Vatican leakers say cardinals among plotters in scandal
* Italy papers quote leakers as saying cardinals involved
* Crisis worst in Benedict's papacy
* Ouster of Vatican bank head reflects badly on secretary of state
VATICAN CITY, May 28, (Reuters) - The worst crisis in Pope Benedict's pontificate deepened on Monday when Italian media said at least one cardinal was among those suspected of leaking sensitive documents as part of a power struggle at the top of the Church.
The scandal exploded last week when within a few days the pope's butler was arrested for leaking documents, the head of the Vatican's own bank was abruptly dismissed and a book was published alleging conspiracies among the cardinals or "princes of the Church".
Newspapers, quoting insiders who had themselves leaked documents, said the arrested butler was merely a scapegoat doing the bidding of more powerful figures in the scandal, which has been dubbed "Vatileaks".
Documents passed to Italian journalists accuse Vatican insiders of cronyism and corruption in contracts with Italian companies. La Stampa daily quoted one of the alleged leakers as saying the goal was to help the pope root out corruption.
On Saturday, Paolo Gabriele, 46, Pope Benedict's personal butler, was formally charged with stealing confidential papal documents. But leakers quoted by La Stampa, La Repubblica and other media said the leaking plot went much wider.
"There are leakers among the cardinals but the Secretariat of State could not say that, so they arrested the servant, Paolo, who was only delivering letters on behalf of others," La Repubblica quoted one alleged whistleblower as saying.
The Secretariat of State is run by Cardinal Tarcisio Bertone, the pope's powerful right-hand man, and the scandal appears to involve a power struggle between his allies and enemies, reminiscent of Renaissance conspiracies in the Vatican.
It has been brewing for months, but since it burst into the open it has shaken the very heart of the Roman Catholic Church.
Aides say the pontiff is "saddened and pained" by the events. His critics say a lack of strong leadership has opened the door to infighting among his powerful aides - and potentially to the corruption alleged in the leaked documents.
Many Vatican insiders believe the butler, who had access to the pope's private apartment, could not have acted alone. He is being held in a "safe room" in the Vatican police station and has been charged with aggravated theft.
Now known in Vatican statements as "the defendant" - he was until Wednesday night the quiet man who served the pope's meals, helped him dress and held his umbrella on rainy days.
"He did not steal the documents. His role was to deliver documents," La Stampa newspaper quoted the unidentified alleged leaker it interviewed as saying.
WEED OUT CORRUPTION
The Vatican's announcement of the arrest of the butler came a day after the president of the Vatican bank (IOR), Italian Ettore Gotti Tedeschi, was fired by its board of external financial experts, who come from Germany, Spain, the United States and Italy.
Gotti Tedeschi's ouster was is a blow to Bertone, who as secretary of state was instrumental in bringing him in from Spain's Banco Santander to run the Vatican bank in 2009.
While news of the butler's arrest has filled pages and pages of newspapers in Italy and beyond, the Vatican's own newspaper, L'Osservatore Romano, has ignored the story. Some say this may be because the paper itself has been an instrument in the power struggle between Bertone's allies and foes.
Documents leaked over the last few months included letters by an archbishop who was transferred to Washington by Bertone after blowing the whistle on what he saw as a web of corruption in a memo that put a number of cardinals in a bad light. Other documents alleged internal conflicts over the Vatican bank.
"I feel very sad for the pope. This whole thing is such a disservice to the Church," said Carl Anderson, head of the Knights of Columbus charity group and a member of the board of the Vatican bank who voted to fire Gotti Tedeschi.
Anderson told Reuters the bank president was sacked because of "a fundamental failure to perform his basic responsibilities". Gotti Tedeschi has said he was ousted because he wanted the bank to be more transparent, but Anderson rejected that assertion.
"Categorically, this action by the board had nothing to do with his promotion of transparency," Anderson said. "In fact, he was becoming an obstacle to greater transparency by his inability to work with senior management."
He said the Vatican was aiming to make the OECD's "white list" of states with an adequate level of financial transparency. Vatican sources have pointed to the bank head's very public ouster as an example of the drive to achieve this.
Gianlugi Nuzzi, the Italian journalist who has received many of the documents over recent months and last week published a new book called "His Holiness", on Monday criticised the Vatican for rounding up leakers.
"Surely, arresting someone and rounding up people and treating them like delinquents to stop them from passing on true information to newspapers would cause an uproar in other countries," he said. "There would be a petition to free them." (Reporting By Philip Pullella; Editing by Barry Moody and Peter Graff)
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