Dec 12, 12:25 AM EST
Vatican Bank mired in laundering scandal
By VICTOR L. SIMPSON and NICOLE WINFIELD
VATICAN CITY (AP) -- This is no ordinary bank: The ATMs are in Latin. Priests use a private entrance. A life-size portrait of Pope Benedict XVI hangs on the wall.
Nevertheless, the Institute for Religious Works is a bank, and it's under harsh new scrutiny in a case involving money-laundering allegations that led police to seize euro23 million ($30 million) in Vatican assets in September. Critics say the case shows that the "Vatican Bank" has never shed its penchant for secrecy and scandal.
The Vatican calls the seizure of assets a "misunderstanding" and expresses optimism it will be quickly cleared up. But court documents show that prosecutors say the Vatican Bank deliberately flouted anti-laundering laws "with the aim of hiding the ownership, destination and origin of the capital." The documents also reveal investigators' suspicions that clergy may have acted as fronts for corrupt businessmen and Mafia.
The documents pinpoint two transactions that have not been reported: one in 2009 involving the use of a false name, and another in 2010 in which the Vatican Bank withdrew euro650,000 ($860,000) from an Italian bank account but ignored bank requests to disclose where the money was headed.
The new allegations of financial impropriety could not come at a worse time for the Vatican, already hit by revelations that it sheltered pedophile priests. The corruption probe has given new hope to Holocaust survivors who tried unsuccessfully to sue in the United States, alleging that Nazi loot was stored in the Vatican Bank.
Yet the scandal is hardly the first for the centuries-old bank. In 1986, a Vatican financial adviser died after drinking cyanide-laced coffee in prison. Another was found dangling from a rope under London's Blackfriars Bridge in 1982, his pockets stuffed with money and stones. The incidents blackened the bank's reputation, raised suspicions of ties with the Mafia, and cost the Vatican hundreds of millions of dollars in legal clashes with Italian authorities.
On Sept. 21, financial police seized assets from a Vatican Bank account at the Rome branch of Credito Artigiano SpA. Investigators said the Vatican had failed to furnish information on the origin or destination of the funds as required by Italian law.
The bulk of the money, euro20 million ($26 million), was destined for JP Morgan in Frankfurt, with the remainder going to Banca del Fucino.
Prosecutors alleged the Vatican ignored regulations that foreign banks must communicate to Italian financial authorities where their money has come from. All banks have declined to comment.
In another case, financial police in Sicily said in late October that they uncovered money laundering involving the use of a Vatican Bank account by a priest in Rome whose uncle was convicted of Mafia association.
Authorities say some euro250,000 euros, illegally obtained from the regional government of Sicily for a fish breeding company, was sent to the priest by his father as a "charitable donation," then sent back to Sicily from a Vatican Bank account using a series of home banking operations to make it difficult to trace.
The prosecutors' office stated in court papers last month that while the bank has expressed a "generic and stated will" to conform to international standards, "there is no sign that the institutions of the Catholic church are moving in that direction." It said its investigation had found "exactly the opposite."
Legal waters are murky because of the Vatican's special status as an independent state within Italy. This time, Italian investigators were able to move against the Vatican Bank because the Bank of Italy classifies it as a foreign financial institution operating in Italy. However, in one of the 1980s scandals, prosecutors could not arrest then-bank head Paul Marcinkus, an American archbishop, because Italy's highest court ruled he had immunity.
Marcinkus, who died in 2006 and always proclaimed his innocence, was the inspiration for Francis Ford Coppola's character Archbishop Gilday in "Godfather III."
The Vatican has pledged to comply with EU financial standards and create a watchdog authority. Gianluigi Nuzzi, author of "Vatican SpA," a 2009 book outlining the bank's shady dealings, said it's possible the Vatican is serious about coming clean, but he isn't optimistic.
"I don't trust them," he said. "After the previous big scandals, they said 'we'll change' and they didn't. It's happened too many times."
He said the structure and culture of the institution is such that powerful account-holders can exert pressure on management, and some managers are simply resistant to change.
The list of account-holders is secret, though bank officials say there are some 40,000-45,000 among religious congregations, clergy, Vatican officials and lay people with Vatican connections.
