gotti Tedeschi. Photographer: Andrew Medichini/AP Photo

The Vatican bank, whose reputation took a blow last year over an investigation into money laundering, has fired Chairman Ettore Gotti Tedeschi after a tenure stained by a financial scandal.

In a vote of no-confidence, the board of directors unanimously agreed to remove Tedeschi, a Banco Santander SA (SAN) banker who took the job in 2009, from his post for failing “to carry out various duties of primary importance,” according to a statement yesterday by Vatican spokesman Federico Lombardi.

“I would rather say nothing otherwise I would only have ugly words to say,” Tedeschi told reporters in Rome, according to Italian news agency Ansa.

The bank, which is formally called the Institute for the Works of Religion, said it’s now hunting for a replacement who can “restore” relations with the financial community. Set up in 1942 by Pope Pius XII to manage the Vatican’s finances, the bank, known by its Italian initials as the IOR, reports directly to the pope.

After barely a year in office, Tedeschi, who also teaches ethics in finance at Milan’s Catholic University, was taken by surprise when Italian prosecutors in 2010 seized 23 million euros ($29 million) from a Rome bank account registered to the IOR amid suspicions of money-laundering violations.

He and Director General Paolo Cipriani were placed under investigation for allegedly omitting data in wire transfers from an Italian account. The publication this month of confidential leaked documents in a book titled “Your Holiness” by journalist Gianluigi Nuzzi also painted a poor picture of Tedeschi as the man in charge of the church’s money.

Calls for Transparency

The probe triggered calls to bring the city-state in line with European Union financial rules and become more transparent.

Tedeschi responded by saying the investigation was yet another example of the Catholic Church coming under “fierce attack.” At the time, Pope Benedict XVI was beset by allegations of sexual abuse of minors by priests.

The cardinals on the IOR’s governing council are to meet today to decide on the next steps, according to the Vatican statement.

The institute is no stranger to scandal. It was implicated in the fraudulent bankruptcy of Banco Ambrosiano in 1982. The bank’s former Chairman Roberto Calvi, dubbed “God’s banker,” was found hanged under London’s Blackfriars Bridge in June of that year. The Vatican paid $240 million to compensate Ambrosiano’s account holders without admitting any wrongdoing.

To contact the reporters on this story: Flavia Krause-Jackson in United Nations at

To contact the editor responsible for this story: John Walcott at








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