Part 3: In God's Name:An Investigation into John Paul 1's Murder....Vatican Incorporated

In God’s Name

David Yallop

4 

Vatican Incorporated 

When Albino Luciani became Head of the Roman Catholic Church in August 1978 he was in command of a truly unique organization. Over 800 million people, nearly one-fifth of the world’s population, looked to Luciani as their spiritual leader. Nearer to hand, within Vatican City, was the structure that controlled not only the faith, but the fiscal policy of the Church. 

‘Vatican Incorporated’ is a vital part of this structure. It exists in bricks and mortar. It exists within certain philosophies. Paul Marcinkus of the Vatican Bank is credited with the observation that, ‘You can’t run the Church on Hail Marys’. Obviously the power of prayer has been devalued along with many of the world’s currencies in recent years. 

Marcinkus should not be condemned for what might appear to be a materialistic observation. The Church plays many roles in many countries. It needs money. How much money is a different question. What it should be doing with that money is another. That it does much that is good is beyond doubt. That it does much that is highly questionable is also beyond doubt. There is a large quantity of published works which give details of the many charities financed by the Church, of the aid it gives to famine relief, to alleviate suffering of every kind. Education, medicine, food, shelter – these are some of the benefits that derive from the work of the Church. What is lacking is information on how much is acquired and how it is acquired. On these matters the Vatican is and always has been very secretive. That secrecy has inevitably given rise to one of the world’s great unsolved mysteries. How much is the Roman Catholic Church worth? 

In mid-1970, commenting on a Swiss newspaper article which declared, ‘the productive capital of the Vatican can be reckoned at between 50 and 55 billion Swiss francs’ (a figure approaching 13 billion dollars), L’Osservatore Romano said: ‘It is a simply fantastic figure. In reality, the productive capital of the Holy See, including both Deposits and Investments placed both in Italy and outside Italy, is far from reaching one hundredth of this sum.’ That would place a ceiling figure on Vatican wealth on July 22nd, 1970, of £46 million or 111 million dollars. 

The first falsehood contained in the Vatican newspaper’s statement is the exclusion of the assets of the Vatican Bank. It is comparable to asking ICI or Du Pont for complete disclosure and being favoured with the total in the petty cash box. Even excluding the annual profits of the Vatican Bank, the figure quoted by the Vatican is an outrageous lie. It was a lie that over the years was to be heard again. In April 1975 Lamberto Furno of La Stampa asked His Eminence Cardinal Vagnozzi: ‘If I were to put forward the sum of 300 billion lire for the productive patrimony of the five administrations, * would I be close to the mark?’ 

Furno was deliberately excluding the Vatican Bank in his question. He drew from Vagnozzi the assertion, ‘I tell you, the productive patrimony of the Holy See, in Italy and in the world, is less than a quarter of the sum you mention.’ 

If that were true it would follow that on April 1st, 1975 the productive wealth † of the Holy See, excluding the Vatican Bank, was a figure lower than 75 billion lire or approximately 113 million dollars. One single administration, the Extraordinary Section of the Administration of the Patrimony of the Holy See, or the APSA, is treated as a central bank by the World Bank, the International Monetary Fund and the Bank of International Settlements at Basle. Every year the staff at Basle publish annual figures which show what the world’s central banks have deposited or borrowed from other banks in the Group of Ten. Their figures for 1975 indicate that the Vatican had 120 million dollars on deposit in foreign banks and that, uniquely, the Vatican was debtless, the only bank in the entire world to be in such a position. This was just one administration within the Vatican and to ascertain the entire actual wealth of just that one section a great many other tangible assets must be added. 

Like Rome itself, Vatican wealth was not built in a day. The problem of a wealthy Church – and all who aspire to follow the teachings of Jesus Christ must regard that wealth as a problem – has its roots as early as the fourth century. When the Roman Emperor Constantine converted to Christianity and gave colossal wealth to the then Pope, Silvester I, he created the first rich Pope. Dante ends the Inferno with the lines: 

Alas! Constantine, how much misfortune you caused, Not by becoming Christian, but by the dowry 

Which the first rich Father accepted from you. 

The Catholic faith’s claim to uniqueness is valid. It is the only religious organization in the world which has as its headquarters an independent State, Vatican City, which is a law unto itself. At 108.7 acres it is smaller than many of the world’s golf courses, is the size of St James’s Park in London and approximately one eighth the size of Central Park in New York City. A leisurely stroll right round Vatican City takes something over an hour. To count the wealth of the Vatican would take rather longer. 

The modern wealth of the Vatican is based on the generosity of Benito Mussolini. The Lateran Treaty which his government concluded with the Vatican in 1929 gave the Roman Catholic Church a variety of guarantees and measures of protection. 

The Holy See obtained recognition of itself as a Sovereign State. It was exempted from paying taxes both for its properties and its citizens, exempted from paying duty on imported goods; it had diplomatic immunity and accompanying privileges for its own diplomats and those accredited to it by foreign powers. Mussolini guaranteed the introduction of Catholic religious teaching in all State High Schools and the entire institution of marriage was placed under Canon Law, which ruled out divorce. The benefits for the Vatican were many, not least the fiscal ones. 

Article one. Italy undertakes to pay the Holy See, on the ratification of the Treaty, the sum of 750 million lire and to hand over at the same time Consolidated 5 per cent State Bonds to the bearer for the nominal value of one billion lire. 

At the 1929 rate of exchange this package represented 81 million dollars. A 1984 equivalent figure is approximately 500 million dollars. Vatican Incorporated was in business. It has never looked back. 

To handle the windfall, Pope Pius XI created on June 7th, 1929 The Special Administration. He appointed to run the Department the layman Bernardino Nogara. Apart from having many millions of dollars to play with, Nogara had another very important asset. One hundred years earlier the Roman Catholic Church had completely reversed its position on money lending. The Church can rightfully claim to have changed the meaning of the word usury. 