The bank chairman is Ettore Gotti Tedeschi, also chairman of Banco Santander's Italian operations, who was brought in last year to bring the Vatican Bank in line with Italian and international regulations. Gotti Tedeschi has been on a very public speaking tour extolling the benefits of a morality-based financial system.
"He went to sell the new image ... not knowing that inside, the same things were still happening," Nuzzi said. "They continued to do these transfers without the names, not necessarily in bad faith, but out of habit."
It doesn't help that Gotti Tedeschi himself and the bank's No. 2 official, Paolo Cipriani, are under investigation for alleged violations of money-laundering laws. They were both questioned by Rome prosecutors on Sept. 30, although no charges have been filed.
In his testimony, Gotti Tedeschi said he knew next to nothing about the bank's day-to-day operations, noting that he had been on the job less than a year and only works at the bank two full days a week.
According to the prosecutors' interrogation transcripts obtained by AP, Gotti Tedeschi deflected most questions about the suspect transactions to Cipriani. Cipriani in turn said that when the Holy See transferred money without identifying the sender, it was the Vatican's own money, not a client's.
Gotti Tedeschi declined a request for an interview but said by e-mail that he questioned the motivations of prosecutors. In a speech in October, he described a wider plot against the church, decrying "personal attacks on the pope, the facts linked to pedophilia (that) still continue now with the issues that have seen myself involved."
As the Vatican proclaims its innocence, the courts are holding firm. An Italian court has rejected a Vatican appeal to lift the order to seize assets.
The Vatican Bank was founded in 1942 by Pope Pius XII to manage assets destined for religious or charitable works. The bank, located in the tower of Niccolo V, is not open to the public, but people who use it described the layout to the AP.
Top prelates have a special entrance manned by security guards. There are about 100 staffers, 10 bank windows, a basement vault for safe deposit boxes, and ATMs that open in Latin but can be accessed in modern languages. In another concession to modern times, the bank recently began issuing credit cards.
In the scandals two decades ago, Sicilian financier Michele Sindona was appointed by the pope to manage the Vatican's foreign investments. He also brought in Roberto Calvi, a Catholic banker in northern Italy.
Sindona's banking empire collapsed in the mid-1970s and his links to the mob were exposed, sending him to prison and his eventual death from poisoned coffee. Calvi then inherited his role.
Calvi headed the Banco Ambrosiano, which collapsed in 1982 after the disappearance of $1.3 billion in loans made to dummy companies in Latin America. The Vatican had provided letters of credit for the loans.
Calvi was found a short time later hanging from scaffolding on Blackfriars Bridge, his pockets loaded with 11 pounds of bricks and $11,700 in various currencies. After an initial ruling of suicide, murder charges were filed against five people, including a major Mafia figure, but all were acquitted after trial.
While denying wrongdoing, the Vatican Bank paid $250 million to Ambrosiano's creditors.
Both the Calvi and Sindona cases remain unsolved.
AP reporter Martino Villosio contributed from Rome.
Monday, December 13, 2010
Jugosos despidos en el Reniec
Abusando de la figura del "despido arbitrario", numerosos funcionarios de confianza del Registro Nacional de Identificación y Estado Civil (Reniec) cobraron jugosas liquidaciones al estilo "Barrios", el ex jefe de Essalud, que dejó numerosos émulos en la administración pública.
De acuerdo al programa "Cuarto Poder", el coronel PNP ® Néstor Castañeda Pacheco cobró una indemnización de 75 mil 850 nuevos soles por sus cuatro años de trabajo, eso sin contar la liquidación normal. Todo junto sumó la astronómica cifra de 162 mil nuevos soles.
Castañeda se desempeñó como Gerente de Operaciones el 2006 y en enero del 2009 pasó a ser Gerente de Administración. No accedió a los cargos por concurso público, por lo que está sujeto al régimen laboral 728.
Otro implicado es Sergio Bernales Gonzales que ocupó el cargo de gerente de Recursos Humanos hasta enero de 2009. Según documentación, sólo por despido arbitrario recibió 54 mil 750 nuevos soles. Bernales aseguró que el pago es legal.
Iguales beneficios recibió Ernesto Aranda Vergara, hijo del ex congresista Ernesto Aranda Dextre, quien ocupó el cargo de gerente de Certificación y Registro Digital entre junio de 2007 y agosto de este año. El cobró por despido arbitrario 56 mil 650 nuevos soles.
