Popes and demons: Mysterious Vatican bank poses problem for new pontiff

GABRIEL BOUYS/AFP/Getty Images FilesThe massive round tower, left, is the headquarters of the Institute for Works of Religion, the Vatican’s secretive bank.

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National Post | Mar 8, 2013by Adrian Humphreys

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As the world waits for the Vatican’s conclave to select a new pope to lead 1.2 billion Roman Catholics, and the church’s sex abuse scandals dominate discourse on the incoming pontiff’s priorities, another decidedly worldly issue is also poised to take an immediate toll on the new Holy Father: money.

The public and private woes of the Vatican bank, long shrouded in secrets and whispers, might well prove to be just as challenging, if not as draining, as the lurid, faith-shaking damage of the clergy abuse scandal.

With a two-year probe by Italian authorities into money laundering, poor transparency, inadequate adherence to standards for guarding against criminal and terrorist financing, and questions over sudden changes in its leadership, the bank represents another crisis of morals, legalities and perception.

The importance of the Vatican bank in Pope Benedict XVI’s grand vision can be assumed from the urgency it held with the outgoing pontiff: among the last official acts before his shock retirement was overhauling financial leadership and church oversight.

On Feb. 15, Benedict XVI approved the appointment of Ernst von Freyberg as the new president of the supervisory board of the Institute for Works of Religion, the church agency widely known as the Vatican bank.

The appointment of the German lawyer and businessman came after assessing “a number of candidates of professional and moral excellence,” the Vatican said in a statement.

“The Holy Father has closely followed the entire selection process … and he has expressed his full consent to the choice made by the Commission of Cardinals.”

While the appointment drew immediate criticism over the involvement of Mr. von Freyberg’s Blohm+Voss, an industrial group, in manufacturing German warships, including during the Nazi era, it also raised eyebrows for its timing. Putting money under the baton of a German is not out of step with European policy these days, but for an institution already rife with conspiracy theories the sudden shuffle could not go unnoticed.

“[Benedict’s] decision to retire was so unprecedented, you would think that he would have other things on his mind than replacing the head of the Vatican bank,” said Carlo Calvi, son of Roberto Calvi, who was known as “God’s Banker” because of his close ties to the Vatican before his outlandish death more than 30 years ago.

Alessia Pierdomenico/Bloomberg FilesThe city of Rome, in Italy, is seen beyond St. Peter’s Square from the roof of the Basilica in Vatican City.

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Ernst von Freyberg. The Canadian Press Files.

“However, I am more surprised by the sackings — the people who were let go — rather than the appointments,” he said.

Ettore Gotti Tedeschi was chairman of the Vatican bank until he was pushed out in May with a withering assessment of not being up for the job. He had been trying to get the Vatican onto the international banking “white list” of virtuous countries.

Then, on Feb. 22, Monsignor Ettore Balestrero, a key church official pushing for better regulation and controls on the Vatican bank, was suddenly transferred from Rome to Colombia.

That transfer followed the moving of Archbishop Carlo Maria Vigano, who was credited with turning a deficit for the Vatican into a large surplus through greater accountability and controls, from the Vatican to the United States.

One of the leaked documents in the “Vatileaks” scandal was a letter from Archbishop Vigano to Pope Benedict begging he remain in Rome to continue his financial crusade. The Pope was unmoved.

The transfers suggest change is not always welcome.

“Change under the new pope will be easier said than done because they make money on this, it is a source of income that has been used for a lot of purposes,” said Mr. Calvi. To address the problems, “They need, essentially, to do a very drastic reform that would almost certainly mean foregoing a considerable source of revenue.”

The Vatican bank has not always shown such virtuous strength, as Mr. Calvi knows better than most. Few outside the Vatican’s inner circle eye church finance as closely as Mr. Calvi, who now lives in Montreal.

Watching the Vatican bank has consumed Mr. Calvi’s adult life and the Calvi name almost consumed the Vatican bank.

His father was chairman of Banco Ambrosiano, an Italian Catholic bank closely linked to the Vatican.

Few outside the Vatican’s inner circle eye church finance as closely as Carlo Calvi, who now lives in Montreal. Graham Hughes for National Post

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The shadowy operations of Vatican finance forced its way into the public’s consciousness when Roberto Calvi was found dead, just as the scandalous operation of church finance was being revealed amid the collapse of Banco Ambrosiano, Italy’s largest private bank, with $1-billion missing.

Since then, his unsolved death, first declared a suicide, then reclassified as a murder, and the cast of powerful figures and secretive organizations linked to it — from the Mafia and the Masonic lodge P2 to the powerful conservative Catholic organization Opus Dei and the Vatican itself — make it one of modern history’s enduring mysteries, Europe’s equal to the Jimmy Hoffa disappearance.

What do we know about the Roman Catholic Church’s finances?

The case was also said to be linked to landmark Cold War politics, with claims Banco Ambrosiano was used by those close to John Paul II, the Polish pope, to fund the anti-Communist Solidarity movement in Poland and by those close to U.S. president Ronald Reagan to fund the Contra rebels of Central America.

The raw puzzle and quirks of Mr. Calvi’s death compel conspiracy theories and befuddlement, with small details that seem to mean much, but with no answer to exactly what.

The banker’s body was found hanging under Blackfriars Bridge, his feet dangling in the River Thames in the heart of London, on June 18, 1982; he wore two pairs of underwear, had five bricks in his pockets, about $14,00-worth of three different currencies and the business card of a Mafia figure.

It was a death shouting in the symbolic language of Italy’s underworld.

Blackfriars Bridge in London, U.K. Simon Dawson/Bloomberg Files

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“I am more of the idea that there are theatrical elements and not necessarily symbolic aspects to it,” said his son. “Hundreds and hundreds of millions of dollars were involved — if that is not a motive for murder, I don’t know what is.”

After all, any Catholic cleric would know: Radix malorum est cupiditas, the Latin Biblical quotation meaning greed is the root of evil.

The very notion of a church bank speaks to the awkward interface between the spiritual and temporal, represented by the pope being both leader of the Catholic Church and sovereign of the Vatican City state.

Unlike many Vatican institutions, the Vatican bank is not of antique origin, having been formed in 1942 by Pius XII, although it had older antecedents. Its purpose is to protect and administer the property and funds intended for the church’s works.

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Unlike true national central banks, it does not set monetary policy or involve itself in currency maintenance, as the Vatican uses the euro. Also unlike most banks, its surplus or profit is supposed to go toward religion or charity.

As it is not a true central bank, and with the Vatican not a full member of the European Union, its relationship with strict regulation has been more nebulous and its ends of religion or charity have, likewise, not always been clear.

“One would be surprised at the acceptance of risky relationships and risky behaviour for an organization like the Vatican. But, objectively, I’ve seen it. It is hard to understand, but it is true,” said Mr. Calvi.