In the classic sense usury means all gains from money lending. For over eighteen hundred years the Roman Catholic Church had dogmatically stated that the charging of any interest on a loan was absolutely forbidden as being contrary to Divine Law. The prohibition was restated in various Church Councils: Arles (AD 314), Nicea (325), Carthage (345), Aix (789), Lateran (1139) – at this Council usurers were condemned to excommunication – various State Laws made the practice legal. It was still heresy, that is, until 1830. Thus, by courtesy of the Roman Catholic Church, usury now means lending money at exorbitant rates of interest. 

Self-interest produced a total reversal on the Church’s teaching with regard to money lending. Perhaps if celibacy was no longer the rule for priests it might move the Roman Catholic Church’s teaching on birth control. 

Nogara was a member of a devout Roman Catholic family; many of its members made in a variety of ways significant contributions to the Church. Three of his brothers became priests, another became director of the Vatican Museum but Bernardino Nogara’s contribution was by any standards the most profound. 

Born in Bellano, near Lake Como, in 1870, he achieved early success as a mineralogist in Turkey. In 1912 he played a leading role in the peace treaty of Ouchy between Italy and Turkey. In 1919 he was again a member of the Italian delegation that negotiated the peace treaty between Italy, France, Britain and Germany. He subsequently worked on behalf of the Italian Government as a delegate to the Banca Commerciale in Istanbul. When Pope Pius XI was seeking a man capable of administering the fruits of the Lateran Treaty, his close friend and confidant Monsignor Nogara suggested his brother Bernardino. With that selection Pius XI struck pure gold. 

Nogara was reluctant to accept the job and did so only when Pope Pius XI agreed to certain conditions. Nogara did not wish to be trammelled by any traditional views the Church might still hold about making money. The ground rules Nogara insisted upon included the following: 

1 Any investments he chose to make should be totally and completely free of any religious or doctrinal considerations. [Cannot serve The Creator, and Mammon DC]

2 He would be free to invest Vatican funds anywhere in the world. 

The Pope agreed, and opened the doors to currency speculation, and to playing the market in the Stock Exchange, including the buying of shares in companies whose products were inconsistent with Roman Catholic teaching. Items such as bombs, tanks, guns, and contraceptives might be condemned in the pulpit but the shares Nogara bought for the Vatican in companies which manufactured these items helped to fill the coffers in St Peter’s. 

Nogara played the gold market and the futures market. He bought Italgas, sole supplier of gas in many of Italy’s cities, placing on the Board on behalf of the Vatican Francesco Pacelli. Pacelli’s brother became, in time, the next Pope (Pius XII) and the nepotism which stemmed from that Papacy was manifest throughout Italy. The rule became ‘if there is a Pacelli on the Board, six to four it belongs to the Vatican’. 

Among the banks that came under Vatican influence and control through Nogara’s purchases were Banco di Roma, Banco di Santo Spirito and Cassa di Risparmio di Roma. The man clearly not only had a way with money, he was fairly gifted in the art of persuasion. When Banco di Roma was floundering and threatening to take with it a large amount of Vatican money, Nogara persuaded Mussolini to take over the bank’s largely worthless securities and transfer them to a Government holding company, IRI. Mussolini also agreed that the Vatican should he reimbursed, not at the current market value of the securities, which was virtually nil, but at their original purchase price. IRI paid Banco di Roma over 630 million dollars. The loss was written off by the Italian treasury, which is another way of saying the ordinary people picked up the bill, just as they had been doing for the clerics since the Middle Ages. 

Much of the speculation Nogara indulged in on behalf of the Vatican certainly contravened Canon Law and probably Civil Law, but as his client was the Pope, who was not asking questions, Nogara remained untroubled by such niceties. 

Using Vatican capital, Nogara acquired significant and often controlling shares in company after company. Having acquired a company he rarely sat on the Board, preferring to nominate one of the trusted Vatican elite to look after the Church’s interests. The three nephews of Pius XII, Princes Carlo, Marcantonio and Giulio Pacelli, were among the inner elite whose names began to appear as directors on an ever-growing list of companies. These were the Church’s ‘uomini di fiducia’, men of trust. 

Textiles. Telephone communications. Railways. Cement. Electricity. Water. Bernardino Nogara was everywhere. When Mussolini needed armaments for his invasion of Ethiopia in 1935, a substantial proportion was supplied by a munitions plant which Nogara had acquired on behalf of the Vatican. 

Realizing, before many, the inevitability of the Second World War, Nogara moved part of the assets then at his disposal into gold. He bought 26.8 million dollars’ worth of gold at 35 dollars per ounce. Later he sold 5 million dollars’ worth on the free market. The profit on the sale was in excess of the 26.8 million dollars he had paid for the entire original quantity. His speculations in gold continued throughout his control of Vatican Incorporated: 15.9 million dollars’ worth bought between 1945 and 1953; 2 million dollars’ worth sold between 1950 and 1952. My research indicates that 17.3 million dollars’ worth of that original purchase is still held on deposit on behalf of the Vatican at Fort Knox. At the current market price that 17.3 million dollars, originally purchased at 35 dollars per ounce, is now worth a figure approaching 230 million dollars. 

In 1933 Vatican Incorporated again demonstrated its ability to negotiate successfully with Fascist governments. The Concordat of 1929 with Mussolini was followed with a Concordat between the Holy See and Hitler’s Reich. Solicitor Francesco Pacelli had been one of the key figures in the Mussolini agreement; his brother Cardinal Eugenio Pacelli, the future Pius XII, had a leading role as the Vatican’s Secretary of State in concluding a treaty with Nazi Germany. 

Hitler saw many potential benefits in the treaty, not least the fact that Pacelli, a man already displaying marked pro-Nazi attitudes, might prove a useful ally in the approaching World War. History was to prove that Hitler’s assessment was accurate. Despite a great deal of world pressure, Pope Pius XII declined to excommunicate either Hitler or Mussolini. Perhaps his refusal was based on an awareness of just how irrelevant he was. His was a Papacy which affected neutrality, which talked to the German episcopate about ‘just wars’ and did precisely the same to the French bishops. This resulted in the French bishops supporting France and the German bishops supporting Germany. His was a Papacy which declined to condemn the Nazi invasion of Poland because, he said, ‘We cannot forget that there are forty million Catholics in the Reich. What would they be exposed to after such an act by the Holy See?’ 