Luis de Cárdenas Falcón, ex director de la Escuela Nacional de Reniec y ex asesor del jefe de la institución, Eduardo Ruiz Botto, recibió por dos años de servicio un pago de 37 mil 600 nuevos soles por despido arbitrario.
En la lista de beneficiados sobresale Rodolfo Arturo Carrasco Yalán, quien ocupó tres altos cargos de confianza entre mayo de 2007 y marzo de 2010, despedido tres veces y tres veces fue indemnizado con una suma de 24 mil nuevos soles. Quizá la explicación sea el vínculo amical entre el padre de Carrrasco y el ex jefe de Reniec, Eduardo Ruiz Botto.
.....Those who controlled the main criminal traficking networks were in fact high government officials.... Secret Lima.. Papeles sobre Perú actual
Subject: Uy Carajo!!!
To: Herbert Mujica <firstname.lastname@example.org>
|S E C R E T LIMA 000345 |
E.O. 12958: DECL: 03/13/2034
TAGS: PGOV, PREL, PINR, PTER, SNAR, KCRM, PE
SUBJECT: ALLEGED ARMY CORRUPTION -- A PERSPECTIVE
REF: A. LIMA 1865
B. IIR 6 876 0037 08
C. LIMA 1640
D. IIR 6 876 0018 09
Classified By: Amb. P. Michael McKinley. Reasons 1.4 (b) and (d).
1. (S/NF) Introduction and Summary: The Garcia
Administration's efforts to combat narcotrafficking have been
stronger than under past administrations, and have included a
National Anti-Drug Strategy partly supported with government
funds, solid progress combatting coca production in the Upper
Huallaga Valley, and better police cooperation. And while
corruption has long plagued Peruvian government institutions,
few observers believe the problem today is anywhere near as
deep or extensive as during the shadowy (1990-2000) reign of
former President Fujimori's intelligence chief Vladimiro
Montesinos. xxxxxxxxxxxx has claimed to Poloffs that remnants of
the Montesinos narco-corruption web still exist within the
military. xxxxxxxxxxxx argues that some senior military
officials receive lucrative payoffs from drug traffickers
operating in the Apurimac and Ene River Valley (VRAE), which
is also the base of one of the most important remnants of the
Shining Path guerrillas. xxxxxxxxxxxx contends that the army -- for
fear of disrupting these drug trafficking networks and losing
access to payoffs -- is unwilling to commit the large force
needed to pacify the VRAE. As a result, xxxxxxxxxxx argues, ongoing
military operations against the Shining Path are destined to
fall short. Some of xxxxxxxxxxxx accusations are corroborated
by other Embassy contacts, press reports, and internal
documents as well as circumstantial evidence. Although the
xxxxxxxxxxxx clearly has an axe to grind against xxxxxxxxxxxx, the evidence calls for close monitoring. In the
meantime, it is apparent that Defense Minister Antero Flores
Araoz is continuing to push the military to build on and
expand new counter-terrorism efforts in the VRAE. (Note:
This cable focuses on military, rather than police corruption
because the military retains principal authority in the VRAE.
The military's recent operations against the Shining Path in
the VRAE are discussed Septel. End Note.) End Introduction
Army Command Dismantles Military Operations in the VRAE (2004)
2. (S/NF) Corruption has long plagued Peruvian government
institutions, including the security services -- military,
police and judicial. Former President Alberto Fujimori's
(1990-2000) intelligence chief Vladimiro Montesinos, for
example, collaborated with top army and other security
officials to develop a web of protection for favored drug
traffickers while cooperating with U.S. officials to combat
others. To many observers, that was Peru's "heyday" of
narco-corruption -- a time when the government of Peru verged
on becoming a kind of "narco-state" in which those who
controlled the main criminal trafficking networks were in
fact high government officials. While most observers
acknowledge that Peru has come a long way since that time,
sharply reducing the extent of such subterranean influences,
few believe that drug-related corruption has been eliminated
and some believe it may now again be on the rise.