“God’s Banker” Roberto Calvi, whose body was found hanging from a London bridge in 1982, meets Paul VI in an undated photo. Courtesy Carlo Calvi

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“In many cases, they seem to have little judgment in terms of the arrangements they get themselves into.”

In the fallout of the Banco Ambrosiano scandal, though it claimed no wrongdoing, the Vatican bank paid $250-million to Ambrosiano’s creditors.

Since then, its regulatory framework has still not caught up to modern standards, especially in the post-9/11 world.

The former head of the Vatican bank, Ettore Gotti Tedeschi, was forced to resign from his post on May 24, 2012 “for failing to carry out duties of primary importance,” the Holy See said in a statement. Tiziana Fabi/AFP/GettyImages Files

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In 2010, Rome magistrates froze ¤23-million ($31-million) the Vatican bank held in an Italian bank. The Vatican said its bank was merely transferring its own funds between its own accounts in Italy and Germany. The money was released in June 2011, but an investigation continues.

In July, a European anti-money laundering committee said the Vatican bank failed to meet all its standards on fighting money laundering, tax evasion and other financial crimes.

The report by Moneyval, a monitoring committee of the 47-nation Council of Europe, found the Vatican passed nine of 16 “key and core” aspects of its financial dealings. The head of the Vatican delegation to the Moneyval committee was Msgr. Balestrero.

Msgr. Balestrero said the report was a call for the Vatican to push forward with “efforts to marry moral commitments to technical excellence” to prove “the Holy See’s and Vatican City state’s desire to be a reliable partner in the international community.”

Seven months later, he was reassigned to South America.

“The Moneyval report was one of the rare bits of good news for the Vatican last year. Balestrero was the one who dealt with Moneyval and they send him to Colombia. That doesn’t sound like the way to reward someone,” said Mr. Calvi.

This week, the widely read Italian Catholic weekly Famiglia Cristiana, which is distributed free in Italian parishes on Sundays, carried an article calling for the bank to be closed on the grounds the pontificate should not have direct links to the world of finance.

It argued there are plenty of ethically minded commercial banks in Italy and elsewhere that could be trusted to manage the Holy See’s assets.

In January, René Bruelhart, the new director of the Vatican’s Financial Information Authority, said the church was on the right track.

“Considering the particular nature of the Vatican City state, adequate measures have been adopted for vigilance, prevention, and fighting money laundering and financing terrorism,” he told the Italian newspaper Corriere della Sera.

How much further the Vatican bank will go and how quickly it can get there, under both the new chairman and a new pope, is being anxiously watched by the world’s financial community. And by Mr. Calvi.

Then Cardinal Joseph Ratzinger of Germany, left, now former Pope Benedict XVI, looks on as late Pope John Paul II celebrates Mass in St. Peter’s Basilica at the Vatican in 2002. Pier Paolo Cito / The Associated Press Files

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National Post, with files from news services

Who Runs The World? Solid Proof That A Core Group Of Wealthy Elitists Is Pulling The Strings

theeconomiccollapseblog.com | Jan 29, 2013

By Michael

Does a shadowy group ofobscenely wealthy elitists control the world?  Do men and women with enormous amounts of money really run the world from behind the scenes?  The answer might surprise you.  Most of us tend to think of money as a convenient way to conduct transactions, but the truth is that it also represents power and control.  And today we live in a neo-fuedalist system in which the super rich pull all the strings.  When I am talking about the ultra-wealthy, I am not just talking about people that have a few million dollars.  As you will see later in this article, the ultra-wealthy have enough money sitting in offshore banks to buy all of the goods and services produced in the United States during the course of an entire year and still be able to pay off the entire U.S. national debt.  That is an amount of money so large that it is almost incomprehensible.  Under this ne0-feudalist system, all the rest of us are debt slaves, including our own governments.  Just look around – everyone is drowning in debt, and all of that debt is making the ultra-wealthy even wealthier.  But the ultra-wealthy don’t just sit on all of that wealth.  They use some of it to dominate the affairs of the nations.  The ultra-wealthy own virtually every major bank and every major corporation on the planet.  They use a vast network of secret societies, think tanks and charitable organizations to advance their agendas and to keep their members in line.  They control how we view the world through their ownership of the media and their dominance over our education system.  They fund the campaigns of most of our politicians and they exert a tremendous amount of influence over international organizations such as the United Nations, the IMF, the World Bank and the WTO.  When you step back and take a look at the big picture, there is little doubt about who runs the world.  It is just that most people don’t want to admit the truth.

The ultra-wealthy don’t run down and put their money in the local bank like you and I do.  Instead, they tend to stash their assets in places where they won’t be taxed such as the Cayman Islands.  According to a report that was released last summer, the global elite have up to 32 TRILLION dollars stashed in offshore banks around the globe.

U.S. GDP for 2011 was about 15 trillion dollars, and the U.S. national debt is sitting at about 16 trillion dollars, so you could add them both together and you still wouldn’t hit 32 trillion dollars.

And of course that does not even count the money that is stashed in other locations that the study did not account for, and it does not count all of the wealth that the global elite have in hard assets such as real estate, precious metals, art, yachts, etc.

The global elite have really hoarded an incredible amount of wealth in these troubled times.  The following is from an article on the Huffington Post website…

Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues, according to research published on Sunday.

The study estimating the extent of global private financial wealth held in offshore accounts – excluding non-financial assets such as real estate, gold, yachts and racehorses – puts the sum at between $21 and $32 trillion.

The research was carried out for pressure group Tax Justice Network, which campaigns against tax havens, by James Henry, former chief economist at consultants McKinsey & Co.

He used data from the World Bank, International Monetary Fund, United Nations and central banks.

But as I mentioned previously, the global elite just don’t have a lot of money.  They also basically own just about every major bank and every major corporation on the entire planet.

According to an outstanding NewScientist article, a study of more than 40,000 transnational corporations conducted by the Swiss Federal Institute of Technology in Zurich discovered that a very small core group of huge banks and giant predator corporations dominate the entire global economic system…

An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The researchers found that this core group consists of just 147 very tightly knit companies…

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

The following are the top 25 banks and corporations at the heart of this “super-entity”.  You will recognize many of the names on the list…

1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
9. UBS AG
10. Merrill Lynch & Co Inc
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
17. Natixis
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Société Générale
25. Bank of America Corporation

The ultra-wealthy elite often hide behind layers and layers of ownership, but the truth is that thanks to interlocking corporate relationships, the elite basically control almost every Fortune 500 corporation.

The amount of power and control that this gives them is hard to describe.

Unfortunately, this same group of people have been running things for a very long time.  For example, New York City Mayor John F. Hylan said the following during a speech all the way back in 1922…

The real menace of our Republic is the invisible government, which like a giant octopus sprawls its slimy legs over our cities, states and nation. To depart from mere generalizations, let me say that at the head of this octopus are the Rockefeller-Standard Oil interests and a small group of powerful banking houses generally referred to as the international bankers. The little coterie of powerful international bankers virtually run the United States government for their own selfish purposes.

