By Philip Pullella
VATICAN CITY (Reuters) - In a new blow for the troubled Vatican bank, lawyers for its former head who was abruptly fired in 2012 threatened legal action on Friday to clear his name and show that he was unfairly dismissed.
The surprise move by lawyers for Ettore Gotti Tedeschi came after months of relative calm for the Vatican bank under its new president, German Ernst Von Freyberg.
Gotti Tedeschi was ousted after a no confidence vote by its lay board on May 24 at the height of the "Vatileaks" scandal, in which former Pope Benedict's butler leaked the pontiff's personal papers to the media.
The board said Gotti Tedeschi was fired because he was an ineffective and divisive manager. He said he was ousted because he wanted to introduce more transparency to the bank, which has been an embarrassment for the Vatican for decades.
Gotti Tedeschi had been under investigation by Rome magistrates on suspicion of money laundering, but last month a judge ruled that the case against him be shelved.
In a detailed, five-page statement, Gotti Tedeschi's lawyers said the judge's written decision proved that he was a capable manager who acted in the best interests of the bank and encouraged him to take legal action to clear his name.
One of the lawyers, Fabio Marzio Palazzo, told Reuters that Gotti Tedeschi had not yet decided whether to seek financial damages from the board or be satisfied with a judicial sentence clearing his name.
"The important thing is that he be vindicated, but we are still evaluating everything," he said.
Palazzo said his client might also take legal action against some Italian media for defamation.
Gotti Tedeschi himself told Reuters: "They have to say they're sorry and finally explain after two years why they did what they did. My lawyers will evaluate the rest".
"This ruined my life. It's a shame that it was the Italian magistrates who had to clear this up and not the Church," he said.
The board members who voted no confidence in Gotti Tedeschi are still serving at the bank, which is formally known as the Institute for Works of Religion (IOR).
They are Carl Anderson, the American head of international charity group Knights of Columbus, Ronaldo Hermann Schmitz, a former top executive at Deutsche Bank, Manuel Soto Serrano of Banco Santander and Antonio Maria Marocco, an Italian notary.
A spokesman said the IOR had no comment.
Gotti Tedeschi had been suspected of money laundering along with the IOR's then director general, Paolo Cipriani, and its then deputy director, Massimo Tulli. The case against them is continuing and they are expected to stand trial.
The investigation led to the freezing in 2010 of 23 million euros ($31.6 million) of IOR funds in Italian banks.
In the past year under the leadership of von Freyberg, the IOR has closed hundreds of accounts, instituted strict anti-money laundering regulations and launched several investigations into suspicious activities.
Pope Francis has appointed a commission to advise him on what to do about the bank. Early in his papacy, he did not exclude closing it altogether but Vatican officials have said recently that that is no longer likely. ($1 = 0.7271 Euros)
(Editing by Hugh Lawson)