The president of the Vatican bank has been dismissed by the board of directors, the Vatican announced today, blaming him for a deterioration in standards of governance.
The board unanimously passed a no-confidence vote in Italian Ettore Gotti Tedeschi for failing to carry out "various fundamentally important functions of his office", the Vatican statement said.
The bank will seek a new president who can "re-establish full and effective relations between the Institute and the financial community, based on mutual respect of internationally accepted banking standards", it said.
The Vatican bank, founded in 1942 by Pope Pius XII, has been in the spotlight since September 2010 when Italian investigators froze €23 million of its funds in Italian banks after opening an investigation into possible money-laundering.
Mr Gotti Tedeschi told Reuters that he had been ousted because the bank did not like his honest way of doing things."I don't want to speak or give interviews, I have paid for my transparency," he said.
The Vatican recently adopted new financial transparency laws and set up internal regulations to make sure its bank and all other departments adhere to international regulations and standards, and cooperate with foreign authorities.But in January Italian newspapers published leaked internal letters that appeared to show a conflict among senior Vatican officials about just how transparent the bank should be about dealings that took place before it enacted its new laws.
In response to the money-laundering probe the bank, officially known as the Institute for Works of Religion, said it did nothing wrong and was just transferring the funds between its own accounts. The money was released in June 2011, but the investigation is continuing.
In March, the US state department for the first time put the Vatican on its list of countries considered vulnerable to money laundering.That decision dealt a blow to the Vatican's bid to be included in the European Commission's "white list" of state which comply with international standards against tax fraud and money-laundering.
A decision on its inclusion is expected next month.