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December 6, 2013 12:05 pm

By Rachel Sanderson

An 11-month FT investigation reveals the extent of mismanagement at the €5bn-asset bank
Cardinals at the Vatican conclave to elect the new pope in March©ReutersCardinals at the Vatican conclave to elect the new pope in March

On June 28 this year, Italian police arrested a silver-haired priest, Monsignor Nunzio Scarano, in Rome. The cleric, nicknamed Monsignor Cinquecento after the €500 bills he habitually carried around with him, was charged with fraud and corruption, together with a former secret service agent and a ­financial broker. All three were suspected of attempting to smuggle €20m by private plane across the border from Switzerland.

Prosecutors alleged that the priest, a former banker, was using the Institute for Religious Works – the formal name for the Vatican’s bank – to move money for businessmen based in the Naples region, widely regarded in Italy as a haven of organised crime. Worse still, Scarano (who, together with the other men, has denied any wrongdoing) had until only a month earlier been head of the accounting department at the Administration of the Patrimony of the Apostolic See, the treasury of the Vatican.

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