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Vatican's new financial regulator vows transparency


By Philip Pullella and Stefano Bernabei

VATICAN CITY (Reuters) - The Vatican's new financial regulator says he is confident that the days when the Holy See would "wash dirty laundry" in private are over and that Pope Francis' recent spending rules are a sea change in transparency.

In an interview with Reuters, Carmelo Barbagallo, the head of the Vatican's Financial Information Authority (AIF), cited two recent scandals that were revealed by the Vatican and not by the media.

The first was a shady deal to buy a London property as an investment - a still-evolving case that exploded last year - followed by a Vatican police raid this week on a department suspected of irregular contract bidding.

"(In the past, people thought) that it was better to wash dirty laundry in the family, and therefore not say anything," he said.

"I think not. I think you have to be strong to manage the consequences of revealing the problem and just as strong in avoiding that it repeats itself," he said.

Barbagallo, a former top official at the Bank of Italy, was appointed following the scandal surrounding the London property deal, which led to the suspension last year of five Vatican employees, the resignation of the Vatican's police chief, and the arrest of an Italian middleman.

The previous top two AIF officials lost their jobs. Both deny any wrongdoing. Barbagallo acknowledged that his predecessors had done much good work but declined to discuss details of the London property deal, citing ongoing investigations.

After Vatican police raided the AIF offices, seizing documents and computers, the Egmont Group of world financial intelligence units suspended the Holy See because of fears that intelligence regarding other countries had been breached.

Egmont fully readmitted the Vatican after Barbagallo signed a protocol with Vatican prosecutors on protecting sensitive information.

Barbagallo, who spoke as the AIF released its annual report, described as a "truly epochal change" the pope's sweeping new rules, issued on June 1, for procurement, spending, and awarding contracts.

They aim to ensure transparent competition and reduce the risk of corruption and nepotism.

The personnel changes at the AIF come as the Vatican is preparing for a new evaluation this year by Moneyval, a monitoring body of the Council of Europe.

Moneyval has given Vatican financial reforms mostly positive reviews in recent evaluations.

"We will have no difficulty adopting good suggestions Moneyval may make," Barbagallo said.

(Writing by Philip Pullella; Editing by Giles Elgood)

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