They practically control both parties, write political platforms, make catspaws of party leaders, use the leading men of private organizations, and resort to every device to place in nomination for high public office only such candidates as will be amenable to the dictates of corrupt big business.

These international bankers and Rockefeller-Standard Oil interests control the majority of the newspapers and magazines in this country. They use the columns of these papers to club into submission or drive out of office public officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government. It operates under cover of a self-created screen [and] seizes our executive officers, legislative bodies, schools, courts, newspapers and every agency created for the public protection.

These international bankers created the central banks of the world (including the Federal Reserve), and they use those central banks to get the governments of the world ensnared in endless cycles of debt from which there is no escape.  Government debt is a way to “legitimately” take money from all of us, transfer it to the government, and then transfer it into the pockets of the ultra-wealthy.

Today, Barack Obama and almost all members of Congress absolutely refuse to criticize the Fed, but in the past there have been some brave members of Congress that have been willing to take a stand.  For example, the following quote is from a speech that Congressman Louis T. McFadden delivered to the U.S. House of Representatives on June 10, 1932…

Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. The Federal Reserve Board, a Government board, has cheated the Government of the United States and the people of the United States out of enough money to pay the national debt. The depredations and iniquities of the Federal Reserve Board has cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.

Sadly, most Americans still believe that the Federal Reserve is a “federal agency”, but that is simply not correct.  The following comes from factcheck.org…

The stockholders in the 12 regional Federal Reserve Banks are the privately owned banks that fall under the Federal Reserve System. These include all national banks (chartered by the federal government) and those state-chartered banks that wish to join and meet certain requirements. About 38 percent of the nation’s more than 8,000 banks are members of the system, and thus own the Fed banks.

According to researchers that have looked into the ownership of the big Wall Street banks that dominate the Fed, the same names keep coming up over and over: the Rockefellers, the Rothschilds, the Warburgs, the Lazards, the Schiffs and the royal families of Europe.

But ultra-wealthy international bankers have not just done this kind of thing in the United States.  Their goal was to create a global financial system that they would dominate and control.  Just check out what Georgetown University history professor Carroll Quigley once wrote…

[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.

Sadly, most Americans have never even heard of the Bank for International Settlements, but it is at the very heart of the global financial system.  The following is from Wikipedia…

As an organization of central banks, the BIS seeks to make monetary policy more predictable and transparent among its 58 member central banks. While monetary policy is determined by each sovereign nation, it is subject to central and private banking scrutiny and potentially to speculation that affects foreign exchange rates and especially the fate of export economies. Failures to keep monetary policy in line with reality and make monetary reforms in time, preferably as a simultaneous policy among all 58 member banks and also involving the International Monetary Fund, have historically led to losses in the billions as banks try to maintain a policy using open market methods that have proven to be based on unrealistic assumptions.

The ultra-wealthy have also played a major role in establishing other important international institutions such as the United Nations, the IMF, the World Bank and the WTO.  In fact, the land for the United Nations headquarters in New York City was purchased and donated by John D. Rockefeller.

The international bankers are “internationalists” and they are very proud of that fact.

The elite also dominate the education system in the United States.  Over the years, the Rockefeller Foundation and other elitist organizations have poured massive amounts of money into Ivy League schools.  Today, Ivy League schools are considered to be the standard against which all other colleges and universities in America are measured, and the last four U.S. presidents were educated at Ivy League schools.

The elite also exert a tremendous amount of influence through various secret societies (Skull and Bones, the Freemasons, etc.), through some very powerful think tanks and social clubs (the Council on Foreign Relations, the Trilateral Commission, the Bilderberg Group, the Bohemian Grove, Chatham House, etc.), and through a vast network of charities and non-governmental organizations (the Rockefeller Foundation, the Ford Foundation, the World Wildlife Fund, etc.).

But for a moment, I want to focus on the power the elite have over the media.  In a previous article, I detailed how just six monolithic corporate giants control most of what we watch, hear and read every single day.  These giant corporations own television networks, cable channels, movie studios, newspapers, magazines, publishing houses, music labels and even many of our favorite websites.

Considering the fact that the average American watches 153 hours of television a month, the influence of these six giant corporations should not be underestimated.  The following are just some of the media companies that these corporate giants own…

Time Warner

Home Box Office (HBO)
Time Inc.
Turner Broadcasting System, Inc.
Warner Bros. Entertainment Inc.
CW Network (partial ownership)
TMZ
New Line Cinema
Time Warner Cable
Cinemax
Cartoon Network
TBS
TNT
America Online
MapQuest
Moviefone
Castle Rock
Sports Illustrated
Fortune
Marie Claire
People Magazine

Walt Disney

ABC Television Network
Disney Publishing
ESPN Inc.
Disney Channel
SOAPnet
A&E
Lifetime
Buena Vista Home Entertainment
Buena Vista Theatrical Productions
Buena Vista Records
Disney Records
Hollywood Records
Miramax Films
Touchstone Pictures
Walt Disney Pictures
Pixar Animation Studios
Buena Vista Games
Hyperion Books

Viacom

Paramount Pictures
Paramount Home Entertainment
Black Entertainment Television (BET)
Comedy Central
Country Music Television (CMT)
Logo
MTV
MTV Canada
MTV2
Nick Magazine
Nick at Nite
Nick Jr.
Nickelodeon
Noggin
Spike TV
The Movie Channel
TV Land
VH1

News Corporation

Dow Jones & Company, Inc.
Fox Television Stations
The New York Post
Fox Searchlight Pictures
Beliefnet
Fox Business Network
Fox Kids Europe
Fox News Channel
Fox Sports Net
Fox Television Network
FX
My Network TV
MySpace
News Limited News
Phoenix InfoNews Channel
Phoenix Movies Channel
Sky PerfecTV
Speed Channel
STAR TV India
STAR TV Taiwan
STAR World
Times Higher Education Supplement Magazine
Times Literary Supplement Magazine
Times of London
20th Century Fox Home Entertainment
20th Century Fox International
20th Century Fox Studios
20th Century Fox Television
BSkyB
DIRECTV
The Wall Street Journal
Fox Broadcasting Company
Fox Interactive Media
FOXTEL
HarperCollins Publishers
The National Geographic Channel
National Rugby League
News Interactive
News Outdoor
Radio Veronica
ReganBooks
Sky Italia
Sky Radio Denmark
Sky Radio Germany
Sky Radio Netherlands
STAR
Zondervan

CBS Corporation

CBS News
CBS Sports
CBS Television Network
CNET
Showtime
TV.com
CBS Radio Inc. (130 stations)
CBS Consumer Products
CBS Outdoor
CW Network (50% ownership)
Infinity Broadcasting
Simon & Schuster (Pocket Books, Scribner)
Westwood One Radio Network

NBC Universal

Bravo
CNBC
NBC News
MSNBC
NBC Sports
NBC Television Network
Oxygen
SciFi Magazine
Syfy (Sci Fi Channel)
Telemundo
USA Network
Weather Channel
Focus Features
NBC Universal Television Distribution
NBC Universal Television Studio
Paxson Communications (partial ownership)
Trio
Universal Parks & Resorts
Universal Pictures
Universal Studio Home Video

And of course the elite own most of our politicians as well.  The following is a quote from journalist Lewis Lapham…

“The shaping of the will of Congress and the choosing of the American president has become a privilege reserved to the country’s equestrian classes, a.k.a. the 20% of the population that holds 93% of the wealth, the happy few who run the corporations and the banks, own and operate the news and entertainment media, compose the laws and govern the universities, control the philanthropic foundations, the policy institutes, the casinos, and the sports arenas.”

