Not all the bad news came from Vatileaks. The State Department announced in early March that for the first time it had added the Vatican to a list of sixty-eight countries it considered a “concern” for money laundering.1 And a few days later the investment bank JPMorgan Chase announced it was shuttering a Vatican Bank account in Milan since the IOR had failed to respond to multiple queries about the account for two years. That account was a so-called sweeping facility, meaning that at the end of each day any funds were transferred to a Vatican Bank account in Germany. Over some eighteen months, while JP Morgan had been waiting for answers about the origin of the money in that account, some $2.2 billion had passed through it.2 JP Morgan was one of the IOR’s correspondent banks, institutions through which it conducted its foreign transactions. All the correspondent banks had themselves been pushed hard by European regulators for strict compliance. They were in no mood to cover for any sloppiness by the Vatican Bank.3
That a major American investment bank had to close an active IOR account because it could not get information required by anti-money-laundering laws did not look good for an institution that was supposedly working hard to get on the OECD white list. And it did not reflect well on Gotti Tedeschi. Did he know about the JP Morgan requests and ignore them or did his management style mean he was uninvolved in the bank’s details? Neither answer was comforting.
That spring, Moneyval sent a top secret draft to the Vatican with its preliminary conclusions.4 It wanted to give the church an opportunity to comment before the report was released that July. Gotti Tedeschi told colleagues he felt he had made considerable progress in meeting the EU standards, but he was frustrated about how long it took directives he issued to become operational. Approaching three years as the bank’s director, he was still surprised at the enormous divide between efficiency and performance in his private finance work and what passed for banking inside the city-state.5
The Moneyval draft was unequivocal: the Vatican had a long way to go before it would be transparent and compliant enough to qualify for OECD’s white list. Moneyval’s recommendations included reorganizing the Financial Intelligence Authority (AIF) and reducing the power of the Secretariat of State over financial affairs. The European inspectors did not like a change that Bertone had made to AIF’s oversight of the Vatican Bank: any monitoring had to have the Secretary of State’s express permission.
Bertone privately castigated the draft’s recommendations as an undue interference with the church’s sovereignty. But others, like APSA’s Cardinal Nicora, felt vindicated. Nicora had opposed Bertone’s power grab over money matters, and at the time had written a secret letter to the Secretary of State warning, “We are taking a step back and remaining a tax haven.”6
Gotti Tedeschi advanced the most logical argument: since the Vatican had agreed to EU oversight, change was coming one way or the other. There was no use in postponing the inevitable.7
Moneyval’s reorganization suggestions to further empower AIF got a boost in May when Italian prosecutors complained they had subpoenaed records for an IOR account held by a Sicilian priest. The Vatican had stonewalled for a month. That criminal investigation focused on $1.5 million that went through the cleric’s IOR account over two years. The probe also centered on several real estate investments and sales both by the priest and his local bishop, all disguised to clean mob profits.
