SCANDALS OF VATICAN BANK AND MKOMBOZI COMMERCIAL BANK: COMMONALITY OR COINCIDENCE?

INTRODUCTION.

Recent ESCROW Scandal report by the PAC accused two banks i.e. Mkombozi Commercial Bank partly owned by the Catholic Church and Stanbic Bank for money laundering and facilitating fraud which lead to the disappearance of TZS 306 Billion. The report surprised and left many wondering whether the government will take decisive measures as suggested by the final PAC recommendations to the government to declare the two bank 'institution of money laundering concern.'

Those familiar with Mkombozi Commercial bank (MCB)accuse the only catholic church bank in Tanzania of two things; first,
facilitating 'filthy business enterprise' of Mr. James Rugemalira, one of the accused culprit of 'stolen' funds from the TEGETA ESCROW account maintained at the Bank of Tanzania. Second; facilitating the hand out of funds from the TEGETA ESCROW account to a number of people including Bishop Methodius Kilaini, who was given TZS 80 million for unknown reasons,later to be claimed that was a donation to the Church from James Rugemalira.

Notwithstanding, Financial Times Magazine concluded it is 11 months investigation which revealed the mismanagement of the Vatican Bank, owned by Catholic church in the Vatican City which has an asset size of Euro 5 billion. The FT magazine reported that in June 2013 the police arrested silver haired priest Monsignor Nunzio Scarano in Rome. FT Magazine reports "The cleric, nicknamed Monsignor Cinquecento after the €500 bills he habitually carried around with him, was charged with fraud and corruption, together with a former secret service agent and a ­financial broker. All three were suspected of attempting to smuggle €20m by private plane across the border from Switzerland.
Prosecutors alleged that the priest, a former banker, was using the Institute for Religious Works – the formal name for the Vatican’s bank – to move money for businessmen based in the Naples region, widely regarded in Italy as a haven of organized crime. Worse still, Scarano (who, together with the other men, has denied any wrongdoing) had until only a month earlier been head of the accounting department at the Administration of the Patrimony of the Apostolic See, the treasury of the Vatican."

What has faced the two bank owned by Catholic Church? Is MCB alleged involvement a repetition of what happened within Vatican Bank? Is there commonality or coincidence in regards to revealed course of events?

VATICAN BANK SCANDAL.

Much has been written and said in regards to the scandal faced by Vatican Bank. FT magazine published a long article named "The scandal at the Vatican bank" by Rachel Sanderson, where a number of observations pointed out that the bank "plagued for years by several scandals that include charges of corruption, money laundering and mismanagement." Others referred it as 'a heaven for
money launderer and tax dodgers'

According to Mr. David Willey in his article published by BBC under the title 'The Vatican Bank is rocked by scandal again' in June 2013, Vatican bank has been accused of money laundering and lack of due diligence in allowing non-religious, and even crony, businessmen to hold accounts in what amounts to an international offshore tax haven. The author reports that 'During the 1980s, the archbishop (Paul Marcinkus,a giant of priest)got involved in some shady dealings, first with a Mafia-linked Sicilian banker called Michele Sindona, and then with an Italian financier called Roberto Calvi, president of the Banco Ambrosiano, which eventually collapsed with huge debts involving losses of at least $250m (£165m) to the IOR, one of the Banco's shareholders.'

Rachel Sanderson states that 'There were surprisingly few checks and balances on cash flow – and far less documentation than expected. The staff was small – 112 people, largely Italian until this year, with cardinals acting as supervisors. Many of the staff seemed unversed in customer due diligence, according to some. “They would not answer basic [Know Your Client] requests,” a senior manager at an international bank says."

These scandals led major reforms of the bank leadership to be undertaken by new Pope. This year,Pope Francis, announced the appointment of anew head for the bank, French financier Jean-Baptiste de Franssu to undertake two year programme 'to cede the bank’s asset-management business to a newly formed Vatican department, leaving the institution handling only payment services for priests and religious organizations.''How far the Vatican reforms go depends on the man at the top. Named after a saint who was plain-spoken and happy with simple pursuits, Pope Francis’s approach so far has inspired the bank investigators to work some long and late hours. For them, his early reflections on what banking should be – in this bejeweled city of saints and sinners, or anywhere in the world – is worthy of some meditation."

Source: various articles on the internet.