For the Vatican, one of the major assets to emerge from the very lucrative deal with Hitler was confirmation of the ‘Kirchensteuer’, Church Tax. This is a State tax which is still deducted at source from all wage-earners in Germany. One can opt out by renouncing one’s religion. In practice few choose to. This tax represents between 8 and 10 per cent on income tax collected by the German Government. The money is handed over to the Protestant and Catholic Churches. Substantial amounts derived from the Kirchensteuer began to flow to the Vatican in the years immediately preceding the Second World War. The flow continued throughout the war, 100 million dollars in 1943, for example. In the Vatican Nogara put the German revenue to work alongside the other currencies which were pouring in. 

On June 27th, 1942, Pope Pius XII decided to bring another part of the Vatican into the modern world and into the ambit of Bernardino Nogara. He changed the name of the Administration of Religious Works to the Institute for Religious Works. The change did not capture the front pages of the world’s newspapers; they were rather preoccupied with the Second World War. The IOR, or the Vatican Bank as it is known by all but the Vatican, was born. ‘Vatican Incorporated’ had sired a bastard child. The original function of the Administration, set up by Pope Leo XIII in 1887, had been to gather and administer funds for religious works; it was in no sense a bank. Under Pius, its function became ‘the custody and administration of monies (in bonds and cash) and properties transferred or entrusted to the Institute itself by fiscal or legal persons for the purposes of religious works, and works of Christian piety’. It was, and is, in every sense a bank. 

Nogara took to reading the terms of the Lateran Treaty very closely, particularly Clauses 29, 30 and 31 of the Concordat. These dealt with tax exemptions and the formation of new, tax-exempt ‘ecclesiastical corporations’ over which the Italian State would have no control. Interesting discussions began about the meaning of the phrase ‘ecclesiastical corporations’. Doubtless distracted by other events of the time, Mussolini took a liberal view. On December 31st, 1942, the Finance Ministry of the Italian Government issued a circular stating that the Holy See was exempt from paying the tax on share dividends. It was signed by the then Director General of the Ministry, who was called quite appropriately Buoncristiano (Good Christian). The circular specified the various organizations within the Holy See which were exempt from the tax. The list was long and included The Special Administration and the Vatican Bank. The man whom Nogara selected to control the Vatican Bank was Father, later Cardinal, Alberto di Jorio. Already functioning as Nogara’s assistant in The Special Administration, he kept a foot in both sections by retaining that position and assuming the role of First Secretary, then President, of the Vatican Bank. Apart from the controlling interests in many banks outside the Vatican walls which Nogara acquired, he now had two in-house banks to play with. 

Nogara, applying his mind to the task of increasing the Vatican’s funds, went from strength to strength. The tentacles of ‘Vatican Incorporated’ spread world wide. Close links were forged with an array of banks. Rothschilds of Paris and London had been doing business with the Vatican since the early nineteenth century. With Nogara at the Vatican’s helm the business increased dramatically: Crédit Suisse, Hambros, Morgan Guarantee, The Bankers Trust Company of New York – useful when Nogara wanted to buy and sell stock on Wall Street – the Chase Manhattan, and Continental Bank of Illinois among others, became Vatican partners. 

Nogara was evidently not a man with whom to play Monopoly. Apart from banks, he acquired for the Vatican controlling interests in companies in the fields of insurance, steel, financing, flour and spaghetti, mechanical industry, cement and real estate. With regard to the last named his purchase of at least 15 per cent of the Italian giant Immobiliare gave the Church a share of an astonishing array of property. Società Generale Immobiliare is Italy’s oldest construction company. Through its ownership of the building firm SOGENE, Immobiliare, and therefore to a significant degree the Vatican, owned after its 15 per cent acquisition: the Rome Hilton; Italo Americana Nuovi Alberghi; Alberghi Ambrosiani, Milan; Compagnia Italiana Alberghi Cavalieri; and Soc. Italiani Alberghi Moderni. These are just the major hotels in Italy. The list of major buildings and industrial companies also owned is twice as long.

In France they built a huge block of offices and shops at 90 Avenue des Champs Elysées, another at 61 Rue de Ponthieu, and another at 6 Rue de Berry. 

In Canada they owned the world’s tallest skyscraper – the Stock Exchange Tower situated in Montreal – the Port Royal tower, a 224-apartment block, a huge residential area in Greensdale, Montreal . . . 

In the United States they had five huge apartment blocks in Washington, including the Watergate Hotel, and in New York a residential area of 277 acres situated at Oyster Bay. 

In Mexico they owned an entire satellite city of Mexico City called Lomas Verdes. 

This list of properties is by no means exhaustive. Nogara also bought into General Motors, Shell, Gulf Oil, General Electric, Bethlehem Steel, IBM and TWA. If the shares moved, and moved upwards, it was men like Nogara who created the movement. 

Although Nogara retired in 1954, he continued to give the Vatican his unique brand of financial advice until his death in 1958. Scant mention was made of the man’s passing by the Press, as the majority of his activities on behalf of the Roman Catholic Church had been cloaked in secrecy. This one man who demonstrated that, wherever Christ’s Kingdom might be, that of the Catholic Church was most assuredly of this world, was given a memorable epitaph by Cardinal Spellman of New York. ‘Next to Jesus Christ the greatest thing that has happened to the Catholic Church is Bernardino Nogara.’ 

