By Massimiliano Di Giorgio and Philip Pullella
ROME (Reuters) - An arrested Catholic prelate asked to meet Pope Francis to tell him of irregular activities in the Vatican's financial administration before he was detained on suspicion of money smuggling, according to a judicial document and a legal source.
Monsignor Nunzio Scarano has also written a letter to the pope from his jail cell and given documents to magistrates, a source with direct knowledge of the case said.
Scarano was for years a senior accountant at APSA, the Administration of the Patrimony of the Apostolic See. Through APSA, he had ready access to the Vatican bank, where he had several accounts and which itself is under pressure from the international financial community to ensure more transparency.
According to a transcript of an interrogation of Scarano on July 8 in Rome's Queen of Heaven jail, obtained by Reuters, the 61-year-old monsignor told magistrates:
"Recently, I had asked for an audience with the Holy Father because I was not satisfied with the way things were going at APSA".
The source said Scarano gave magistrates a file of documents that allegedly show what he considered to be the irregular activities at APSA.
Asked to comment on Scarano's accusations, chief Vatican spokesman Father Federico Lombardi said: "There is not much I can say about the reliability of this person. I am sure the magistrates know how to do their job".
The source, who is familiar with Scarano's interrogation, said he was telling magistrates that "he was not the only bad apple" in the Vatican department where he worked.
Scarano, 61, was arrested on June 28 along with an Italian secret service agent and a financial broker. The three are formally accused of plotting to smuggle 20 million euros ($26 million) into Italy from Switzerland for members of a family of ship-owners in southern Italy.
His lawyers say he was only trying to help friends recover their money and had no personal interest in the plot.
Scarano is under separate investigation by magistrates in his home city of Salerno, where he is accused of using his close ties with the Vatican bank to launder money.
Scarano's lawyers deny the accusations, saying all the money in his Vatican bank account was from donations.
However, in other documents obtained by Reuters earlier this month, magistrates depict Scarano as a person who controlled vast amounts of money both in Rome and Salerno and felt he could act with impunity because of his connections.
The Institute for Works of Religion (IOR), as the Vatican bank is formally known, has long been in the spotlight for failing to meet international standards intended to combat tax evasion and the disguising of illegal sources of income.
Pope Francis has set up a commission of inquiry to reform the bank and on Friday announced that he was forming another commission of lay experts to help him overhaul the Holy See's economic and administrative departments.
In her report last month, the judge who ordered Scarano's arrest said he felt safe "thanks to his relations with the Vatican bank".
She said the monsignor saw the IOR as "the only safe and rapid instrument for financial and banking operations that could evade - if not outright violate - laws against money laundering and tax evasion".
Investigators in Salerno started looking into Scarano's financial affairs in January after he called them to report a burglary in his apartment there.
They were startled to see that he lived in luxury and that he valued the stolen art work at up to 6 million euros ($7.85 million).
($1 = 0.7639 euros)
(Additional reporting by Steve Scherer and Antonella Ciancio; Editing by Sonya Hepinstall)
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