AUGUST 1, 1997

Page 11


Vatican denies holding gold

The Vatican denied a report that it had been a repository for gold smuggled out of Croatia by Nazi allies at the end of World War II.

"This news has no basis in reality," Vatican spokesman Joaquin Navarro-Valls said in a statement about the assertions in a recently declassified U.S. Department of the Treasury memo reported in the international media July 22.

"The presumed information, lacking any documentation, is based only on 'an authoritative Italian source' which, if it exists, remains unidentified, and whose authoritativeness is more than doubtful," Navarro-Valls' statement said.

The government memo, discovered by the producers of a television documentary, states that the Vatican was used to funnel cash and gold coins for members of the puppet government which was run by members of the Croatian fascist organization Ustasha.

Written in October 1946 by a treasury agent to his superior, the memo was classified until last December. It quotes a "reliable source in Italy" as saying that 200 million Swiss francs the Ustasha had confiscated had not been accounted for and were being held at the Vatican.