Starting with 80 million dollars, less the 30 million dollars that Pius XI and his successor Pius XII held back to spend on regional seminaries and parish houses in South Italy, the building of Santa Maria and the massive building projects in Rome, including the setting up of the Vatican library and art gallery, Nogara had created Vatican Incorporated. Between 1929 and 1939 he had also had access to the annual world-wide collection of Peter’s Pence. With the ‘pennies’ of the faithful plus the lire from Mussolini and the Deutsche Marks from Hitler, he handed on to his successors a complex array of financial interests worth at a very conservative estimate 500 million dollars controlled by the Special Administration, 650 million dollars controlled by the Ordinary Section of the APSA, and assets in the Vatican Bank in excess of 940 million dollars, with an annual profit from the Bank averaging 40 million dollars going directly to the Pope. In capitalistic terms, Nogara’s service in the cause of the Roman Catholic Church was an incredible success. Viewed in the light of the message contained in the Gospels it was an unmitigated disaster. The Vicar of Christ was now Chairman of the Board. 

Four years after Nogara’s death in 1958 the Vatican had urgent need of his expertise. The Italian Government of the day had raised the spectre of taxing share dividends again. What followed has a direct bearing on a sequence of disasters for the Vatican, including Mafia involvement, financial mayhem and murder. That would begin in 1968. 

In any list of years purporting to be the worst in the Church’s history, 1968 should feature very near the top. It was the year of Humanae Vitae. It was also the year when The Gorilla and The Shark, as they were known, were let loose on the two Vatican banks. The Gorilla is Paul Marcinkus; the Shark, Michele Sindona; and the events which led to their control of Vatican finances make salutary reading. 

Benjamin Franklin said, ‘But in this world nothing can be said to be certain except death and taxes.’ Not many have chosen to argue with that statement. Among the few who have are the men who control the Vatican’s finances. They have made strenuous attempts to eliminate taxes. 

In December 1962 the Italian Government passed legislation taxing the profits on share dividends. Initially the tax was set at 15 per cent. Then it went the way of all taxes and was doubled. 

The Vatican at first raised no objection to paying the tax, at least not publicly. Privately, through diplomatic channels, it advised the Italian Government that: ‘In the spirit of our Concordat and considering the Law of 2nd October 1942, it would be desirable that a favourable treatment be granted to the Holy See.’ Negotiations had begun. 

The secret letter from Vatican Secretary of State, Cardinal Cicognani, to the Italian Ambassador to the Holy See, Bartolomeo Mignone, goes on to detail exactly what the ‘favourable treatment’ should be: tax exemption for a list of departments as long as a cardinal’s arm, including of course the two Vatican banks, The Special Administration and the IOR. 

The Vatican wanted to play the market but not to pay for the privilege. The minority Vatican-backed Christian Democrat Government of the day touched its forelock, kissed the Papal ring and agreed to the Vatican’s request. No reference was made to the Italian Parliament or to public opinion. When the minority Government fell, to be replaced by Christian Democrat Aldo Moro with a coalition of Christian Democrats and Socialists, the post of Finance Minister went to Socialist Roberto Tremelloni. He was disinclined to approve what was clearly an illegal agreement made by his predecessor, made furthermore without being ratified by Parliament and, even more important, made eight days after the government had resigned. 

Aldo Moro, confronted with a Finance Minister threatening to resign on the one hand and an intransigent Vatican on the other, sought a compromise. He asked the Vatican to submit a statement of its shareholdings as a prelude to obtaining exemption. Not unreasonably, the Prime Minister felt that the Italian nation should know of just how much money they were being deprived. The Vatican refused to reveal the details and talked loudly about being a Sovereign State. Apparently it is perfectly permissible to exploit the stock market of another Sovereign State and make profits from the exploitation, but the exploited State is not allowed to know by just how much it is being exploited. 

Various governments came and went. The issue was discussed from time to time in the Italian Parliament. At one point in 1964 the Vatican indicated just how far they had abandoned Christ’s dictum ‘my kingdom is not of this earth’ and had embraced instead the teachings of Bernardino Nogara: ‘Increase the size of your Company because fiscal controls on the part of Government become advantageously difficult.’ The ‘Company’ to which Nogara was referring was Vatican Incorporated, the ‘Government’ those unfortunates across the Tiber, who were obliged to deal with an off-shore tax-haven in the middle of Rome. 

In June 1964, with Aldo Moro yet again in power, the Church of the poor threatened to bring down the entire Italian economy. During negotiations Vatican officials told the Italian Government that if they did not get their way they would throw on to the market every single share they held in Italy. They picked their moment well. The Italian Stock Market was going through a particularly bad period, with shares dropping daily. Suddenly to place on the market the enormous shareholdings of the Vatican would have destroyed the entire Italian economy. The Italian Government, faced with this reality, capitulated. In October 1964 a draft Bill was prepared which would ratify the illegal agreement. [real Godlike huh?DC]

The draft Bill was never put before Parliament, mainly because Governments were collapsing quicker than various Finance Ministers could discover what was in their pending trays. Meanwhile the Vatican continued to enjoy tax exemption. It had not paid tax on its shares since April 1963. In 1967 the Italian Press, specifically the left-wing Press, went on to the attack. They wanted to know why. They also wanted to know how much. They also wanted to know how many shares the Vatican held in their country. Figures began to fly. They ranged from estimates that put the worth of the Vatican investment on the Italian Stock Exchange at 160 million dollars to others that put it at 2.4 billion dollars. 

In March 1967, the then Italian Finance Minister, Luigi Preti, in response to questions in the Italian Senate, threw some official light on the Vatican’s shareholdings in Italy. His breakdown showed that by far the biggest Vatican investor was the IOR, followed by The Special Administration. Various other Vatican Departments with high-sounding names such as The Fabric of St Peter’s, The Pontifical Society for St Peter Apostle, the Administration of the Holy See Patrimony, and Propaganda Fide were also revealed as players of the Stock Market. Finance Minister Preti stated that the Vatican owned shares worth approximately 100 billion lire, 104.4 million dollars, at the then rate of exchange. The actual total figure was undoubtedly much higher. Preti’s figures did not take account of the large Vatican investment in State Bonds and Debentures which are completely exempt from any form of taxation. He was dealing only with shares that were liable for the tax levy. 

