THE VATICAN is expected to pay creditors of the failed

Banco Ambrosiano $244 million (£175 million), believed to represent half the Vatican's liquid assets, under an agreement signed in Geneva this week.
The payment is expected to be made in cash by June 30, which will enable the Vatican to pay less than if it paid in three instalments over the next year as originally proposed.
Details of the settlement were given by the Italian news agency Ansa and the Vatican prev, office said it had no comment to make.
In a document sent to the 120 creditor banks the payment is allegedly described as recognition of moral responsibility by the Vatican in the loss of about $1.3 billion when the Milanese Banco Ambrosiano went bankrupt in 1982. The Vatican has always denied legal liability. It is thought the Vatican will raise the $244 million by disposing of part of its Italian, US, French and other stocks and bonds and by selling real estate.
The Vatican's payment represents 60 per cent of $406 million settlement reached with the creditors who will get back about 67 per cent of their claims against Ambrosiano group, totalling more than $600 million.
A total of $1.3 billion disappeared through the Ambrosiano on loan to "shell" companies in Latin America. Ten of them were owned by the Vatican Bank (10R). But it claimed it was unaware of this and that it had been hoodwinked by the Ambrosiano's President Roberto Calvi. Calvi was found hanging under Blackfriars Bridge in London in 1982. The American Archbishop Paul Marcinkus at that time headed the IOR and was a director of one of the Ambrosiano's Caribbean affiliates.
According to press reports, there is a clause that any disputes about the agreement will be settled by Italian courts. This would be an important recognition by the Vatican of the rights of Italian courts. Italian authorities have been asking the Vatican to create a branch of the IOR in Italy subject to Italian bank regulations and exchange controls. If press reports on the IOR-bank creditors agreement are correct, it seems the Vatican may be disposed to satisfy the Italian request.
Italians have long claimed that the Vatican, operating without controls in Italy, unsettles the financial system.
The question of the economic relations between the Holy See and Italy are being discussed now before ratification of the new Holy See-Italy Concordat.
Press reports state the agreement specifies that no further claims will be made against the Vatican bank.
It is worth noting, however, that this does not protect the Vatican from the claims against it by shareholders in the Ambrosiano bank. Recently a small shareholder lodged a claim and Italian magistrates are now pursuing this investigation. The IOR troubles have not ended for the Vatican.