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“A Time Bomb”

The day after Gotti Tedeschi’s dismissal, Friday, May 25, Giani’s gendarmes arrested Paolo Gabriele at his Vatican apartment. They found boxes of confidential documents. Giani had questioned him three days earlier as the list of suspects narrowed. It had been Gänswein who had finally turned the investigation toward Benedict’s butler. When he read Nuzzi’s book, Gänswein realized that only he and Gabriele had access to three of the leaked documents. With Benedict’s permission, Gänswein questioned the small group that made up the “Pope’s family.” One of them, Sister Cristina Cernetti, had also sensed that Gabriele was the leaker. After he had been questioned, why did the shy and devout butler not dispose of any incriminating documents? He and his wife and three children lived across the street from Giani. Had someone higher promised Gabriele protection, or assured him that even if he were discovered that nothing would happen to him? Some published reports speculated that more than a dozen accomplices helped the butler while others said the conspiracy included some of the Pope’s closest confidants.

The public-relations-challenged Vatican even debated whether to ask Italian prosecutors to drag in Nuzzi for interrogation since he refused to name his sources. “What crime have I committed?” Nuzzi asked when he heard about that. “I am not interested in where the letters came from, just the news they contain.”1

Gabriele was led across the street from his flat to a twelve-foot-by-twelve-foot cell in the Vatican’s seldom-used jail. By that time, the Internet and broadcast media already had “The Butler Did It” as their lead story. Those who knew him best had trouble believing that the pious butler who had dutifully served the Pontiff would do anything to hurt Benedict. Was it possible that Gabriele was only a middleman, holding the documents found in his apartment for someone who had not picked them up before the police arrived? By the end of the day of his arrest, many in the Vatican assumed it was only a matter of time before Gabriele’s handler was unmasked.2

Between the forced departure of Gotti Tedeschi and the arrest of the Pope’s butler, the church was buffeted by two major stories that, no matter how hard it tried, it could not control. The IOR’s Carl Anderson was interviewed the day after Gabriele’s arrest for La Stampa’s “Vatican Insider” column. When asked why Gotti Tedeschi had been fired, Anderson said: “He lost the esteem of the staff and of the heads of the IOR, he caused divisions.”3 Gotti Tedeschi’s number two, Paolo Cipriani, later said that his former boss “didn’t take things in hand. It was as if he were absent, even when he was present.”4 Cipriani claimed that Gotti Tedeschi had refused to show him the problematic accounts.5 (Gotti Tedeschi at least gave some credence to the idea that he may not have spent enough time at the IOR, telling prosecutors that he came to the office only on weekends, spending his workweek running Spain’s Banco Santander office in Milan, a position he kept when he started at the Vatican in 2009.)6

Anderson was adamant that he and his fellow directors had been contemplating a no-confidence vote on Gotti Tedeschi for some time, but that since the board met only quarterly, it had fallen by chance at the same time as Gabriele’s arrest. “It is just a coincidence, nothing more,” Anderson said, although conspiracy-loving Italians found that hard to believe.7 As for whether Bertone had pressured the four directors, Anderson again swore it was not so. They had informed the Secretary of State of what they intended to do—“as a polite gesture”—but insisted there was “no pressure, no influence.”8

Anderson, and the IOR’s interim president, Ronaldo Hermann Schmitz, had written letters to Bertone only a couple of days before their no-confidence vote. Those were now conveniently leaked to some of the church’s favorite reporters. In them, Anderson accused Gotti Tedeschi of showing a “lack of an adequate response” when JPMorgan had requested information on the IOR account they shuttered in Milan. Schmitz said the Vatican Bank was “in an extremely fragile and precarious position” and that under Gotti Tedeschi its international reputation had taken such a beating that he feared lasting and “imminent danger.” Schmitz bemoaned Gotti Tedeschi’s “wanting loyalty.”9

