The Vatican daily yesterday defended the city state’s bank as transparent and its heads as honest after Italian prosecutors placed them under investigation.

Under the headline “The IOR’s Transparency” L’Osservatore Romano said in a page-one article Istituto per le Opere di Religione (IOR) president Ettore Gotti Tedeschi’s rectitude was “well-known in Italian and international financial circles”.

The newspaper also said the IOR “cannot be considered a bank in the current usage of the term”, since it manages the assets of international Catholic institutions and is outside of the jurisdiction of national banks.

Gotti Tedeschi and chief executive officer Paolo Cipriani are under investigation for allegedly violating laws put in place in 2007 that tightened rules on the disclosure of financial operations to the Italian central bank in a bid to stamp out money laundering.

Prosecutors ordered the seizure of €23 million belonging to the Vatican-owned bank after the financial intelligence office at the Bank of Italy noticed two IOR operations it deemed suspicious.

“It is easy to understand that the nature and the purpose of the operations currently being investigated could have been simply and quickly clarified,” the daily wrote.

The Vatican on Tuesday said the required information on the operations was already in the hands of the Bank of Italy adding that it was “perplexed and astonished” at the investigation.