Neither did the Finance Minister concern himself with the fact that under Italian Stock Exchange regulations, the holder of shares is allowed to leave the dividends uncollected for five years. Evidence indicates that the Vatican investments covered by these two aspects were, at the very least, as great as those that had come under the Minister’s province. The real value, therefore, of the Vatican investment in 1968 in Italian shares alone is at the very minimum 202.2 million dollars. Added to that should be the value of the Vatican’s real estate holdings, particularly in Rome and the surrounding districts, and also all non-Italian investments. 

Eventually Italy decided to call the Vatican’s bluff: the Roman Catholic Church should, at least in Italy, render unto Caesar what was Caesar’s. In January 1968 yet another transitory Government led by Giovanni Leone declared that at the end of the year the Vatican would have to pay up. With considerable ill grace and comments about its investments being a wonderful stimulus for the Italian economy, the Vatican agreed – but in typical Vatican fashion. Like the prisoner in the dock found guilty, it asked for time to pay in easy instalments. 

The whole affair had a number of unfortunate results for the Vatican. Whatever the actual total, everyone in Italy was now aware that the Church of the poor had very large investments producing millions of dollars of annual profit. Further, the six-year-old argument had resulted in many companies being identified as Vatican owned or controlled. The wide portfolio might indicate shrewd capitalism, but it was bad public relations to let the man who complained that his phone/water/electricity/gas were not working, know that he had the Church to thank for it. Then, most important of all, if the Vatican maintained its heavy investment in Italy it was going to face very large tax bills. Pope Paul VI had a problem. The men he turned to for the solution were The Gorilla and The Shark. 

If Sigmund Freud’s conclusion that a man’s entire personality is formed in the first five years of life is correct, then Paul Marcinkus merits particularly close study by the experts. Even if one disputes Freud’s opinion few would argue with the view that environment is certainly a major influence in the formative years. 

Marcinkus was born into a city ruled by the Mafia, where gangland murder was an everyday event; where corruption reached from the Mayor to the pre-pubescent youth. It was a city riddled with every conceivable type of crime, in which, between 1919 and 1960, 976 gangland murders were committed and only two of the murderers convicted. It was a city where in the autumn of 1928 the President of the Crime Commission appealed to one man to ensure that the forthcoming November elections were conducted in an honest, democratic manner. The man in question was Al Capone; the city, Chicago. Capone boasted, ‘I own the police’. A more accurate statement would have been, ‘I own the city’. Capone responded to the plea for fair elections. He told the police of America’s second largest city what to do and the police obeyed. The President of the Crime Commission later observed: ‘It turned out to be the squarest and the most successful election day in forty years. There was not one complaint, not one election fraud and no threat of trouble all day.’ 

Paul Marcinkus was born in the suburb of Cicero, Illinois on January 15th, 1922. The following year Al Capone, confronted with the extraordinary spectacle of an honest Mayor and an equally honest Chief of Police in Chicago, moved his headquarters to Cicero. The population of some 60,000, mainly first and second generation Poles, Bohemians and Lithuanians, became accustomed to the sight of the Mafia in their midst. Capone set up headquarters at the Hawthorne Inn at 4833 Twenty-second Street. Along with Capone came such gentlemen as Jake ‘Greasy Thumb’ Guzik, Tony ‘Mops’ Volpi, Frank ‘The Enforcer’ Nitti, Frankie ‘The Millionaire Newsboy’ Pope. 

This was the Cicero in which Paul Casimir Marcinkus grew up. His parents were Lithuanian immigrants. His father earned a living cleaning those windows that were not being smashed by machine gun bullets, and his mother worked in a bakery. Their grasp of the English language was poor. In the classic manner of many of the poor immigrants who sought a better life in the land of the free, they determined that their children through honest endeavour and hard work should have better lives. Marcinkus, the youngest of their five children, succeeded beyond their wildest dreams. His is the story of local boy makes God’s banker. 

Guided by his parish priest, Marcinkus developed a vocation for the priesthood. He was ordained in 1947, the year Al Capone died of syphilis. The Catholic burial of America’s all-time Public Enemy Number One in Chicago was officiated by Monsignor William Gorman, who explained to reporters: ‘The Church never condones evil, nor the evil in any man’s life. This very brief ceremony is to recognize his (Capone’s) penitence and the fact that he died fortified by the Sacraments of the Church.’ 

Marcinkus went to Rome and studied at the same Catholic University, the Gregorian, at which Albino Luciani had obtained his degree. Marcinkus was equally successful and obtained his doctorate in Canon Law. During his seminarian days, he had used his 6 ft 3 ins of height and his 16-stone of brawn with considerable success on the playing fields. When he went in for the ball during a football match, he usually came out with it. His physical strength was to prove a decided asset in his rise to the top. Clearly some of the lessons learned on the streets of Cicero paid off. 

Returning to Chicago he worked as a parish priest, then became a member of the Ecclesiastical Court of the Diocese. One of the first to be impressed with Marcinkus was the then Head of the Archdiocese of Chicago, Cardinal Samuel Stritch. After a recommendation from the Cardinal, Marcinkus was transferred to the English section of the Vatican Secretary of State’s office in 1952. Tours of duty attached to the Papal Nuncios of Bolivia and Canada followed, then in 1959 he returned to Rome and the Secretary of State’s Department. His fluency in Spanish and Italian ensured his constant employment as an interpreter. 

In 1963 the Cardinal of New York, Francis Spellman, advised Pope Paul during one of his frequent trips to Rome that Marcinkus was a priest with an excellent potential. In view of the fact that Spellman headed the wealthiest diocese in the world at that time, and was frequently referred to as ‘Cardinal Moneybags’ – a tribute to his financial genius – the Pope began quietly to monitor Paul Marcinkus. In 1964, during a visit to down-town Rome, the over-enthusiastic crowds were in danger of trampling the Vicar of Christ underfoot. Suddenly Marcinkus appeared. Using shoulders, elbows and hands he physically clove a path through the crowds for the frightened Pope. The following day the Pope summoned him for personal thanks. From then on he became the unofficial bodyguard to the Pope and his nickname, The Gorilla, was born. 

