Vatican in chaos after pope's butler arrested for leaks, bank president ousted for negligence

VATICAN CITY (AP) ? The Vatican's inquisition into the source of leaked documents has yielded its first target with the arrest of the pope's butler, but the investigation is continuing into a scandal that has embarrassed the Holy See by revealing evidence of internal power struggles, intrigue and corruption in the highest levels of the Catholic Church governance.

The detention of butler Paolo Gabriele, one of the few members of the papal household, capped one of the most convulsive weeks in recent Vatican history and threw the Holy See into chaos as it enters a critical phase in its efforts to show the world it's serious about complying with international norms on financial transparency.

The tumult began with the publication last weekend of a book of leaked Vatican documents including correspondence, notes and memos to the pope and his private secretary. It peaked with the inglorious ouster on Thursday of the president of the Vatican bank. And it concluded with confirmation Saturday that Pope Benedict XVI's own butler was the alleged mole feeding documents to Italian journalists in an apparent bid to discredit the pontiff's No. 2.

"If you wrote this in fiction you wouldn't believe it," said Carl Anderson, a member of the board of the Vatican bank which contributed to the whirlwind with its no-confidence vote in its president, Ettore Gotti Tedeschi. "No editor would let you put it in a novel."

The bank, known as the Institute for Religious Works, issued a scathing denunciation of Gotti Tedeschi in a memorandum obtained Saturday by The Associated Press. In it the bank, or IOR by its Italian initials, explained its reasons for ousting Gotti Tedeschi: he routinely missed board meetings, failed to do his job, failed to defend the bank, polarized its personnel and displayed "progressively erratic personal behavior."

Gotti Tedeschi was also accused by the board of leaking documents himself: The IOR memorandum said he "failed to provide any formal explanation for the dissemination of documents last known" to be in his possession.

In an interview with the AP, Anderson said the latter accusation was independent of the broader "Vatileaks" scandal that has rocked the Vatican for months. But he stressed: "It is not an insignificant issue."

Gotti Tedeschi hasn't commented publicly about his ouster or the reasons behind it, saying he has too much admiration for the pope to do so. He also hasn't been arrested, avoiding the fate that befell Gabriele.

The 46-year-old father of three has been in Vatican detention since Wednesday after Vatican investigators discovered Holy See documents in his apartment. The Vatican spokesman, the Rev. Federico Lombardi, said Gabriele had met with his lawyers and that the investigation was taking its course through the Vatican's judicial system.

Gabriele, the pope's personal butler since 2006, has often been seen by Benedict's side in public, riding in the front seat of the pope's open-air jeep during Wednesday general audiences or shielding the pontiff from the rain. In private, he is a member of the small papal household that also includes the pontiff's private secretaries and four consecrated women who care for the papal apartment.

Lombardi said Gabriele's detention marked a sad development for all Vatican staff. "Everyone knows him in the Vatican, and there's certainly surprise and pain, and great affection for his beloved family," the spokesman said.

The "Vatileaks" scandal has seriously embarrassed the Vatican at a time when it is trying to show the world financial community that it has turned a page and shed its reputation as a scandal plagued tax haven.

Vatican documents leaked to the media in recent months have undermined that effort, alleging corruption in Vatican finance as well as internal bickering over the Holy See's efforts to comply with international norms to fight money laundering and terror financing.

The Vatican in July will learn if it has complied with the financial transparency criteria of a Council of Europe committee, Moneyval ? a key step in its efforts to get on the so-called "white list" of countries that share financial information to fight tax evasion.

Anderson acknowleged that the events of the last week certainly haven't cast the Holy See in the best light. And he said the bank's board appreciated that the ouster of its president just weeks before the expected Moneyval decision could give the committee pause.

"The board considered that concern and decided that all things considered it was best to take the action at this time," Anderson said. "These steps were taken to increase the IOR's position vis-a-vis Moneyval."

The Vatileaks scandal began in January when Italian journalist Gianluigi Nuzzi broadcast letters from the former No. 2 Vatican administrator to the pope in which he begged not to be transferred for having exposed alleged corruption that cost the Holy See millions of euros in higher contract prices. The prelate, Monsignor Carlo Maria Vigano, is now the Vatican's U.S. ambassador.

Nuzzi, author of "Vatican SpA," a 2009 volume laying out shady dealings of the Vatican bank based on leaked documents, last weekend published "His Holiness," which presented a trove of other documents including personal correspondence to the pope and his secretary ? many of them painting Benedict?s No. 2, Cardinal Tarcisio Bertone, in a negative light.

Nuzzi has said he was offered the documents by multiple Vatican sources and insisted he didn't pay a cent ? to any of them.

Gabriele was in Vatican custody and unavailable for comment. No known motive has come to light as to why Gabriele, if he is found to be the key mole, might have passed on the documents. Nuzzi declined to comment Saturday on whether Gabriele was among his sources.

Bertone, 77, has been blamed for a series of gaffes and management problems that have plagued Benedict's papacy and, according to the leaked documents, generated a not inconsiderable amount of ill will directed at him from other Vatican officials.

"For some time and in various parts of the church, criticism even by the faithful has been growing about the lack of coordination and confusion that reign at its center," Cardinal Paolo Sardi, the former No. 2 official in the Vatican secretariat of state, wrote to the pope in 2009, according to the letter cited in "His Holiness."

Anderson, who heads the Knights of Columbus, a major U.S. lay Catholic organization, said he was certain the Holy See would weather the storm and that the Vatican bank, at least, could move forward under a new leader with solid banking credentials as well as a desire to show off the bank's transparency.

"I hope this will be the beginning of a new chapter for the IOR and part of that chapter will be restoring the public image of the IOR," he told AP. "I think we have a good story to tell."

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