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The Vatican has denounced as 'criminal' a new book of leaked internal documents that shed light on power struggles inside the Holy See and the inner workings of its embattled bank, and warned that it would take legal action against those responsible.

Pope Benedict XVI has already appointed a commission of cardinals to investigate the 'Vatileaks' scandal, which erupted earlier this year with the publication of leaked memos alleging corruption and mismanagement in Holy See affairs and internal squabbles over its efforts to comply with international anti-money laundering norms.

The publication on Saturday of His Holiness, by Italian journalist Gianluigi Nuzzi, added fuel to the fire, reproducing letters and memos to and from Benedict and his personal secretary which the Vatican said violated the pope's right to privacy.

Pope's butler arrested in scandal


The Vatican has confirmed that the Pope's butler had been arrested in its embarrassing leaks scandal, adding a Hollywood twist to an already remarkable tale of power struggles, intrigue and corruption in the highest levels of Catholic Church governance.

Paolo Gabriele, a layman who lives inside Vatican City, was arrested on Wednesday with secret documents in his possession and was being held on Saturday, the Vatican spokesman the Reverend Federico Lombardi said in a statement.

Gabriele is often seen by the Pope's side in public, riding in the front seat of the pontiff's open-air jeep during the Pope's general audiences. Lombardi said Gabriele had two lawyers representing him as the Vatican judicial system takes its investigative course.

The 'Vatileaks' scandal has seriously embarrassed the Vatican, at a time in which it is trying to show the world financial community that it has turned a page and shed its reputation as a scandal plagued tax haven.

Vatican documents leaked to the press in recent months have undermined that effort, alleging corruption in Vatican finance as well as internal bickering over the Holy See's efforts to show more transparency in its financial operations.

But perhaps most critically, the leaks have seemed aimed at one main goal: to discredit Pope Benedict XVI's No 2, Cardinal Tarcisio Bertone, the Vatican secretary of state.

The scandal took on even greater weight last week with the publication of 'His Holiness', a book which reproduced confidential letters and memos to and from Benedict and his personal secretary.

The Vatican called the book 'criminal' and vowed to take legal action against the author, publisher, and whoever leaked the documents.

The Vatican had already warned of legal action against the author, Italian journalist Gianluigi Nuzzi, after he broadcast letters in January from the former No 2 Vatican administrator to the Pope in which he begged not to be transferred for having exposed alleged corruption that cost the Holy See millions of euros in higher contract prices.

The prelate, Monsignor Carlo Maria Vigano, is now the Vatican's US ambassador.

Nuzzi, author of 'Vatican SpA', a 2009 volume laying out shady dealings of the Vatican bank based on leaked documents, said he was approached by sources inside the Vatican with the trove of new documents, most of them of fairly recent vintage and many of them painting Bertone in a negative light.

At a press conference this week, Nuzzi defended the publication and said he wasn't afraid of the Vatican.

In a related case, the president of the Vatican's bank, Ettore Gotti Tedeschi, was ousted on Thursday by his board. Sources close to the investigation said he too had been found to have leaked documents, though the official reason for his ouster was that he had failed to do his job.