- Associated Press - Tuesday, September 21, 2010

VATICAN CITY (AP) — Just when the Catholic Church didn’t need another scandal, Italian authorities seized 23 million euros ($30.18 million) from a Vatican bank account and began investigating top officials of the bank in connection with a money-laundering probe.

The Vatican said Tuesday it was “perplexed and surprised” by the investigation.

Italian financial police seized the money as a precaution Tuesday, and prosecutors placed the Vatican bank’s director general and its chairman — a man who speaks frequently about morality in financing — under investigation for alleged mistakes linked to violations of Italy’s anti-laundering laws, news reports said.

The is probe not the first time the bank, formally known as the Institute for Religious Works, has faced trouble. In the 1980s, it was involved in a major scandal that resulted in a banker being found hanging from Blackfriars Bridge in London.

In a statement, the Vatican said it had been working for some time to make its finances more transparent to comply with anti-terrorism and anti-money-laundering regulations.

“The Holy See is perplexed and surprised by the initiatives of the Rome prosecutors, considering the data necessary is already available at the Bank of Italy,” it said in a statement.

It expressed full trust in the chairman of the bank, Ettore Gotti Tedeschi, and his director general.

News reports circulated more than a year ago that Italian investigators were scrutinizing millions of euros worth of Vatican bank transactions to see if they violated money-laundering regulations.

In Tuesday’s case, police seized the money from a Vatican bank account being held at the Rome branch of Credito Artigiano Spa, according to news agencies ANSA and Apcom. The bulk of the money, 20 million euros ($26.3 million), was destined for JP Morgan in Frankfurt, Germany, with the remainder going to Banca del Fucino.

According to the reports, the Vatican bank neglected to communicate to financial authorities where the money had come from. The reports stressed that Mr. Gotti Tedeschi wasn’t being investigated for laundering money himself but for a series of omissions in financial transactions.

Prosecutors declined requests seeking confirmation of the reports.

Mr. Gotti Tedeschi was named chairman of the bank a year ago after serving as the head of Italian operations for Spain’s Banco Santander. A member of the conservative religious movement Opus Dei, Mr. Gotti Tedeschi frequently speaks out on the need for more morality in financing and is a very public cheerleader of Pope Benedict XVI’s finance-minded encyclical, “Charity in Truth.”

In the book “Money and Heaven,” Mr. Gotti Tedeschi explored capitalism and Catholic values.

The Vatican bank was famously implicated in a scandal over the collapse of the Banco Ambrosiano in the 1980s. Roberto Calvi, the head of the Banco Ambrosiano, was found hanging from Blackfriars Bridge in London in 1982. The circumstances remain mysterious. Italian prosecutors maintain he was murdered, but there have been no convictions.

Last year, a U.S. appeals court dismissed a lawsuit against the Vatican bank filed by Holocaust survivors from Croatia, Ukraine and Yugoslavia who alleged it had accepted millions of dollars of their valuables stolen by Nazi sympathizers.

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