xxxxxxxxxxx argues that significant elements
of this corrupt network continue to exist and to operate --
now under the control of second-tier officers from the
3. (S/NF) Many of xxxxxxxxxx principle accusations
stem from corruption xxxxxxxxxx says xxxxxxxxxxx witnessed xxxxxxxxxx in Ayacucho (which includes part of
the VRAE). At that time xxxxxxxxxx launched a
counter-insurgency operation that xxxxxxxxxx claimed some senior army
officers later dismantled when it threatened their own
corrupt interests. xxxxxxxxxx used a small salary
increase approved by then-President Alejandro Toledo to
recruit auxiliary troops from local self-defense groups in
the VRAE to build xxxxxxxxxxxx forces from 300 to 3,500 troops.
xxxxxxxxxx deployed these troops to small bases of about 100
soldiers each, spread throughout the VRAE in Ayacucho.
xxxxxxxxxxx told Poloff xxxxxxxxxxx such bases would be better
positioned to resist insurgents and drug traffickers than the
isolated outposts of five to seven soldiers -- the model in
use at the time -- who regularly accepted bribes rather than
risk confronting superior forces. (A variety of articles and
investigative news programs from 2004 confirmed this
de scription xxxxxxxxxxxx.)
4. (S/NF) xxxxxxxxxxx however, the army
xxxxxxxxxxx dismantled xxxxxxxxxxx and reduced troop levels to
700. xxxxxxxxxxxx threatened lucrative sales of excess fuel by senior army
officers to drug traffickers. xxxxxxxxxxxx
Excess Fuel Scandal Implicates Top Generals (2006)
5. (S/NF)xxxxxxxxxxx the excess military fuel
scandal that erupted in 2006 is linked to the army's drug
trafficking ties in the VRAE. The scandal broke when the
press denounced a scheme by some senior generals to request
hundreds of thousands of gallons of fuel in 2006 for sale and
personal enrichment. xxxxxxxxxxx that about half this fuel
was sold to companies like Repsol, while the rest, in the
form of kerosene, was sold to drug traffickers in the VRAE.
One prominent counter-narcotics analyst told Poloff he had
seen evidence that the military had sold kerosene to drug
traffickers in northern Peru, and -- although he did not have
evidence -- believed it plausible they have also sold to
traffickers in the VRAE. Prosecutors have since implicated
dozens of Generals in the scheme to commercialize fuel,
including then Army commander Cesar Reinoso -- who was forced
to resign -- and his replacement Edwin Donayre. Reinoso
later claimed that the scheme was nothing new and that nearly
all senior generals participated. (Note: Officers are
officially provided periodic fuel allotments, usually more
than can be reasonably consumed, and consider this a
perquisite that complements their base salary. End Note.)
Army Commanding General Donayre retired from the military on
December 5 -- putatively for his politically inflammatory
comments relating to Chile (Ref A) -- but in the view of some
observers for other reasons as well, including his alleged
involvement in the fuel skimming scheme. xxxxxxxxxx
6. (S/NF) Peru's Public Ministry is currently investigating
the fuel scandal, so far without results. In a series of
recent articles published in the political weekly "Caretas,"
prominent investigative journalist Gustavo Gorriti has
alleged an army cover-up. Gorriti reported that General
Donayre declined to meet Public Ministry investigators on six
separate occasions, and that he reassigned the army's
internal inspector to a remote jungle posting after the
inspector issued a damning report on the scandal. Gorriti
also reported that the GOP's independent Comptroller in 2008
completed an investigation that said the military used clumsy
counterfeit documentation to "justify" over $2 million in
excess fuel. xxxxxxxxxxx told Poloffs that the army is
withholding internal accounting documents that would help
prove the investigators case. xxxxxxxxxxx gave Poloff what xxxxxxxxx said
were copies of these documents, marked "Secret", that showed
hundreds of thousands of gallons of "extraordinary fuel"
allotments to various generals in 2004 and 2005.