Have you ever wondered why things never seem to change in Washington D.C. no matter who we vote for?

Well, it is because both parties are owned by the establishment.

It would be nice to think that the American people are in control of who runs things in the U.S., but that is not how it works in the real world.

In the real world, the politician that raises more money wins more than 80 percent of the time in national races.

Our politicians are not stupid – they are going to be very good to the people that can give them the giant piles of money that they need for their campaigns.  And the people that can do that are the ultra-wealthy and the giant corporations that the ultra-wealthy control.

Are you starting to get the picture?

There is a reason why the ultra-wealthy are referred to as “the establishment”.  They have set up a system that greatly benefits them and that allows them to pull the strings.

So who runs the world?

They do.  In fact, they even admit as much.

David Rockefeller wrote the following in his 2003 book entitled “Memoirs”…

“For more than a century, ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure — one world, if you will. If that is the charge, I stand guilty, and I am proud of it.”

There is so much more that could be said about all of this.  In fact, an entire library of books could be written about the power and the influence of the ultra-wealthy international bankers that run the world.

But hopefully this is enough to at least get some conversations started.

So what do you think about all of this?  Please feel free to post a comment with your thoughts below…

The Treasury Has Already Minted Two Trillion Dollar Coins

What the advocates of the $1 trillion coin are, therefore, proposing is to tax us in a hidden way.  This is not just taxation without representation.  It’s also taxation with misrepresentation.

While inflation, let alone hyperinflation, has not yet occurred, everything is in place for this outcome. 

forbes.com | Jan 19, 2013

by Laurence Kotlikoff

No doubt, you’ve heard about the latest irresponsible fiscal/monetary proposal to be floated by members of Congress and the erstwhile economist, Paul Krugman, whose lunch was just eaten by Jon Stewart.  

It entails having the Treasury avoid the federal debt limit by handing the Federal Reserve a single $1 trillion platinum coin.  The Fed would then credit the Treasury’s bank account with $1 trillion, which the Fed could spend on the President’s lunch, a $200 toilet seat, a new aircraft carrier, more Medicare spending – anything it wants.

Is there anything special about platinum? Well, yes.  The coin doesn’t have to contain $1 trillion worth of platinum.  It can be microscopic for all the Fed cares as long as they can use a electron microscope to read the $1 trillion In God We Trust inscription.   But it has to be made out of platinum.  No other metal or substance, like a piece of pizza, will do.  The reason is that the Treasury has the right, by an obscure law, to mint platinum coins, but only platinum coins.  Otherwise, making money by making money is the Fed’s domain.

Countries that pay for what they spend by printing money or, these days, creating it electronically, are usually broke.  That certainly fits our bill.

Our country is completely, entirely, and thoroughly broke.  In fact, we’re in worst fiscal shape than any developed country, including Greece.   We have fantastically large expenditures coming due in the form of Social Security, Medicare, and Medicaid payments to the baby boom generations – I.O.U.s, which we’ve conveniently kept off the books.

When the boomers are fully retired, Uncle Sam will need to cough up $3 trillion (in today’s dollars) per year to pay us (I’m one of us.) these benefits.   To put $3 trillion in perspective, it’s 1.5 times Russia’s GDP.

These benefits are called entitlements because, presumably, we feel we are entitled to hit up our children to cover their costs.  Borrowing from them and letting them tax themselves and their kids to pay themselves back is a good trick, but it’s running afoul of the debt ceiling.  Taxing them more and promising to the pay them benefits they’ll never receive is an old trick that’s run its course.  So we’re now onto printing money that will, we hope, raise prices only after we have protected our assets against inflation.

And we’re printing lots and lots of money.  Indeed, over the past five years, the Treasury has, in effect, done its $1 trillion coin trick twice.

Come again?

Well, substitute a $2 trillion piece of paper called a Treasury bond for the platinum coin.  Suppose the Treasury prints up such a piece of paper and hands it to the Fed and the Fed puts $2 trillion into its account.  No difference right, except for the lack of platinum.

Next suppose the Treasury doesn’t hand the $2 trillion bond to the Fed directly, but hands it to John Q. Public who gives the Treasury $2 trillion and then hands the bond to the Fed in exchange for $2 trillion.  What’s the result?  It’s the same.  The Treasury has $2 trillion to spend.  John Q. Public has his original $2 trillion.  And the Fed is holding the piece of paper labeled U.S. Treasury bond.

Finally, suppose the Treasury does this operation in smaller steps and over five years, specifically between 2007 and today.  It sells, i.e., hands to John Q. in exchange for money, smaller denomination bonds, which Johns Q. sells to the Fed, i.e., hands to the Fed in exchange for money.   Further, suppose the sum total of all these bond sales to the public and Fed purchases of the bonds from the public equals $2 trillion.  Voila, you’ve got U.S. monetary policy since 2007.

In 2007, the monetary base – the amount of money our government printed in its entire 231 years of existence totaled $800 billion.  Today it totals $2.8 trillion.  And it increased by this amount via the process just described – the Treasury’s effective minting out of thin air two $1 trillion platinum coins.

Now what happens when the Treasury spends its freebee money?  It raises prices of the goods and services we buy or keeps them from falling as much as would otherwise be the case.  Either way, the money we have in our pockets or in the bank or coming to us over time as, for example, interest plus principal on bonds we’ve bought in the past – all this money loses purchasing power.  So we are effectively taxed $2 trillion.

What the advocates of the $1 trillion coin are, therefore, proposing is to tax us in a hidden way.  This is not just taxation without representation.  It’s also taxation with misrepresentation.   The fact that a Nobel Laureate in economics would propose this without making clear this fact raises the question of whether his prize should be revoked.  Lance Armstrong, after all, is losing his medals for discrediting his profession.  Perhaps the Nobel committee should consider taking back Krugman’s.

This is no innocent omission.  Every PhD economist is taught about seigniorage.  It’s a term that was coined (excuse the pun) in the 15th century and stems from the right of feudal lords – seignurs – to coin money, use it to buy, say, chickens and debase the purchasing power of the coins they had given their serfs in the past for, say, wild boar.

Today, 12 cents out of ever dollar being spent by our government is being printed.  As indicated, the money supply has more than tripled.  While inflation, let alone hyperinflation, has not yet occurred, everything is in place for this outcome.  If you want to see what things will look like, check out Zimbabwe, which has surely been reading Krugman’s articles.

