Vatican Scandal Next Claims Church Bank's Director, His Deputy

The dominos continued to fall in the Vatican scandal as the church bank's director and deputy director resigned Monday after its senior accountant, a former banking executive, was arrested by Italian authorities last week.

Director Paolo Cipriani and deputy Massimo Tulli agreed to leave the church bank, formally called the Institute for Religious Works, the Vatican said in a statement obtained by The Associated Press. The departures come on the heels of Monsignor Nunzio Scarano's arrest, after Italian law enforcement accused him in a plot to smuggle $26 million into Italy from Switzerland without reporting it, the AP said.

Pope Francis has made cleaning up the IOR one of his top priorities after calling for a commission of inquiry last month to scrutinize the institution's activities, the New York Times reported. It has been a long plagued by scandal. Last year the bank's board ousted its then-president, Ettore Gotti Tedeschi, for incompetence and erratic behavior.

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The AP reported that Italian prosecutors had placed Cipriani under investigation in 2010 for alleged violations of Italy's anti-money-laundering rules after financial police seized $30 million from a Vatican account at a Rome bank. It led to bigger concerns by authorities that the IOR was becoming an offshore tax haven, according to the AP.

The BBC reported that the Vatican named Ernst von Freyberg, the current president of the bank, as the IOR's interim director. The BBC said the bank hires 114 employees and has 5.4 billion euros, of $7 billion in assets.

Problems at the IOR hit a new low with the June 28 arrest of Scarano, 61, along with Italian secret service agent Giovanni Maria Zito and financial broker Giovanni Carenzio, said the BBC. Scarano had worked as a senior accountant for the Administration of the Patrimony of the Apostolic See, according to the BBC.

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The BBC reported Italian authorities had been investigating Scarano for a series of suspicious transactions involving the recycling through the Vatican bank of a series of checks described as church donations.

The AP reported that the IOR has a history of scandal. The AP said it was implicated in a scandal over the collapse of the Banco Ambrosiano in the 1980s, in one of Italy's largest fraud cases.

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