Arrested prelate denies stealing, laundering in letter to Pope

ROME (REUTERS) - A Catholic prelate at the centre of a suspected money-smuggling operation denied stealing and laundering cash in a letter he sent to Pope Francis from his jail cell.

Monsignor Nunzio Scarano, who is the target of two Italian criminal investigations, also said in the letter he tried to fight abusive activities by lay superiors in the Vatican's financial administration, which Pope Francis wants to reform.

Scarano worked for years as a senior accountant at the Administration of the Patrimony of the Apostolic See, or APSA. Through APSA, he had access to the Vatican bank, where he had at least two accounts. Though not directly implicated in the money smuggling investigation, the Vatican bank has faced growing criticism for its persistent failure to meet international transparency standards.

Pope Francis has inherited a Church struggling to deal with several other scandals related to priests' sexual abuse of children, alleged corruption and infighting in the central bureaucracy.

"I have never laundered dirty money, I have never stolen," Scarano said in the handwritten letter to Francis that his lawyers said he wrote on July 19. He said he had documents to hand over to Pope Francis that would help efforts to "finally reform the sad reality" of the Vatican's financial administration, and all the "connected abuses".

Scarano was arrested on June 28 along with an Italian secret service agent and a financial broker. The three are formally accused of plotting to smuggle 20 million euros (S$33 million) into Italy from Switzerland for members of a family of ship-owners in southern Italy. His lawyers say he was only trying to help friends recover their money and had no personal interest in the plan.

Scarano is under separate investigation by magistrates in his home city of Salerno, where he is accused of using his close ties with the Vatican bank to launder money. His lawyers deny the accusations, saying all the money in his Vatican bank account was from donations which could be traced.

Shortly before he was arrested, Scarano asked to meet Pope Francis, according to a transcript of an interrogation of the 61-year-old monsignor in Rome's Queen of Heaven jail on July 8.

Pope Francis has set up a commission of inquiry to reform the Vatican bank and announced earlier this month he was forming another commission of lay experts to help him overhaul the Holy See's economic and administrative departments.

Vatican spokesman Federico Lombardi said on Thursday Pope Francis had not received the letter before leaving for Brazil on July 22, his first trip abroad since becoming pontiff in March.

A source with direct knowledge of the case told Reuters last week that Scarano had sent the letter to Pope Francis and handed over documents to magistrates that allegedly showed what he considered to be irregular activities at APSA.

In the letter seen by Reuters, Scarano spoke of cardinals covering up for his superiors in the Vatican financial administration, but also of blackmailing and manipulation of those cardinals by his senior colleagues.