Pope names commission of inquiry into Vatican bank amid new scandals and old questions

VATICAN CITY — Pope Francis' new commission of inquiry into the troubled Vatican bank has a brand new money-laundering case to look into: How a Holy See monsignor withdrew more than a half-million euros in charitable donations from the bank without any flags being raised, walked out of Vatican City with the cash, and then used the money to pay off his personal mortgage.

The case of Monsignor Nunzio Scarano is just one example of how lax norms and incompetence, if not more serious shortcomings at the Institute for Religious Works, or IOR, have sullied the Vatican's reputation in international financial circles and made it a target for Francis' clean-up and reform campaign.

Francis on Wednesday announced the creation of a commission of inquiry to look into the IOR's activities and legal status "to allow for a better harmonization with the universal mission of the Apostolic See," according to the legal document he signed creating it.

It was the second time in as many weeks that Francis has intervened to get information out of the IOR, a secretive institution best known for the scandals it has caused the Vatican. On June 15, he filled a key vacancy in the bank's governing structure, tapping a trusted prelate to be his eyes inside the bank.

Francis named five people to the commission, including two Americans: Monsignor Peter Wells, a top official in the Vatican secretariat of state, and Mary Ann Glendon, a Harvard law professor, former U.S. ambassador to the Holy See and current president of a pontifical academy.

American cardinals were among the most vocal in demanding a wholesale reform of the Vatican bureaucracy — and the Vatican bank — in the meetings outlining the priorities for the new pope in the run-up to the March conclave that elected Francis. The demands were raised following revelations in leaked documents last year that told of dysfunction, petty turf wars and allegations of corruption in the Holy See's governance.

Francis, who has made clear he has no patience for corruption and wants a "poor" church, has already named a separate commission of cardinals to advise him on the broader question of reforming the Vatican bureaucracy as a whole.

The bank commission's members have authority to gather documents, data and information about the bank's legal status and activities, even overriding normal secrecy rules to do so. Members can receive information from anyone in the Vatican bureaucracy as well as people who spontaneously volunteer information, and the commission can refer to outside advisers if necessary, according to the terms.

The commission will report back to Francis — presumably with both information and recommendations — and then will be dissolved, the document states. No timeframe was given but the commission is to start working soon.

The bank's daily management and activities continues unchanged.

The announcement came as the Vatican faces a new embarrassment involving the bank: Prosecutors in the southern city of Salerno have placed Scarano, an accountant in one of the Vatican's key finance offices, the Administration for the Patrimony of the Apostolic See, under investigation for alleged money-laundering stemming from his IOR account.

Scarano's attorney, Silverio Sica, told The Associated Press that the investigation concerns transactions Scarano made in 2009 in which he took 560,000 euros ($729,000) in cash out of his personal IOR bank account and carried it out of the Vatican and into Italy to help pay off a mortgage on his Salerno home.

"The money came from the Vatican. He wanted to bring it into Italy. He was advised to do it in this way," Sica said.

The original money came into Scarano's IOR account from donors who gave it to the prelate thinking they were funding a home for the terminally ill in Salerno, Sica said. He said the donors had "enormous" wealth and could offer such donations for his charitable efforts.

He said Scarano had given the names of the donors to prosecutors and insisted the origin of the money was clean, that the transactions didn't constitute money-laundering, and that he only took the money "temporarily" for his personal use.

The home for terminally ill hasn't been built, though the property has been identified, Sica said.

"He declares himself absolutely innocent," Sica said.

Italian daily Corriere della Sera reported over the weekend that the Bank of Italy had flagged the case to the AIF, seeking information about Scarano's IOR account as part of the Salerno probe. Lombardi didn't respond when asked why the IOR itself didn't flag such unusually large cash withdrawals back in 2009.

There have long been questions about just what the IOR actually is and does — questions which the commission presumably will try to iron out for Francis. Vatican officials have long insisted it's not even a bank, since it doesn't perform key banking activities like making loans.