In December 1964 he accompanied Pope Paul to India; the following year to the United Nations. By now Marcinkus had taken over the duties of security adviser on such trips. Personal bodyguard. Personal security adviser. Personal translator. The boy from Cicero had come far. He was by now a close friend of the Pope’s personal secretary, Father Pasquale Macchi. Macchi was a key member of the Papal entourage, which the Roman Curia referred to as ‘The Milan Mafia’. When the Archbishop of Milan, Montini, was elected Pope in 1963 he had brought with him a whole train of advisers, financiers, clerics. Macchi was one of the entourage. All roads may lead to Rome; a number go via Milan. The dependence that the Pope placed upon men like Macchi was out of all proportion to their official positions. Macchi would berate the Pope when he considered him morbid or depressed. He would tell him when to go to bed, who should be promoted, who should be punished with an uncomfortable transfer. Having tucked His Holiness up at nights Macchi could invariably be found in an excellent restaurant just off the Piazza Gregono Settimo. His usual companion for dinner was Marcinkus. 

Further trips abroad with ‘The Pilgrim Pope’ to Portugal in May 1967 and to Turkey in July of the same year cemented the friendship of Pope Paul and Marcinkus. Later that year Pope Paul VI created a Department called the Prefecture of the Economic Affairs of the Holy See. A more comprehensible title would have been Chancellor of the Exchequer or Auditor General. What the Pope sought was a department that would be able to produce an annual summary of the exact state of Vatican wealth and the progress of all assets and liabilities of every Administration of the Holy See, with a view to obtaining figures in black and white which would give a final balance or estimate for each year. From its creation the Department has struggled under two very serious handicaps. Firstly, on Pope Paul’s express instructions the Vatican Bank was specifically excluded from the economic exercise. Secondly, there was Vatican paranoia. 

After the Department had been established by a trio of cardinals, the man subsequently appointed to run it was Cardinal Egidio Vagnozzi. In theory he should have been able after a maximum of one year in the job to provide the Pope with the exact state of Vatican finances. In practice Vagnozzi found that the manic desire for financial secrecy which the various Vatican departments frequently demonstrate to enquiring journalists, was extended to him. The Congregation of the Clergy wanted to keep its figures to itself. So did the APSA. So did they all. In 1969 Cardinal Vagnozzi observed to a colleague: ‘It would take a combination of the KGB, the CIA and Interpol to obtain just an inkling of how much and where the monies are.’ 

To assist Bernardino Nogara’s aging colleague, the 84-year-old Cardinal Alberto di Jono, who was still functioning as Head of the Vatican Bank, Pope Paul consecrated as bishop, Paul Marcinkus. The morning after Marcinkus had prostrated himself at the feet of the Pope he took over as the Vatican Bank’s Secretary. For all practical purposes he was now running the Bank. Interpreting for President Johnson when he talked to the Pope had been relatively easy but, as Marcinkus freely admitted, ‘I have no banking experience’. The virgin banker had arrived. From being an obscure priest in Cicero, Paul Marcinkus had risen higher and further in terms of real power than any American before him. 

One of the men who had assisted the rise of Paul Marcinkus was Giovanni Benelli. His initial assessment to Pope Paul of the golf-playing, cigar-chewing, extrovert from Cicero was that Marcinkus would be a valuable asset to the Vatican Bank. Within two years Benelli concluded that he had made a disastrous misjudgement and that Marcinkus should be removed immediately. He discovered that in that brief period Marcinkus had built himself a power base stronger than his own. When the final showdown came in 1977 it was Benelli who left the Vatican. 

The extraordinary promotion of Marcinkus was part of a carefully planned change of Vatican policy. Paying large amounts of tax on share profits and having a high profile as an owner of countless Italian companies was now decidedly passé for Vatican Incorporated, particularly when those companies made embarrassing little items such as the contraceptive pill, on which Pope Paul had just invoked the wrath of God. The Pope and his advisers had taken the decision to reduce their commitments in the Italian money markets and transfer the bulk of Vatican wealth to the foreign markets, particularly the USA. They also wished to move into the highly lucrative world of Eurodollar blue chips and off-shore profits. 

Marcinkus was selected as an essential component in this strategy. The Pope used another part of his ‘Milan Mafia’ to complete the team. He chose a man who actually was Mafia, not from Milan, which was merely his adopted city. ‘The Shark’ was born in Patti near Messina, Sicily. His name – Michele Sindona. 

Like Albino Luciani, Michele Sindona knew poverty as a child and like Luciani he was deeply affected and influenced by that environment. While the former grew to manhood determined to relieve the poverty of others, the latter resolved to relieve others of their wealth. 

Born on May 8th, 1920 and educated by the Jesuits, Sindona demonstrated early in life a marked proclivity for mathematics and economics. Having graduated from Messina University with an excellent Law degree, in 1942 he avoided conscription in Mussolini’s armed forces with the aid of a distant relation of his fiancée who worked in the Vatican Secretariat of State, one Monsignor Amleto Tondini. 

During the last three years of the Second World War, Sindona put his Law degree to one side and earned a very lucrative living doing what he would ultimately become world famous for: buying and selling. He bought food on the Black Market in Palermo and smuggled it with the aid of the Mafia to Messina, where it was sold to the starving population. 

After June 1943 and the Allied landings, Sindona turned to the American Forces for his supplies. As business expanded so did his Mafia connections. In 1946 he left Sicily for Milan, taking with him his young wife Rina, invaluable lessons in the law of supply and demand, and a number of even more invaluable letters of introduction from the Archbishop of Messina, whose friendship Sindona had carefully cultivated. 

