The Vatican on Friday was hit by a new scandal, as
Italian police arrested a high-ranking Catholic Church official on
suspicion that he had plotted to illegally transport 20 million euros
(26 million dollars) from Switzerland to Italy.
Two other Italian suspects were arrested in the plan involving Monsignor Nunzio Scarano, an accountant at the Administration of the Patrimony of the Apostolic See (APSA) - the Holy See's central bank. The three face charges of corruption, fraud and other crimes.
The arrests came two days after Pope Francis announced that he had set up a five-member investigative panel to look into the activities of the Vatican's secretive bank, the Institute of Religious Works (IOR).
Prosecutors said Scarano paid Giovanni Maria Zito, a former intelligence officer, 400,000 euros (523,000 dollars) to transport the cash via private jet. Giovanni Carinzo, a financial broker, was also reportedly involved in the plot, which was aborted in the end.
The prelate's lawyer, Silverio Sica, told the SkyTG24 news channel that Scarano had "tried to help friends that were important to him, who had suffered a loss," and ruled out that he had made any personal gains.
Vatican spokesman Father Federico Lombardi confirmed in a statement that the prelate had been suspended weeks ago and said the Vatican stood ready to offer its "full cooperation" with Italian authorities.
Scarano was taken off his job after being placed under investigation in his home town of Salerno, southern Italy, for the suspected laundering of over 500,000 euros withdrawn in small quantities from his account at the IOR.
Formerly a bank clerk at Deutsche Bank, he entered priesthood in 1987. According to Il Fatto Quotidiano, a newspaper, he was known as "Monsignor 500" for his habit of carrying 500-euros banknotes, and had investments in real estate and friends in show business.
Il Fatto suggested that he may have even brushed shoulders with the pope, as he used the same Vatican residence where Francis would stay when - in his previous role of Archbishop of Buenos Aires - he was visiting Rome.
The pontiff made no reference to the scandal during his morning homily, focused on moral rectitude.
"We ask this grace from the Lord: to walk always in his presence, trying to be faultless," Francis said, according to Vatican Radio.
Separately, Italian authorities said they had arrested for slander Patrizio Poggi, a former priest who had made claims about a paedophile ring that recruited boys for Roman priests. The Vatican had flatly denied the accusations earlier this week.
Last year, the Catholic Church was rocked by the VatiLeaks scandal, which exposed alleged cronyism and corruption within its ranks, while this month the pope spoke about a "gay lobby" and a "stream of corruption" inside the Vatican.
The pontiff is expected to promote a radical shake-up of Vatican institutions. Since his election in March, he has spoken in favour of "a poor Church, for the poor," and suggested that agencies such as the IOR were "necessary only up to a point."
In its 71-year history, the bank has been linked to fraud and money laundering several times, and is still under investigation by Italian magistrates. However, it has tried to clean up its act in recent years.
In 2012, inspectors from the Moneyval committee of the Council of Europe said the Vatican had come a long way on financial transparency, but criticized the lack of independent supervision over the IOR.
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