Foreign holdings of US debt increased to record $5.56 trillion in November

Associated Press | Jan 16, 2013

WASHINGTON — Foreign demand for U.S. Treasury securities rose to a record level in November, further evidence that overseas investors remained confident in U.S. debt despite looming budget battles in Washington.

The Treasury Department says foreign holdings of U.S. Treasurys rose 0.6 percent in November from October to $5.56 trillion. It was the 11th consecutive monthly gain.

China, the top foreign holder, increased its portfolio by $200 million to $1.17 trillion. Japan, the second-largest holder, boosted its investments by $900 million to $1.13 trillion.

Demand kept rising even as Congress neared a deadline to raise its $16.4 trillion borrowing limit. The government reached its borrowing limit on Dec. 31, but began using bookkeeping maneuvers to keep operating. The Treasury is expected to exhaust those measures by mid-February to early March.

$1 Trillion Platinum Coin: Yes, It Really Originated In A ‘Simpsons’ Episode

forbes.com | Jan 13, 2013

Sunday mornings represent prime time for political dicussions. Let’s limit ours to silly policy, platinum and The Simpsons. 

First off, let’s get this out of the way: The $1 trillion platinum coin will not happen. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” says a Treasury spokesman.

Now, speculation and chatter swirled for weeks about the possibility, and more importantly, the fiscal feasibility, behind the trillion-dollar coin. Some very smart folks—right down to a former U.S. mint chief—suggested the Treasury could take advantage of a loophole, mint a $1 trillion platinum coin and ship it to the Federal Reserve. In theory it would then allow the U.S. to keep paying its bills, even though the country surpassed its $16.4 trillion debt limit. Another solution: Perhaps the government can issue IOU’s that we redeem at our local Wells Fargo or Bank of America.

Treasury, Fed Oppose Using Platinum Coin to Avoid Debt Ceiling

The coin thing sounded great, though, right? Well, it sounded a bit far-fetched…even more so when you consider that fiscal theorem originated in Los Angeles, not Washington D.C. It is, in fact, ripped right from the halcyon days of the late 1990s—when Butterfinger BB’s still existed, and The Simpsons was in its ninth season. In that stretch of episodes, there was one called The Trouble With Trillions, an amusing romp that alluded to Stark Trek and included Fidel Castro.

The Trouble with Trillions
Johnson sends Homer on a secret mission. They reveal that in 1945, President Harry Truman printed a one trillion-dollar bill (with his photo on it) to help reconstruct post-war Europe.

Here’s a succinct episode synopsis from Ed Yardeni, a widely followed economist, that my colleague, Chris Helman, unsurfaced for us from a Yardeni client note:

In 1945, President Harry Truman secretly printed a one-trillion-dollar bill with his photo on it. He did so to help pay for the post-war reconstruction of Europe. He entrusted Montgomery Burns with the mission of transporting the large denomination to the Europeans. However, the money never arrived, and the FBI suspects Burns kept the money. That’s the premise of an episode of The Simpsons, first aired on April 5, 1998 titled, “The Trouble with Trillions.” Homer Simpson is caught cheating on his taxes and is turned into an informant by the FBI. Along the way, the bill is stolen by Fidel Castro.

I looked for the episode on YouTube. Alas, Fox and News Corp. keep a tight lid on copyright content. I found only this, the bit in which Castro makes off with the $1 trillion bill:

That Yardeni included it in his daily market musings reflects how ridiculous the whole thing became. A discussion over an idea dreamt up more than a decade earlier as a Simpsons plot device.

US ‘seriously’ considering $1 trillion coin to pay off debt

A legal loophole means the US Treasury is able to mint a platinum coin and assign any value to it. Photo: Peter Macdiarmid/Getty Images

The US is “seriously” considering creating a $1 trillion platinum coin to write down part of its debt to stop the world’s largest economy defaulting as early as next month, according to financial analyst Cullen Roche.

A ‘Double Eagle’ gold twenty dollar coin is displayed at Goldsmith’s Hall in London. Nearly half a million of these coins were originally minted in the middle of the Great Depression in the US. Only 13 are known today after the rest were melted down before they ever left the US Mint, sacrificed as part of a strategy to stabilise the American economy. In 2002 a Double Eagle sold at auction for $7.6 million.

Telegraph | Jan 7, 2013

By Rebecca Clancy

Speaking to the BBC’s Today programme, Mr Roche, founder of Orcam Financial Group and blogger at Pragmatic Capitalism, said the idea was being taken “somewhat seriously” in Washington.

“I know it’s been spoken about at the White House and a number of prominent people, including congressman, are talking about it,” he said.

In theory the US Treasury would mint the coin and deposit it into its own account at the Federal Reserve, which would allow the government to write down or cancel $1 trillion of its $16.4 trillion debt pile.

The Treasury began shuffling funds in order to pay government bills after the country hit its $16 trillion debt limit on December 31. However, the Treasury’s accounting maneouvres will last only until around the end of February as the latest fiscal cliff deal gives US politicians two months to raise the debt limit before the country defaults.

The idea, which was raised last year, has been floated by several financial analysts in the States over recent days as Congress and the government approach the key fiscal vote.

Mr Roche said the idea was an “accounting gimmick”, but noted it was just “one really silly idea [being used] to fight another silly idea”.

“The idea of the US willingly defaulting on debt is beyond crazy,” he said.

“We started kicking the idea around a year ago and it was really a joke and the fact it’s become something sort of serious, well it’s a sad state of affairs that it’s become so dysfunctional in Congress that this is something we’re having to resort to.”

Writing in his New York Times blog, economist Paul Krugman, said that while he did not expect the Treasury to go ahead with this “gimmick”, there could be a case for it.

“This is all a gimmick — but since the debt ceiling itself is crazy, allowing Congress to tell the president to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand,” he said.

Mr Roche also did not expect the Treasury to go ahead and mint a $1trillion coin, but said President Obama could use it as threat.

“I don’t think it’s something that will end up being used but I think that if it comes down to it we could potentially see the President use this as something where he says, ‘look if you’re going to threaten to default on debt then I’m going to threaten to use the coin loophole’.”

There are limits on how much paper money the US can circulate and rules that govern coinage on gold, silver, and copper.

But, the Treasury has broad discretion on coins made from platinum, and in theory, it is allowed to mint a platinum coin and assign any value to it.

However, it is worth noting that this was intended to issue commemorative coins and not as a fiscal measure, Mr Krugman said.

Britain’s biggest bank: ‘Sorry about helping all those drug and terror gangs’

dnaindia.com | Jul 18, 201

By Louise Armitstead & Richard Blackden

HSBC was forced to apologise publicly yesterday (Tuesday) before the US Senate – and its compliance chief resigned – over facilitating a multi-billion-dollar money-laundering operation for drug gangs, terrorists and rogue nations worldwide.