In Milan he lived in the suburbs at Affori, and worked for a business consultancy and accounting firm. Sindona’s speciality, as American capital began to flow into Italy, was to show would-be investors how to dance their way through Italy’s complex tax laws. His Mafia associates were suitably impressed with his progress. He was talented, ambitious, and, more important in the eyes of the Mafia, he was also ruthless, totally corruptible and one of their own. He knew the importance of Mafia traditions like ‘omertá’, the rule of silence. He was Sicilian. 

The Mafia family Gambino were particularly taken with the young Sindona and his dexterity at placing dollar investments without reference to tiresome tax regulations. The Gambino family has global interests but its two main power centres are New York and Palermo. The former is controlled by the Gambinos, the latter by their Sicilian cousins the Inzerillos. On November 2nd, 1957 there was a ‘family’ reunion in the Grand Hotel des Palmes, Palermo. Also invited to enjoy the wine and food was Michele Sindona. 

The Gambino family made Sindona an offer he accepted with enthusiasm. They wanted him to manage the family’s re-investment of the huge profits just beginning to accrue from the sales of heroin. They needed a laundryman. Sindona, with his proven abilities at moving amounts of money in and out of Italy without disturbing the tranquillity of the Government’s taxation departments, was an ideal choice. Added to this ability was the fact that he was by the time of this Mafia summit conference already a director of an increasing number of companies. He frequently said to grateful clients, ‘No, I’ll take payment in some shares in your company’. He had also begun to perfect the technique of acquiring troubled companies, dividing them up, selling off pieces, merging other pieces, shuffling everything sideways and then selling at a large profit. It was dazzling to behold, particularly if you were not paying the conjuror. 

Within seventeen months of the Mafia summit conference Sindona bought his first bank, aided by Mafia funding. Sindona had already discovered one of the cardinal rules of theft: the best way to steal from a bank is to buy one. 

Sindona created a Liechtenstein holding company, Fasco AG. Shortly afterwards Fasco acquired the Milanese Banca Privata Finanziaria, usually called BPF. Founded in 1930 by a Fascist ideologist, the BPF was a small, very private, exclusive institution which served as a conduit for the illegal transfer of funds from Italy on behalf of a favoured few. It was doubtless this proud heritage that won Sindona’s heart. Though disdaining to fight for Mussolini Michele Sindona was a natural Fascist. It would have appealed to him to acquire such a bank. 

In 1959, the same year in which he acquired BPF, Sindona made another very shrewd investment. The Archbishop of Milan was trying to raise money for an old people’s home. Sindona stepped in and raised the entire amount: 2.4 million dollars. When Cardinal Giovanni Battista Montini opened the Casa della Madonnina, Sindona was by his side. The two men became firm friends, with Montini relying more and more on Sindona’s advice on problems other than diocesan investments. 

What Cardinal Montini may not have known is that the 2.4 million dollars were supplied to Sindona very largely from two sources: the Mafia and the CIA. Former CIA agent Victor Marchetti was later to reveal: 

In the 1950s and the 1960s the CIA gave economic support to many activities promoted by the Catholic Church, from orphanages to the missions. Millions of dollars each year were given to a great number of Bishops and Monsignors. One of them was Cardinal Giovanni Battista Montini. It is possible that Cardinal Montini did not know where the money was coming from. He may have thought it was coming from friends. 

‘Friends’, who as part of their determination to stop Italy voting into power a Communist Government, not only poured many millions of dollars into the country but were also prepared to smile benignly upon men like Michele Sindona. He might well be a criminal of growing significance but at least he was a right-wing criminal. 

The Shark began to swim faster. The Milanese, who as a breed are inclined to be dismissive about the Romans, let alone the Sicilians, had initially disregarded this quietly spoken, polite man from the South. After a while the financial circles of the city which is the financial capital of Italy conceded that Sindona was a fairly bright tax consultant. When he began to acquire a company here and there they put it down to beginner’s luck. By the time he had become a bank owner and confidant of the man many were tipping as the next Pope, it was too late to stop him. His progress was irresistible. Again through his holding company, Fasco, he acquired the Banca di Messina. This move particularly pleased the Mafia families Gambino and Inzerillo, giving them as it did, unlimited access to a bank in Sicily, in Sindona’s own home province. 

Sindona forged close links with Massimo Spada, one of the Vatican’s trusted men, Administrative Secretary of the Vatican Bank and on the Board of twenty-four companies including Banca Cattolica del Veneto on behalf of the Vatican. Luigi Mennini, another top Vatican bank official, also became a close friend. Father Macchi, Montini’s secretary, yet another. Banca Privata began to flower. In March 1965, Sindona sold 22 per cent to Hambros Bank of London. Hambros, with their longstanding close links with Vatican finances, considered Sindona’s direction of the funds flowing into BPF ‘brilliant’. So did the Gambino and Inzerillo families. So did Continental Bank of Illinois, who also bought 22 per cent of the bank from Sindona. Continental were by now the major conduit for all USA investment by the Vatican. The bonds Sindona was placing around himself and the various Vatican elements were now multi-layered. He became a close friend of Monsignor Sergio Guerri. Guerri had taken over the responsibility of running Nogara’s monolithic creation, The Special Administration.

In 1964, Sindona had acquired yet another bank, this time in Switzerland, the Banque de Financement in Geneva, Finabank. Largely owned by the Vatican it was, like his first bank, little more than an illegal conduit for the flight of money from Italy. After Sindona’s purchase of the controlling block of shares the Vatican still retained a 29 per cent share of the bank. Hambros of London and Continental Illinois of Chicago also had a stake in Finabank. 

For three such august institutions as Vatican Incorporated, Hambros and Continental to be involved so closely with Sindona must surely indicate that Sindona ran his banks in an exemplary manner. Or does it? 

