Regulation

Former Head Of Vatican Bank Head Embezzlement Trial Underway

The former head of the Vatican bank is answering tough charges of money laundering and embezzlement, according to news from Reuters. Angelo Caloia, 79, is the highest-ranking Holy See financial official to stand trial. He, along with lawyer Gabriele Liuzzo, 95, stand accused in a trial within the Vatican that began on Wednesday (May 9).

However, Liuzzo is reportedly in ill-health and was unable to attend. Both men deny any wrongdoing in the case. Lelio Scaletti — a former director general for the bank — was also implicated in the crime but died several years earlier.

Caloia and Liuzzo are accused of embezzling funds while managing the sale of 29 buildings by the Vatican to local buyers. The Institute for Works of Religion (IOR — the bank’s official name) is seeking damages resulting from the alleged siphoning off of an estimated €57 million. The crime allegedly occurred over a seven-year period between 2001 and 2008. As of 2014, the accounts of all three men were frozen; at the time, they reportedly each contained millions of euros.

The case, however, has taken some interesting turns in its early unfolding. The IOR’s lawyer, Alessandro Benedetti, said preliminary contracts involving the deals could not be found. Italian retail deals are generally a two-step process that involves a first contract to set the price and a second to complete the sale for said price. According to the case against the defendants, the IOR alleges all three routinely underrepresented the proceeds from the sales in the IOR books, pocketing the difference between the actual price and the amount officially recorded.

The head of the bank in 2013 — Ernst von Freyberg, a German businessman — ordered an audit by U.S.-based Promontory Financial Group, as previous administration’s accounting practices struck him as potentially fraudulent. During his term, which ended in 2014, Freyberg performed a massive overhaul of the bank and its processes, which had been mired in corruption accusations for decades. As part of that action, thousands of accounts were audited and closed, and the Vatican finally made the “white list” of states with cooperative financial institutions.

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