Britain’s biggest bank was “pervasively polluted for a long time” as it allowed funds to be shifted to and from its branches in the United States as far afield as Mexico, Syria, the Cayman Islands, Iran and Saudi Arabia, the hearing was told.

Issuing an apology, Stuart Gulliver, chief executive of HSBC, said: “We have sometimes failed to meet the standards regulators and customer expect… we take responsibility for fixing what went wrong.”

HSBC, the only British bank with US branches, is now braced for a “substantial” fine which analysts said could be up to $1 billion (£640 million). The latest banking scandal comes in the wake of Barclays’ £290 million fines for its role in rigging Libor.

The hearing by the Senate’s Committee on Homeland Security was the culmination of a year-long investigation. Its 335-page report into HSBC saw the committee sift through 1.4 million documents and interview 75 HSBC officials, as well as bank regulators. It highlighted damning examples of lax controls and inadequate compliance by staff at HSBC’s 470 US branches.

The bank allegedly ignored specific US measures designed to prevent transactions being made involving terrorists, drug lords and rogue regimes. Two HSBC subsidiaries, for example, processed 25,000 transactions over seven years, worth a total of $19.4 billion, without disclosing that the cash had links to Iran. The bank is also alleged to have moved billions of dollars in cash from Mexican subsidiary HBMX to its US network – despite being warned by both US and Mexican authorities that such sums could only be linked to drug trafficking.

The report said that HSBC accepted more than $15 billion in cash between 2006 and 2009 from Mexico, Russia and other countries at high risk of money-laundering but failed properly to monitor transactions.

The bank even managed to label Mexico, ravaged by corruption and drug wars, as “low risk”, the committee said. HSBC also provided US dollars and banking services to banks in Saudi Arabia and Bangladesh despite apparent links to terrorist financing, according to the report.

David Bagley, HSBC’s global head of compliance who had worked at the bank for 20 years, yesterday resigned in front of the committee. He admitted HSBC had “fallen short of our own and regulators’ expectations”.

Senator Carl Levin, who led the committee’s investigation, said HSBC’s lack of controls in America and abroad between 2006 and 2010 had been “a recipe for trouble”.

The report said many of the abuses occurred as a result of HSBC’s failure to monitor its so-called “bearer share accounts”, facilities that legally keep secret the owners and some transactions. At one stage the Miami branch had 1,670 bearer share accounts, holding $2.6 billion of assets and generating revenues of $26 million.

Levin told the hearing: “In an age of international terrorism, drug violence in our streets and on our borders, and organised crime, stopping illicit money flows that support those atrocities is a national security imperative.”

The chairman accepted HSBC had overhauled its systems since the failures were found and was “committed to cleaning its house”.

The investigation into HSBC is the latest US attempt to crack down on money-laundering. Last month, ING agreed to pay $619 million to settle allegations that it broke American sanctions against Cuba and Iran.

Son of ‘God’s banker’ Roberto Calvi: Mafiosi who hanged father from Blackfriars Bridge still at large in London

Family moment: Italian financier Roberto Calvi (right) and his son Carlo in a picture taken by Carlo’s sister Anna in 1982, the year Roberto was found hanging under Blackfriars Bridge in London

Son of ‘God’s banker’ Roberto Calvi talks 30 years after father’s death

Carlo Calvi, 58, has spent £15million conducting his own investigation

Daily Mail | May 26, 2012

By Claudia Joseph

It was a very public death.

In the grey light of dawn, the body of a man was found hanging from scaffolding underneath Blackfriars Bridge in Central London, his feet dangling in the water.

Roberto Calvi was found hanging from scaffolding on Blackfriars Bridge, his pockets loaded with bricks. Both the Calvi and Sindona cases remain unsolved.

He was wearing an expensive Italian suit and his pockets  were weighted with bricks and stuffed with cash.

Initially police believed that Italian financier Roberto Calvi, known as ‘God’s banker’ because of his close financial ties with the Vatican, had committed suicide.

But the dead man’s son, Carlo Calvi, commissioned an independent forensic report, which concluded in October 2002 that he had been murdered.

In 2005, Italian prosecutors brought murder charges against five suspects but all were acquitted after the subsequent trial in Rome.

Now, 30 years after his father was found dead, Carlo remains convinced that he was murdered and wants police to reopen the case.

Carlo believes that up to a dozen men from the Italian underworld were involved in the murder – and claims many are still at large in London.

‘A long time has passed since my father’s murder on June 18, 1982,’ he said. ‘It is not unrealistic to believe that there are individuals involved in his death still alive. I want the City of London Police to pursue these individuals and put them where they belong. It is a matter of public interest. These people are still operating in London. We should all know who they are and what they are doing.’

Carlo, aged 58 and himself a former banker, has dedicated his life to seeking justice for his father, who was the chairman of Italy’s second-largest bank, Banco Ambrosiano. The bank subsequently collapsed with debts  of half a billion pounds amid dark rumours of laundered Mafia drug money, a link with the clandestine ‘P2’ Masonic lodge and secret political slush funds.

Now living in Montreal, Canada, Carlo spends his time travelling between his home and London, New York and Milan – sifting through  evidence, meeting secretive contacts willing to talk about Italian organised crime and poring over the transcripts of Mafia trials.

His obsession with finding the men involved in his father’s murder has come at a price – both financial and personal. He has spent £15 million on fees for lawyers, private detectives and other experts in an attempt to identify the guilty.

And his marriage to Marie Josee, mother of his two sons, Roberto, 18, and Nicola, 16, broke up in 2000. He has also not seen his sister Anna, 55, a lecturer at Warwick University, since their mother’s death from Parkinson’s disease in 2006.

‘There’s no doubt I have fixated on the case,’ he said. ‘I’m sure that played a part in my divorce and it has affected my relationship with my sister. She doesn’t necessarily agree with the things I have done.’

Carlo was a 28-year-old post-graduate student at Washington’s Georgetown University when he recieved the telephone call that would change his life. His mother Clara, then 60, and sister Anna, 25, were staying with him in Washington, having been warned by his father that their lives were in danger.

‘My mother had been living with me in America for about six weeks because my father feared for her safety,’ he recalled. ‘My sister arrived the day before he died. We were awoken by the telephone in the middle of the night when my uncle Luciano, my mother’s brother, called from Bologna to say that he had heard the news on the radio.

‘He spoke to my mother who had a complete breakdown. She was devastated. We had to call a doctor. I remember telling my uncle that he could have been more careful with his words. I think he was a little too direct.’

Within hours the family had been escorted by American police to a secret apartment in the Watergate complex, famous for the break-in that brought about the fall of President Richard Nixon. They spent the next few weeks under police guard before returning to Carlo’s home.

‘My mother never recovered from my father’s death,’ said Carlo. ‘She and my father had always dreamed  of living near Lake Como. They were very close and she remained very attached to her dreams.

