Back in mid-January, Bloomberg’s Elisa Martinuzzi and Nicholas Dunbar reported that Deutsche Bank helped Italy’s third-largest bank, Monte Paschi, cover up a 367 million euro loss at the end of 2008 with a shady derivative deal. That swap helped the bank look better than it really was just before taxpayers bailed it out—echoes of Goldman Sachs’s deal to hide Greece’s national debt.

The Italian papers followed Bloomberg’s scoop days later with news that Nomura had structured a derivative for Monte Paschi along similar lines. The Italian central bank then disclosed Monte Paschi executives had concealed documents on the trades from them. Reuters reported that JPMorgan also did a sketchy derivative for the bank.

But the scandal only continued to grow. So far, the bank may have lost a billion dollars on the deals, and it turns out that the Bank of Italy knew about the allegedly fraudulent deals back in 2010, when Mario Draghi was its chief. Draghi is now head of the European Central Bank, and has been critical in tamping down the euro crisis in the last several months.

Now, the scandal threatens to change the course of Italian national elections being held later this month, giving a leg up to Silvio Berlusconi. Meantime, the political upheaval is helping cause the temperature to rise in the euro crisis again. The story has gotten relatively short shrift in The Wall Street Journal, though The New York Times weighed in last week with 1,600 words.

Bloomberg broke the story by getting hold of 70 pages of documents about the deals—documents the Italian bankers (or most of them, anyway) apparently didn’t want out. Monte Paschi is now in the middle of another government bailout. The big question is whether these derivatives deals were limited to Monte Paschi or whether other banks in Italy and in the rest of Europe did them too.

As Bloomberg columnist Jon Weil writes, “The first people to tell the public that the world’s oldest bank was cooking its books weren’t the bank’s executives, its outside auditors at KPMG, its regulators at the Bank of Italy, or anyone else who had a duty to keep the place honest. They were journalists with a good source: a stack of documents from another bank that helped craft the scheme.”

This is one to watch. Hats off to Bloomberg for uncovering it.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.