Aired September 21, 2010 - 14:00:00 ET
FOSTER: We are expecting the Federal Reserve to make its latest announcement on interest rates anytime soon. It is expected in the next few minutes. We're keeping an eye on the Fed Web site, to see when it is coming through. Nothing yet. But we are expecting no real change in interest rates but we are very eagerly anticipating what may be coming in the commentary, any indication of more spending, more cash spending in the economy, which may help boost it. Or that might be delayed until next month. We're going bring you the details as it comes through to us.
Just when the Catholic Church, meanwhile, didn't need another scandal the Vatican bank is being investigated in connection with a probe into money laundering. The bank's chairman and managing director reportedly has been placed under investigation. And $30 million seized from a Vatican bank account.
In the meantime the Vatican has told CNN it is perplexed and baffled by the probe, because the Holy See, aims for total transparency in its financial dealings. So what, exactly, is the Vatican Bank? Well, the bank, which is formally known, as the Institute for Religious Works, was founded back in 1942. It is much like any other international commercial bank, but also invests any funds given to the Holy See for religious works.
It is not the first time the bank has faced trouble. In 1982, you remember, you may remember, it was involved in a major scandal arising form the fraudulent bankruptcy of Banco Ambrosiano.
Our next guest is internationally known. His book, "The Laundryman" in which he uncovered the true extent of global money laundering. He is an expert in this area. Jeffrey Robinson joins me now, live from CNN New York.
Thank you very much indeed. Can you just explain what we mean by money laundering? Because this may be as innocent as some lost paperwork or some badly filled out paperwork. Or it may be much bigger than that. Let's just explain what we're talking about here?
JEFFERY ROBINSON, AUTHOR, "THE LAUNDRYMAN": Yes, well money laundering is a slight of hand, if you will. It is the machinations that you go through to take generally, illegally obtained funds. And then move it into some sort of funds that appear to be legal. Now, the obvious thing is drug trafficking. The trafficker collects cash on the street, he needs to do something with it. He puts it into banks, he puts it into auction houses, he buys products he sells products. Moves them through bank accounts, across borders, into secret banks, brings it out the other hand, so it looks like an investment in real estate, that he can live on; legitimate funds, a legitimate-looking funds.
Corporate money laundering is slightly different. When you get to big corporations or institutions, what they tend to do is they take money and they put it into slush funds that they hide so that the source of that money, that they then spend on say, corruption, or political influence, is not directly related back to them. Enron is a perfect example of what was going on when they had several thousand shell companies in the Cayman Islands, like Acme Trading and Acme Investments, that sort of thing.
So there are two kinds: The drug trafficker who needs to take his cash and make it look legitimate on the other end. The corporation or the institution that wants to spend money in a certain way that it is not directly attached to them. They want it to look legitimate, coming from a different source. That is money laundering.
FOSTER: When we hear that the Italians have frozen funds in a Vatican bank account. What can we learn from that?
ROBINSON: Well, you can learn that somebody, someplace is wondering what those funds are, where they came from, or where they were going? Now, if you go back to the fall of the Soviet Union and the disintegration of the Communist Party. In those days there was one bank. Russian organized criminals suddenly understood that the way you can make money is not to rob a bank but to own a bank. And suddenly there were several thousand banks in the Soviet Union, based in Moscow, largely. But the other areas of the former Soviet Union as well.
Where you could, as you owned a bank, put money in, take money out, do all sorts of things. Now, if you have transparency, real transparency, and not tax transparency-which is very different-if you have real transparency, you can't move that money because people are auditing those accounts. If you have a secret bank, you can do anything you want to. And if you are inside that bank, money laundering becomes the most fun you can have with your pants still on.
FOSTER: And so what do we know about the Vatican Bank? I'm not-you know, we can't make any allegations here. This is an investigation, this is very early stages. But what do you know about it and what it does? And how secretive it is?
ROBINSON: Well, it is probably the most secret bank in the world, because they don't publish their reports. Nobody really knows what goes on. They are a member of the OECD unit that is looking at tax transparency. That's why I made that distinction. And they are trying to get on the OECD white list, which is tax transparency. So that people who are avoiding tax can't use that bank. But what happens to the funds once it comes in, or how they go out, and how those funds are spent, good question. This makes Switzerland look like a glass jar.
FOSTER: And looking back in history, how has the Vatican handled such allegations in the past?
ROBINSON: Badly, very badly. Go back to 1982 and Banco Ambrosiano, which was a phony bank bankruptcy that lead to the death of Mr. Calvi under Blackfriars Bridge in London. That had to do with Exocet Missiles in Argentina, that had to do with money laundering, and a group called Paduay (ph), which is P2, which is a Masonic organization that had ties to everybody, including inside the Vatican Bank. There was a lot to be answered for in 1982, and I suspect if somebody knows how to look they'll be a lot to answer for in 2010.
FOSTER: OK, Jeffrey Robinson. Thank you very much indeed for your insight there from New York.
Expecting any moment now, the decision from the Federal Reserve on interest rates, crucially, commentary on monetary easing. If there is going to be any such thing we are going to across to Alison Kosik now who is monitoring this for us, from the stock exchange.