‘The following year, she suffered  the first symptoms of Parkinson’s. I don’t think she got it as a direct result of my father’s murder – but surely it doesn’t help if you have lived through such a shock?’

Carlo’s quest for the truth began a month after his father’s death when  a London inquest recorded a verdict of suicide. It was hardly a likely explanation. Six days before his death, Calvi had shaved off his moustache and skipped bail in Italy pending an appeal against a four-year suspended prison sentence for illegally transferring £18 million out of the country.

Fearing for his life, the 62-year-old banker chartered a private plane and fled to Britain on a false passport with Sardinian business tycoon Silvano  Vittor, a long-term associate who assumed the role of bodyguard. He was taken to a safe house in Chelsea Cloisters, West London – believed to have been organised by another Sardinian businessman, Flavio Carboni.

Calvi had already written to Pope John Paul II  warning him of the imminent collapse of Banco Ambrosiano, saying that it would ‘provoke a catastrophe of unimaginable proportions in which the Church will suffer the gravest damage’.

Calvi also had close links to the Mafia, the Neapolitan Camorra – a Mafia-like criminal organisation based in Naples – and the Masonic lodge P2. The latter was described by Calvi’s former Banco Ambrosiano mentor, Sicilian Michele  Sindona, as a ‘state within a state’ because of its powerful members, including former Italian Prime  Minister Silvio Berlusconi.

Carlo refused to accept the 1982 inquest’s suicide verdict. He hired one of Britain’s best-known barristers, George Carman QC, to represent the family at a second hearing, which recorded an open verdict. Still not satisfied, he demanded that his father’s body was exhumed.

Carlo then commissioned the  independent forensic report, which concluded in October 2002 that his father had been murdered as the injuries to his neck were inconsistent with hanging, there was no trace of rust and paint on his shoes from the scaffolding and he had not touched the bricks in his pockets.

In 2005, Vittor and Carboni were accused of killing Calvi. But the duo and three others – Mafia financier Pippo Calò, businessman Ernesto Diotallevi and Carboni’s girlfriend Manuela  Kleinszig – were acquitted 20 months later.

Another name linked to Calvi’s murder was Mafia ‘supergrass’ Francesco Di Carlo, known as ‘Frankie the Strangler’.

According to Di Carlo, the killers were Vincenzo Casillo and Sergio Vaccari of the Naples Camorra.

‘Calvi was naming names,’ said Di Carlo. ‘No one had any trust in him any more. He owed a lot of money. His friends had all distanced themselves. Everyone wanted to get rid of him. I was in Rome and received a phone call from a friend in Sicily telling me that a certain high- ranking Mafia member had just been killed.

‘I will never forget the date because of this: it was June 16, 1982 – two days before Calvi was murdered. The friend told me that Pippo Calò was trying to get hold of me because he needed me to do something for him,’ Di Carlo claims.

‘When I finally spoke to Pippo, he told me not to worry, that the problem had been taken care of.

‘That’s a code we use in the Cosa Nostra. We never talk about killing someone. We say they have been taken care of.’

Determined: Carlo Calvi (pictured) has dedicated his life to seeking justice for his father

Carlo Calvi believes that the supergrass is telling the truth. He agrees with Di Carlo that his father’s killers were Casillo – the second-in-command of the Camorra, who was  murdered by a car bomb in Rome in 1983 – and his sidekick Vaccari, who was stabbed to death three months after Calvi’s murder.

Vaccari was also a former tenant of Calvi’s last known home, the rented flat at Chelsea Cloisters.

Carlo points out that both his father and Casillo had business cards belonging to Alvaro Giardili, a Camorra associate, in their possession when they died.

‘I’m not suggesting Alvaro Giardili was involved, but he definitely  connects to some of the individuals involved in the case,’ Carlo said. ‘When my father died, he had Giardili’s business card in his wallet.

‘One of the first people to ring us when we returned to the house after my father died was Giardili. In general, I consider Di Carlo a reliable witness. But I am more interested in what he has to say about the social network of the Italian underground in London during the Eighties.’

It is that underground movement that Carlo is now hoping will be exposed – even if his own safety  is jeopardised.

Calling for a third inquest, he said: ‘The police have already admitted it was murder but I would like to see the case reviewed in open court and the remaining defendants in their jurisdiction pursued.

‘When I lived in Italy I had bodyguards but now I have to rely on my own judgment and instinct.

‘There have been instances when I have been concerned for my safety but I try not to be confrontational and protect myself.

‘If the worst happens, I am not the only person who has this information. I will not rest until I find out the truth about my father’s death.’

Prosecutors investigate Vatican Bank mafia link

Father Treppiedi, 36, was serving as a priest in Alcamo, near Trapani, said to be the richest parish on the Mafia’s island stronghold of Sicily

Anti Mafia prosecutors have asked the secretive Vatican Bank to disclose details of an account held by a priest in connection with a money laundering and fraud investigation, it emerged on Sunday.

Telegraph | Jun 10, 2012

By Nick Pisa in Rome

The official request was made more than a month ago but so far the Vatican Bank, known as the Institute for Religious Works, has refused to disclose any records of the account held by father Ninni Treppiedi – who is currently suspended from serving as a priest.

Investigators want to know more about vast sums of money that are said to have passed through his account to establish if they were money laundering operations by on the run Mafia Godfather, Matteo Messina Denaro.

The reports emerged in the Italian media and came just two weeks after the head of the Vatican Bank, Ettore Gotti Tedeschi, was sacked amid claims of power struggles and corruption within the Holy See which have been linked to the leaking of sensitive documents belonging to Pope Benedict XVI.

More in line with a Dan Brown thriller, it is not the first time that the Vatican Bank has been embroiled in claims of Mafia money laundering. Thirty years ago this month financier Roberto Calvi was found hanging under London’s Blackfriars Bridge with cash and bricks stuffed into his pockets.

Initially City of London police recorded the death as suicide but Italian authorities believe it was murder after it emerged Calvi, known as God’s Banker because of his links to the Vatican Bank, had been trying to launder millions of pounds of mob money via its accounts and through his own Banco Ambrosiano which had collapsed spectacularly.

Father Treppiedi, 36, was serving as a priest in Alcamo, near Trapani, said to be the richest parish on the Mafia’s island stronghold of Sicily, and he was suspended after a series of questionable transactions of church funds and which has also led to his local bishop Francesco Micciche being sacked.

Trapani prosecutor Marcello Viola made the request six weeks ago for details of the account held by Father Treppiedi at the Institute of Religious Works to be disclosed but according to reports in Italian media, as yet the go ahead has still not been given by the Vatican.

In particular prosecutors are said to be looking at financial transactions made through Father Treppiedi’s account at the Vatican Bank between 2007 and 2009 and which came to almost one million euros but paperwork explaining the source of the money is said to be missing.

Attention is also focusing on several land and property deals made by the parish which is in Messina Denaro’s heartland in the area around Trapani and where he still commands fear and respect.

