Monsignor Nunzio Scarano held in Vatican bank inquiry

Footage shows Monsignor Scarano being escorted to and from a police station, as the BBC's Alan Johnston reports from

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A senior Italian cleric has been arrested in connection with an inquiry into a Vatican bank scandal over allegations of corruption and fraud.

Monsignor Nunzio Scarano works in the Vatican's financial administration. A secret service agent and a financial broker have also been arrested.

They are suspected of trying to move 20m euros ($26m; £17m) illegally.

Pope Francis ordered an unprecedented internal investigation into the bank's affairs in the wake of recent scandals.

Analysis

An allegedly corrupt Italian monsignor who until recently helped administer the Vatican's financial assets ends up in handcuffs and is hauled off to prison in Rome together with a financial broker friend and an Italian secret service agent.

Pope Francis's new attempt this week to impose transparency and clarity on the Vatican's financial dealings could not be more timely. A sweeping internal investigation into the running of the Vatican's own bank was announced only two days ago. The result is to be on the Pope's desk "promptly", and a cardinal on the commission of inquiry has already admitted that major reforms are necessary.

Traditionally, great secrecy has been imposed by the Vatican on the bank's functions. The Vatican has hitherto concealed its activities behind a wall of confidentiality, justified by the sovereign status of the papal enclave situated in the heart of Rome.

Monsignor Scarano, 61, worked for years as a senior accountant for a Vatican department known as Apsa (the Administration of the Patrimony of the Apostolic See).

He was suspended from that position "about a month ago, after his superiors learnt about an investigation into his activities", Vatican spokesman Federico Lombardi said.

Monsignor Scarano has been under investigation by Italian police for a series of suspicious transactions involving the recycling through the Vatican bank of a series of cheques described as church donations.

Nunzio Scarano is a priest from Salerno in southern Italy, who is called "monsignor" in recognition of his seniority at the Vatican.

He was arrested along with two other men suspected of plotting to move 20m euros illegally from Switzerland to Italy. One, Giovanni Maria Zito, is described as an Italian secret service agent, and the other, Giovanni Carenzio, a financial broker.

Secretive bank

Earlier this month, the Pope named a trusted cleric to oversee the management of the bank, which has been beset by allegations of money laundering.

Vatican Bank scandal

  • September 2010: Italian police launch investigation into money laundering at the bank
  • December 2010: Vatican sets up financial authority to fight money laundering and make financial operations more transparent
  • May 2012: Bank chief Ettore Gotti Tedeschi dismissed for dereliction of duty
  • January 2013: Italian central bank suspends all bank card payments in the Vatican, citing its failure to fully implement anti-money laundering legislation
  • February 2013: German lawyer Ernst von Freyberg appointed to head bank
  • June 2013: Pope Francis sets up a commission to review the bank's activities

Officially known as the Institute for the Works of Religion (IOR), the bank is one of the world's most secretive. It has 114 employees and 5.4bn euros of assets.

Pope Francis has given the commission carte blanche, bypassing normal secrecy rules, to try to get to the bottom of scandals which have plagued the bank for decades.

Traditionally, the Vatican Bank has refused to co-operate with Italian authorities investigating financial crime on the grounds of the sovereign independence of the Vatican city state, the BBC's David Willey reports from Rome.

But Pope Francis has shown that he is now determined to get to the bottom of long-standing allegations of corruption and money laundering involving the bank, our correspondent adds.

The Institute for the Works of Religion was a major shareholder in the Banco Ambrosiano, a big Italian bank which collapsed in 1982 with losses of more than $3bn.

Its chairman, Roberto Calvi, was found hanging from Blackfriars Bridge in London - in a murder disguised as a suicide. Mr Calvi had close relations with the Vatican.

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