“We have made a request for information to the Vatican City State in the spirit of collaboration with regard to an investigation into sums of money in financial transactions undertaken by the Diocese of Trapani,” the prosecutor said in a public statement.8 No one from the church initially made any comment. When they did, it was to say that the paperwork the prosecutors wanted was missing.9 (When the priest turned into a witness for the civil authorities, the Pope suspended the cleric and dismissed the bishop.)10
On May 19, Gianluigi Nuzzi announced the publication of his new book, Sua Santità: Le carte segrete di Benedetto XVI (His Holiness: The Secret Papers of Benedict XVI). It was based on the trove of information leaked to him by Gabriele since 2011. Nuzzi for the first time disclosed that his source had started collecting documents after the death of John Paul II in 2005.11 Nuzzi reproduced dozens of personal letters, internal memos, faxes, and even personal notes in Sua Santità. He claimed he had omitted anything about private lives and concentrated only on matters on which he thought transparency was necessary. The book was nevertheless a titillating and mortifying look at the Vatican’s dirty laundry and an instant bestseller in Italy.12 Everyone it seemed was talking about some of its revelations: the top newsmen who gave large “donations” to the church before landing private audiences with the Pope or the prominent businessman who wangled a favor from Benedict in exchange for a $100,000 white truffle (that ended up in a soup at a Vatican-run shelter for the homeless).13 Nuzzi revealed confidential notes about how senior clerics were perplexed and fascinated by the 1983 disappearance of fifteen-year-old Emanuela Orlandi, the daughter of a church employee who was never seen again after leaving her family’s Vatican apartment to go to a music lesson.14 And despite the assurance that he steered clear of private lives, Nuzzi disclosed the secret letters of Dino Boffo, the former editor of a Catholic newspaper, complaining to Benedict and a ranking cardinal that another Catholic newspaper editor had leaked a fake document charging that Boffo was a “known homosexual who was already known to the police” for sexual harassment. That leak had kicked off a media feeding frenzy in 2009 that cost Boffo his job. Nuzzi reprinted two private letters from Boffo to the Pope’s powerful private secretary, Monsignor Georg Gänswein, in which the newspaper editor accused Bertone of engineering the character assassination.15
The book also set out how senior Vatican officials judged America—between the sex abuse epidemic and liberal secular policies—as a moral wasteland. An assignment to Washington, as was done with Archbishop Viganò, was unquestionably a punishment.
There was one major story playing out inside the Vatican about which Nuzzi was in the dark since Gabriele had never learned about it. Gotti Tedeschi had been methodically compiling a secret dossier about the Vatican Bank that he intended to present to Pope Benedict.16 The IOR chief had stumbled across information that he considered so explosive about how the IOR was being misused by mobsters—sometimes family members of the clerics who worked inside—that he feared his life might be in danger if others found out before he reached Benedict.17 Corriere della Sera, Italy’s paper of record, later concluded that Gotti Tedeschi uncovered accounts in the names of the “politicians, shady intermediaries, contractors and senior (Italian) officials, as well as people believed to be fronts for Mafia bosses.”18 Part of what Gotti Tedeschi had discovered was linked to the IOR’s inexplicable obstruction for two years about inquiries from Italian prosecutors about a bank account held by two clerics in Sicily. Gotti Tedeschi had also come across a name that sent a shiver through him—Matteo Messina Denaro, an arms and narcotics kingpin who was suspected of dozens of murders over a twenty-year reign.19 The man nicknamed Diabolik had been on the run since 1993 (he is still a fugitive). “With the people I’ve killed, I could make a cemetery,” he once boasted.
On at least two occasions Gotti Tedeschi told Benedict’s secretary, Gänswein, that he wanted to meet with the Pope. He did not share with Gänswein the full details of what disturbed him but confided it was a matter “of the greatest urgency.” The last conversation with Gänswein was on May 21. The IOR chief did not hear back.20 Gotti Tedeschi had a paper calendar on which he kept his appointments. Listed for Friday, June 1, was a shorthand notation to nudge Gänswein. Time was of the essence.21 By now, Gotti Tedeschi’s memo had more than fifty attachments of email, notes, and copies of relevant papers.22
Gänswein was in no hurry to arrange for the IOR chief to see the Pope.23 The chief of the gendarmes, Domenico Giani, had confidentially informed Gänswein that questions had been raised about Gotti Tedeschi’s mental stability. A Rome psychotherapist, Dr. Pietro La Salvia, whose specialty was the psychology of workplace stress, had observed Gotti Tedeschi at the IOR’s 2011 Christmas party. He was “dismayed” by what he saw and wrote a letter to the Vatican Bank’s director general, Paolo Cipriani. As a result of his casual observation, the psychotherapist thought Gotti Tedeschi exhibited “traits of egocentricity, narcissism and a partial disconnection from reality that could be a psychopathological dysfunction.”24 Although La Salvia emphasized that his three-month-old opinion was not a clinical diagnosis, word spread quickly at the top of the Curia and IOR that something might be amiss with Gotti Tedeschi.
