ROME, JULY 17 -- Italy's highest appeals court today nullified an arrest warrant against Archbishop Paul Marcinkus, who has been charged with conspiracy in connection with the bankruptcy of Italy's biggest private bank in 1982.
The court, acting on warrants issued by Milan magistrates in February against Marcinkus, a native of Cicero, Ill., and two associates, Luigi Mennini and Pelegrino de Strobel, said Italian authorities do not have jurisdiction in Vatican affairs.
Since the warrants were issued, the archbishop has remained inside Vatican City, a separate state outside Italian jurisdiction under a 1929 agreement between the Vatican and Italy.
Marcinkus is the president of the Institute of Religious Works, the Vatican bank that held shares in the collapsed Banco Ambrosiano and was allegedly involved in Ambrosiano's overseas trading schemes that left creditors with losses of $1.3 billion.
Milan investigators alleged that they had evidence that Marcinkus' bank and Ambrosiano jointly operated holding companies in Luxembourg, Panama, Nassau, Peru and Costa Rica, often only through post office box operations. The investment in these phantom companies led to the collapse of Ambrosiano.
Prosecutors had argued that because the Vatican bank engaged in international banking affairs outside the Vatican's walls, its senior officials could not claim Vatican immunity under the Lateran Treaty, a 1929 accord between the Holy See and the Italian state.
In an unusual rebuff last month, the Vatican, which had appealed the arrest warrants, issued a statement saying the accusations against Archbishop Marcinkus and his aides were unfounded.
Judicial officials said the court's ruling today virtually eliminated the case against the archbishop and his two aides, although an inquiry into the collapse of the bank still may insist that he give evidence to clarify the Vatican bank's involvement with Ambrosiano.
In 1984, the Vatican paid out $240 million to Ambrosiano's foreign creditors as "a gesture of good will," but said its payment was not an admission of responsibility.