Cocaine Exported Via Army Base in Northern Peru (2004)
7. (S/NF) xxxxxxxxxxx told Poloff he believed a drug
trafficking operation uncovered by police in 2004 at an army
base in Piura in northern Peru was also linked to some senior
military officials and drugs exiting the VRAE. According to
a series of investigative reports by a prominent newspaper, a
junior officer gave traffickers linked to a Mexican cartel
free rein to use the base and its military vehicles to
transit cocaine shipments to a military port where the navy
ran a fish-packing operation. At the port, the traffickers
packed the drugs in with the fish for export. In the 2004
bust, police captured 700 kg of cocaine. The commander of
the base at the time, General Williams Zapata -- now Peru's
representative at the Inter-American Defense Board in
Washington -- refused to comment beyond claiming that the
military was not involved with drug trafficking.
xxxxxxxxxx however, told Poloff
that the implicated junior officer as well as another
perpetrator privately alleged that both General Zapata and
another unnamed senior general had participated in the drug
operation. (Note: Currently, the junior officer is detained
in Brazil, awaiting possible extradition, and the other
offender is in prison in Piura awaiting trial. End Note.)
8. (S/NF) xxxxxxxxx saw signs that
officers may have continued to cooperate with drug
traffickers. His main suspicion surrounded a visit to the
base that year by the Director of the National Chamber of
Fishing of Piura, Rolando Eugenio Velasco Heysen, to meet
regional Army commander General Paul da Silva. xxxxxxxxxx
speculated that Da Silva and Velasco -- who was arrested in
October 2007 for attempting to export 840 kilograms of
cocaine hidden in frozen fish -- were coordinating drug
shipments. An investigative journalist later reported that
both Da Silva and General Edwin Donayre had met with Velasco,
but that Velasco claimed he was merely promoting the
consumption of high-protein squid by the army. xxxxxxxxxxxxx
claims this argument makes no sense because the Generals'
meetings with Velasco occurred outside the time of year that
the Army signs new contracts.
Counter-Drug Analysts on Possible Narco-Army Links
9. (S/NF) A prominent Peruvian counter-drug analyst who
travels regularly to the VRAE agreed with the assessment that
some senior army commanders were complicit with drug
trafficking. He further believed the military was beginning
to recuperate the political power that it had in the 1990s
under President Alberto Fujimori's spy chief Vladimiro
Montesinos, when senior military officers worked
surreptitiously and closely with (certain) drug traffickers.
This analyst said that on his last trip to the VRAE, a local
mayor told him the military controlled all the main riverine
drug routes, and that officers charged protection money
rather than staunch the flow. A second analyst who travels
regularly to the VRAE said he had clear evidence that the
military controlled at least one major drug route (through
Cayramayo) and charged bribes from passing drug traffickers.
10. (S/NF) The analysts also highlighted the case of a drug
plane that crashed in October 2007 while trying to take off
from a clandestine airstrip in VRAE. According to a report
in the left-of-center newspaper La Republica, the airstrip
was located in direct view of a military base. The paper's
local sources said that no plane could take off or land
without being spotted from the base. The first analyst said
his sources in the area told him the army had actually built
the airstrip. According to a DAO source, after the plane
crashed, an army unit sought to destroy any evidence by
cutting up the wreckage and dumping it in the river (Ref B).
The national police received a tip about the army's actions
and recovered the plane, but did not report the incident in
order to avoid inflaming already tense relations with the
military. Army sources told La Republica, however, that the
plane was the first they had ever discovered in the area and
that they immediately reported it to the police.
Implications for Military Operations in the VRAE
11. (S/NF) xxxxxxxxxxx several analysts argued
that the military are reluctant to implement a serious plan
to pacify the VRAE because the payoffs from drug traffickers
are too profitable. These contacts dismissed the recent
Operation Excellence in Vizcatan (Ref C and Septel) as too
small to have any real impact in such a large and harsh
terrain. The operation may temporarily displace Shining Path
cells, they said, but it will not deter drug traffickers.
One analyst described the operation as a smokescreen designed
to deflect increasing political pressure on the army to show
results. Another analyst argued that the operation appeared
to be a serious effort to decapitate Shining Path while at
the same time avoiding the disruption of profitable drug
trafficking routes. xxxxxxxxxxx
Comment: A Series of Worrying Indicators
12. (S/NF) xxxxxxxxxx the limited and tentative progress by the
military in the VRAE to date does give some plausibility to
xxxxxxxxxx argument that the some army officials may not support the
larger objectives of the ongoing operations in the VRAE. We
will continue to closely monitor evidence of drug corruption
in the military and to encourage the government to
consolidate and expand on the first steps taken during
C O N F I D E N T I A L LIMA 003429