There is speculation that Gotti Tedeschi was aware of the possible Mafia link and was about to name names and police seized paperwork from his home which is said to detail his suspicions and which he had prepared for a handful of trusted sources as he feared his life was possible in danger.

In a statement prosecutor Viola said:”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.”

Transactions by the Vatican Bank are already under the spotlight with leading Italian newspaper Corriere della Sera saying Gotti Tedeschi was aware of accounts held by “politicians, shady intermediaries, contractors and senior (Italian) officials, as well as people believed to be fronts for Mafia bosses.”

Of particular interest are said to be property investments and property sales that could potentially have been used to disguise money transfers and launder money – all this in the light of report earlier this year that the Vatican Bank was not completely transparent in its dealings despite efforts to be so.

The latest development comes as prosecutors in the Vatican continue to question the Pope’s butler Paolo Gabriele, 46, in connection with the leaking of documents which then ended up in a whistle blowing book published by an Italian journalist called His Holiness.

No-one from the Vatican was immediately available to comment.

Vatican Banker Fears for His Life: Gotti Tedeschi Could Turn Whistle-Blower

Ettore Gotti Tedeschi feared for his life when he was ousted as head of the Vatican bank after a vote of no confidence May 24. Three decades ago, another of “God’s bankers” was found hanging from a noose under Blackfriars Bridge in London. Tony Gentile, Reuters / Landov

The recently ousted head of the Vatican bank may have evidence that the organization is involved in money laundering—and now he’s afraid for his life.

He spent the last two years struggling endlessly against the Vatican’s powerful Vatican forces, whom he says blocked his every attempt at transparency.

Daily Beast | Jun 10, 2012

By Barbie Latza Nadeau

Ettore Gotti Tedeschi feared for his life when he was ousted as head of the Vatican bank after a vote of no confidence May 24.

The 67-year-old Italian was brought in by the pope’s secretary of state, Cardinal Tarcisio Bertone, in 2009 with a mandate to turn the troubled bank around and help “facilitate transparency” with an eye toward quashing rumors that the bank was a den of iniquity. The Vatican had hoped that through Gotti Tedeschi’s guidance, the tiny city-state could finally earn a coveted spot on the global Financial Action Task Force “white list” of states whose financial practices can be trusted.

In reality, Gotti Tedeschi says he found the bank’s record much worse than he could have imagined, and that he spent the last two years struggling endlessly against the Vatican’s powerful Vatican forces, whom he says blocked his every attempt at transparency. He stormed out of his final meeting of the board of the Vatican bank, known as the Institute for Religious Works (IOR), even before they cast their no-confidence vote against him. The bank says it dismissed him due to lack of management skills and “progressively erratic personal behavior.” But Gotti Tedeschi says he was ousted because he got too close to the truth about the bank’s alleged shady dealings. He told a Reuters journalist moments after he was sacked, “I have paid the price for transparency.”

A week after his ouster, Gotti Tedeschi was in trouble again. His home in Piacenza and his offices in Milan were searched by Italian police, who say they were combing for evidence that he was an “informed witness” with regard to questionable business dealings of Italy’s state-run defense and aerospace firm Finmeccanica, whose president is his close pal. He has not been arrested, nor is he officially under investigation, and the police say the Finmeccanica inquiry is a separate affair not at all related to his problems with the Vatican bank. But in searching his property, investigators reportedly found a treasure trove that could link the Vatican to all sorts of shady dealings and underworld characters. And the Vatican top brass desperately want to get their hands on it, sternly warning Italian police that because the Vatican is a “sovereign nation” their documents are protected under immunity, even if they are found during a criminal probe outside its borders. “The Holy See is surprised and concerned at the recent events that Professor Gotti Tedeschi is involved with,” said a Vatican statement issued Friday. “We have faith that the prosecutors and Italian judicial system will respect our sovereignty—recognized internationally—with regard to these documents.”

What they are reportedly worried about is a secret dossier that Gotti Tedeschi told friends he compiled “just in case something happens to me.” Local press reports say the dossier includes 47 different binders with emails from the pope, letters from cardinals, and notes and reports from various meetings tied to Vatican bank business. He had reportedly planned to deliver the dossier directly to Pope Benedict XVI, presumably as a counterargument to his May 24 firing. The cache reportedly contains irrefutable evidence that could substantiate claims that the IOR is involved in money laundering and tax-evasive practices. There were documents that allegedly show financial transactions between the Vatican and a number of surprising characters, including politicians and known middlemen for mafia bosses. If true, it would give Italian authorities a rare opening to investigate the Vatican’s banking practices with names, account numbers, and transaction dates of dealings with financial entities outside the Vatican’s historically secretive jurisdiction.

In 2010, Gotti Tedeschi and IOR general manager Paolo Cipriani were placed under criminal investigation by authorities in Rome on suspicion of alleged money laundering for shady transactions between the Vatican’s bank accounts. More than €23 million was frozen and later released after the Vatican allegedly cleansed itself by passing anti-fraud legislation. Gotti Tedeschi’s dossier reportedly also included a list of enemies who might want to harm him, including Cipriani, who is still under criminal investigation in the Italian judicial system from the 2010 affair. The Italian police are taking the banker’s enemy list seriously and are considering providing him with police protection.

There is little doubt that Tedeschi has reason to be worried for his safety. Three decades ago, another of “God’s bankers,” Roberto Calvi, was found hanging from a noose under Blackfriars Bridge in London. His pockets were weighted down with bricks and cash. Calvi was not the head of the IOR like Gotti Tedeschi, but he was closely tied to the Vatican’s secret banking structure as head of Banco Ambrosiano, which went bankrupt at the time amid allegations of money laundering, mafia collusion, and generally questionable banking practices. The Vatican owned a small stake in the bank, but wielded great influence over Calvi, who knew the Vatican’s deepest financial secrets. The mystery into Calvi’s death has never been solved. First thought to be a suicide, evidence later pointed to murder. “There are some similarities between the situation of Gotti Tedeschi and what my family lived through during the trial of currency violations of 1981,” Roberto Calvi’s son Carlo told The Daily Beast. He says his father could not have defended himself without exposing the whole structure, and that’s what led to his demise. “While it is difficult for the public to appreciate this, there has always been an attitude of intolerance, isolation, and stubborness with those who set up this type of fiduciary relationship to evade regulations, and this makes them take risks that would be unimaginable to most.”

But neither the Vatican nor Gotti Tedeschi seemed to have learned anything from the scandal surrounding Calvi’s death. “I do not know Gotti Tedeschi,” he says. “But I do know that the very same account structure that existed at the time of my father has continued to be used by IOR in a similar fashion and has even increased disproportionally in size.”

For now, Gotti Tedeschi is cooperating with Italian authorities. According to prosecutor Giuseppe Pignatone, Tedeschi told prosecutors he was “held hostage because he wanted transparency, especially with regard to certain Vatican accounts. It all started when I asked to have information about accounts that were not in the church’s name.” Where it goes from here is anyone’s guess.