On Thursday, May 24, as all of the Vatican and Italy seemed consumed with Nuzzi’s new tell-all, the Vatican Bank’s supervisory board of lay directors assembled in the late afternoon for their scheduled quarterly meeting. Carl Anderson, the American director, had stunned Gotti Tedeschi only a couple of days earlier by informing him that the board was considering a no confidence vote that could result in his dismissal. Gotti Tedeschi did not know then that his colleagues had already made up their minds. The board’s vice president, ex–Deutsche Bank chairman Ronaldo Hermann Schmitz, had earlier written to Bertone with a catalogue of complaints about the IOR chief and said he would quit if Gotti Tedeschi was not sent packing.25
At the meeting, Gotti Tedeschi gave an impassioned defense of his three-year tenure. As far as he was concerned, the bank’s problems were the results of years of mismanagement by his predecessor, Angelo Caloia (when that eventually went public, Caloia demanded in vain a Vatican apology).26 But his fellow directors—Anderson, Schmitz, Manuel Serrano of Banco Santander, and an Italian notary, Antonio Marocco—peppered him with hostile questions. Gotti Tedeschi realized his presentation was useless. After seventy minutes he scooped up his papers and stormed out.27 A Swiss Guard, unaware of the high drama that had just played out inside the ancient tower, saluted him as he screeched at high speed from the Vatican.28
The four Vatican Bank directors then unanimously passed a resolution of no-confidence in Gotti Tedeschi.29 And they submitted a scorching internal memo setting forth nine reasons for his dismissal. Among them, he had “abandoned the premises of the Institute without notice.”30 It noted that he exhibited “progressively erratic personal behavior” and had been sacked because of “his failure to fulfill various primary functions of his office . . . to carry out basic duties . . . or to provide any formal explanation for the dissemination of documents last known to be in the president’s possession.”31 It took only two days before that memo was leaked to reporters and the contents splashed across Italy’s front pages.32
The reference to the “dissemination of documents” was a not subtle reference to their shared belief that Gotti Tedeschi might have leaked information about financial mismanagement inside other Vatican departments in order to make the IOR look better in comparison.33 One particular leak—an email from the general director of the AIF to Gotti Tedeschi complaining about the burden imposed by the Vatican’s anti-money-laundering law—could only have been leaked, they concluded, by Gotti Tedeschi.34 The fact that most people thought the leaks cast Gotti Tedeschi in a positive light was further evidence to them that he had released only those documents that showed him as a serious financier focused on what was best for the Vatican while his Curial colleagues appeared intent only either on destroying their enemies or undermining the EU efforts to apply financial regulations to the city-state.
The IOR’s lay board noted that despite its frequent warnings about the bank’s “governance,” under Gotti Tedeschi’s tenure the “situation has deteriorated further.”35 The directors made no mention of how furious they were when they had learned he had been talking with Anna Maria Tarantola, the second in command of the Bank of Italy’s Vigilance Department, seeking the central bank’s help in closing some problematic Vatican accounts.36
The Vatican Bank’s cardinals’ commission, chaired by Secretary of State Bertone, announced it would meet the following day to discuss “future steps.” Meanwhile, Gotti Tedeschi told ANSA, the Italian wire service, “I’m torn between a concern to tell the truth and not wanting to disturb the Holy Father. My love for the Pope is even more important than the defense of my reputation, called into question in a cowardly way.”37 He told Reuters, “I paid the price for transparency.”38
Gotti Tedeschi was surprised that Benedict had not intervened to save him. What he did not know then was that the Pope had not even been aware of the coordinated effort to dismiss him. When Benedict later learned about his ouster, he was “surprised, very surprised.”39 That Pope Benedict did not know about the struggle for control of the Vatican Bank was another bad sign that the feud in the Curia was raging in part because there was not a strong Pontiff capable of putting an end to the fighting.