On June 1, Pope Benedict took a needed break from the Vatican for a three-day visit to Milan. It was capped by his celebration of an outdoor Mass attended by more than a million people. To the great disappointment of those who had executed the often misguided leak campaign to dislodge Bertone, the Pontiff invited Bertone to join him on the trip. The two made a point of standing together at many of the public events. It was a strong endorsement by Benedict of his embattled Secretary of State. On Sunday, June 3, the final day of the Papal visit, La Repubblica ran an anonymous note it received claiming that up to twenty whistleblowers would continue to send incriminating documents to the media so long as Bertone remained Secretary of State and Monsignor Gänswein was Benedict’s personal secretary.10 No one was sure if there were additional leakers or if someone was merely taking advantage of the media’s eagerness to publish almost anything connected to Vatileaks. (Evidence that the Vatican knew it was outmatched when it came to handling public relations was the hiring later that month of Greg Burke, a Fox television broadcaster, as the first-ever communications advisor to Bertone.)11

The Pope was not long back inside the Vatican when the outside world again seemed inhospitable. Palermo prosecutors announced they were investigating claims that a Sicilian godfather had laundered millions of mob cash through an IOR account.12 An unnamed “church official” warned there is a “time bomb” about to engulf the IOR and dirty Mafia cash. Another anonymous cleric confided that “tainted money” was in IOR accounts and told La Stampa, “What has surfaced is only a splatter of lava; underneath there’s a time bomb, which is ready to explode.”13 No one then knew that this information was part of what Gotti Tedeschi had accumulated and wanted to show the Pope before he was let go.

On the early morning of June 5, Friday, the high drama took an unexpected turn. Forty miles north of Milan, in the small town of Piacenza, Gotti Tedeschi was weighing whether to make the three-and-a-half-hour high-speed train trip to Rome.14 He wanted to “put on the record” that he was still trying to sound the alarm about abuses inside the Vatican Bank.15 What better way than trying once again to see the Pope? The odds were against him, he was realistic enough to know that. But maybe someone there might appreciate the fallout if word got out that the Vatican turned away the dismissed IOR chief with a “must see” dossier.

Gotti Tedeschi was known as a fastidious dresser. That morning he settled on a conservative ensemble, wanting to impress his former colleagues at the church that he was there on serious business. He picked a charcoal gray wool flannel, with peak lapels. He matched it with a striped shirt with a spread collar, and a solid, dark silk tie. Grabbing his leather briefcase, he stepped from his home on the quaint Via Giuseppe Verdi. Four men stood near his car. His instinctive reaction was that they were there to murder him.16 But they were policemen from a special financial crimes unit and had been dispatched by prosecutors in Rome and Naples. They presented him with a search warrant they had obtained that morning in connection with an ongoing corruption probe of Finmeccanica, the state-run defense and aerospace firm. Finmeccanica’s president was a close Gotti Tedeschi friend and prosecutors suspected that some military equipment was sold to India using a Vatican Bank account at JPMorgan. Gotti Tedeschi was not yet a target of the probe but he might have documents relevant to the investigation. They ushered him back inside his house and began rummaging through his home office. Gotti Tedeschi called his Milan attorney, Fabio Palazzo, one of Italy’s most respected white-collar-crime specialists. At the same time, detectives executed another search warrant at his Santander office in Milan, around the corner from the La Scala Opera House (later that morning they also searched his country home in the village of San Paolo).

The police seized two cabinets crammed with files, paperwork, and three-ring binders, as well as a stack of notebooks, a day planner, a briefcase, and several computers. They even took a stack of memos from a wall safe, which Gotti Tedeschi opened at their request. In those papers were some Vatican Bank secrets, including emails that demonstrated how some church officials had resisted the full enforcement of EU money laundering and antiterrorism financing.17 There was also data about a few suspicious numbered accounts.18 In the forty-seven folders carted away from Gotti Tedeschi’s house, prosecutors would discover the broad outline of how the ex-IOR chief had ran into trouble when he tried dismantling the network of clerics who still used the bank as if it was their own private trust.

