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Italian Court Freezes Vatican Bank Funds
The Vatican expressed its "perplexity and astonishment" after an Italian court took the unprecedented step on September 21 of freezing $30 million in Vatican funds pending an investigation for money laundering.
The court acted after prosecutors charged the Institute for Religious Works (IOR), commonly known as the Vatican Bank, with violating Italian law by attempting to transfer funds from one of its accounts in an Italian bank to two other banks, one of them in Germany.
In a statement, the Vatican insisted on its "full transparency" regarding IOR operations. According to the statement, the IOR sought to move the funds to its own accounts in other banks, and had already supplied the required information to Italian authorities.
The IOR was a source of enormous embarrassment to the Vatican in the early 1980s, after it was revealed that shell companies under its control had received $1.3 billion in bad loans from Italy's Banco Ambrosiano, whose collapse in 1982 was the largest bankruptcy in European history up to that time.
Although the Vatican denied responsibility for that debacle, it eventually paid out more than $240 million to Banco Ambrosiano's creditors to settle the matter.
Archbishop Paul C. Marcinkus, the American president of the Vatican Bank at the time, was indicted by Italian prosecutors as an accessory to fraud, but was never arrested or tried on account of the Vatican's status as a sovereign state.