Gotti Tedeschi voluntarily went to the police station, where his lawyer was waiting. Prosecutors were also there.19 They spoke for several hours before agreeing to meet again the next day. Over the course of their discussions, Gotti Tedeschi did not tell them everything, as he later admitted to a colleague. He worried that the Vatican might have an informant inside the police or prosecutor’s office, or if not an agent, then maybe a brother, nephew, or cousin to one of his clerical foes inside the Curia.20 Gotti Tedeschi told the prosecutors that his problems at the IOR began soon after he asked to see “information about accounts that were not in the church’s name.”21 And he confided something he had seen that was odd for a bank: that the IOR sent tens of millions of euros through encrypted money transfers designed to make it tough for regulators to identify who was behind the transactions (Gotti Tedeschi’s deputy, Cipriani, later denied that the bank used any encrypted wire transfers).22 In one of his memos, the police found Gotti Tedeschi’s handwritten entry: “I’ve seen things in the Vatican that scare me.”23

If Bertone remained in power at the Vatican, Gotti Tedeschi later told the Roman prosecutor Giuseppe Pignatone, the IOR would never get onto the OECD white list. Benedict was a holy and well-intentioned Pontiff, but he was simply incapable of issuing the clear-cut directives needed to clean up the bank.24

Prosecutors found Gotti Tedeschi credible.25 But at times he came up with some theories that stretched credulity and made them question whether everything he told them was accurate. A Jewish-Masonic plot, he claimed, had targeted him since he was an Opus Dei member.26 Two of its co-conspirators, he told Pignatone, were thirty-year-old Michele Briamonte, a partner to Franzo Grande Stevens, the lawyer who had long been one of the Vatican’s chief advisors, as well as thirty-three-year-old Marco Simeon, the director of the Vatican desk at Italy’s public television. And he was suspicious about Jeffrey Lena, a solo practitioner in Berkeley, California, who had, among other cases, defended the Vatican in the class action brought by Holocaust victims over the IOR and looted Nazi gold.27

The idea that Italian police might have confidential IOR files as a result of searching Gotti Tedeschi’s home and office was of great concern at the Vatican. It issued a public statement that “we have faith that the prosecutors and Italian judicial system will respect our sovereignty—recognized internationally—with regard to these documents.”28 Behind the scenes, the Vatican had decided to further discredit Gotti Tedeschi. Beyond the internal memos and letters that had already been leaked about his “progressively erratic personal behavior,” several reporters now got anonymous tips about the psychotherapist who thought Gotti Tedeschi suffered from a possible “psychopathological dysfunction.”29 Once the Italian press began repeating that story in various iterations, each seemingly more dramatic than the last, it was soon an “established fact” that Gotti Tedeschi was crazy.

But instead of stemming the torrent of terrible news between Vatileaks and the discord at the IOR, tarnishing Gotti Tedeschi’s reputation seemed to only fuel the media’s near-obsessive interest. There was growing frustration inside the Vatican about how to deal with the press. In mid-June, Bertone lashed out, blaming the media for the scandals. He told an Italian Catholic weekly that journalists had “a will to create division that comes from spite” and that they were “pretending to be Dan Brown [author of the fictional Da Vinci Code] . . . inventing stories and replaying legends.”30

On Thursday, June 28, Lombardi arranged for what he, and Bertone, thought might take the attention off Gotti Tedeschi and Vatileaks. For the first time ever, journalists were invited inside the IOR offices in the fifteenth-century Tower of Nicholas V. The fifty-one members of the fourth estate discovered they were not entitled to do much reporting; instead, as The Wall Street Journal noted, it was “tightly choreographed.”31 Could they take pictures? Not allowed. Sound recordings. No. Could they see the main vault? Off limits. What about questions? Preferred in writing. Instead they sat in the ornate conference room through a particularly dull three-and-a-half-hour PowerPoint presentation by the bank’s acting director, Paolo Cipriani. Gotti Tedeschi’s name was never mentioned. At one stage, Cipriani draped on his lectern a T-shirt with “Anti–Money Laundering Expert” emblazoned across it.32 He told the reporters that “we need to take away the veil, the shadow” that had settled over the IOR.

The journalists left unsold. More important, another audience—the EU’s financial enforcement officials—were not convinced that all was good at the IOR. Vatileaks and its disclosures of unattended corruption and infighting among the church’s leaders had revealed general chaos in the Vatican that inspired little confidence in Brussels.