Carlo Bordoni discovered a different reality. Bordoni first met Sindona in the latter half of November 1964 at Studio Sindona, Via Turati 29, Milan. Previously Bordoni had worked as Manager of the Milan Branch of First National Citibank of New York. Shortly before his meeting with Sindona, Bordoni had been fired by Citibank for exceeding his limits on foreign exchange deals. Sindona could be counted on to look kindly at such a man. He offered Bordoni the opportunity of handling the foreign exchange of BPF. In view of the fact that the bank’s entire deposits were less than 15 billion lire (approximately 15 million dollars), Bordoni declined. Compared with the billion dollar turnover at Citibank this was small change. Further, at that stage, the bank was not even an agent bank and therefore was not authorized to deal in foreign currency. It was unknown internationally, with, in Bordoni’s view, ‘no possibility of inserting itself in the noble club of international banks’. 

Bordoni had a better idea. Why not create an international brokerage company? With hard work and Bordoni’s excellent contacts, such a company could earn large commissions. It would, again in Bordoni’s words, ‘increase the lustre of the then modest Sindona Group and after a while there would be the near certainty of consistent foreign currency credits in favour of BPF and Finabank.’ 

As Bordoni recalled later in a sworn deposition to Milan magistrates, when he turned State evidence against his former boss, Sindona became visibly excited and gave his approval for the project without hesitation. It is easy to understand Sindona’s delight. The aptly named Moneyrex went into operation on February 5th, 1965. Initially run in an ethical manner, it made significant profits. By 1967 it was dealing in a volume of 40 billion dollars per year with net profits in excess of 2 million dollars – profits which in Sindona’s hands promptly disappeared before the tax authorities had time to blink. But Sindona wanted more than honest profit. He urged Bordoni to channel the maximum possible amount of foreign currency towards his two banks. Bordoni pointed out that there were several very serious difficulties which made the idea impractical. The Shark began to get angry and shouted that Bordoni should remember his ‘force of conviction’ and his ‘power’. Bordoni shouted back that these were precisely the difficulties he had been talking about. In case Sindona was in any doubt, Bordoni elaborated: ‘Your “force” is the Mafia and your “power” is Freemasonry. I don’t intend to risk my good name and the success of Moneyrex just because a Mafioso asks me to.’ 

Eventually Bordoni’s discretion overcame his valour, and he agreed to look over the banking operations of BPF and Finabank. What he found tells as much about the Vatican, Hambros and Continental Illinois as it does about Sindona. Twelve years later, in his sworn affidavit from a prison hospital in Caracas to the Milan magistrates, he recalled his discoveries: 

When I started to go to BPF during the summer of 1966, I was deeply affected by the chaos which reigned in the various sectors. It was a tiny bank which was able to survive only thanks to the margins that emanated, duly masked of course, from a myriad of ‘black operations’ which BPF effected on behalf of Credito Italiano, Banca Commerciale Italiana and other important national banks. These foreign currency black operations, a vast illegal export of capital, took place daily and large figures were involved. The technique was really the most coarse and criminal which can be imagined. 

He found numerous overdrawn accounts without any real guarantees and for amounts far in excess of the legal limit of a fifth of capital and reserves. He also found massive theft. The staff were transferring large amounts of money from the accounts of depositors without their knowledge. These sums were then moved to the account held by the Vatican Bank. The Vatican Bank then transferred the amounts, less their 15 per cent commission, to Sindona’s account at Finabank in Geneva. The account name in Finabank was MANI. MA stood for Marco, NI for Nino: the names of Sindona’s sons. The amount of 15 per cent commission paid to the Vatican was a variable figure depending on the current exchange rate operating on the Black Money Market. 

If a client of BPF Milan remonstrated that a cheque he had made out in good faith had bounced or that his account should contain more than was shown he was initially told to take his business elsewhere. If he persisted, then the Manager would appear, and full of Milanese sincerity, apologize and offer the explanation, ‘it is all a big accounting error – you know – these modern computers’. 

Bordoni’s discoveries at Finabank, Geneva were as bad. The Managing Director, one Mario Olivero, knew nothing about banking. The General Manager spent all day playing the share, commodity and currency markets. If he lost, the loss was transferred to a client’s account. If he won the profit was his. The heads of the various divisions followed the example of the General Manager, as did the Vatican Bank. 

The IOR, apart from being part owner of the bank, also had a number of accounts there. Bordoni discovered that these accounts ‘reflected exclusively, gigantic speculative operations which resulted in colossal losses’. These losses, like everyone else’s, were financed by a shell company called Liberfinco (Liberian Financial Company). At the time of Bordoni’s inspection, this shell company was showing a loss of 30 million dollars. When the Swiss bank inspectors hove into view in 1973, the loss this phantom company was showing had grown to 45 million dollars. The Swiss told Sindona, the Vatican, Continental Illinois and Hambros they had 48 hours to close Liberfinco or they would declare Finabank bankrupt. Another Sindona aide, Gian Luigi Clerici di Cavenago, then demonstrated he had as many bright ideas as names. By means of a counter account for 45 million dollars, a device that did not use any actual cash, he closed Liberfinco and opened another company, Aran Investment of Panama, with an immediate deficit of 45 million dollars. 

When Sindona had asked Bordoni to look into Finabank, he had observed in one of the great understatements of all time: ‘Strange things are happening there’. When Bordoni told him just how strange these things were, Sindona insulted him and threw him out of his office. Business continued as usual at both banks. Bordoni tried to extricate himself, Sindona used one of his classic techniques: blackmail. Bordoni too had transgressed in his foreign speculations. His transgressions would be reported to the President of the Bank of Italy. Bordoni stayed. 

Carlo Bordoni should have seen the writing on the wall before he put his hand in the till. During one of their initial confrontations, Sindona had shouted at him: ‘You will never be a real banker because not only are you unable to lie, you are also a man with principles. You would never know how to use the valid weapon of blackmail.’ 

Sindona’s respect for his colleague might have increased immeasurably if he had known that Bordoni had begun to siphon off money into secret accounts in Switzerland. Before the end, Bordoni would relieve Sindona of over 45 million dollars. It was hardly on a par with Sindona’s own criminal activities but then he lacked Sindona’s schooling. 

Sindona was a master when it came to blackmail. Apart from an innate ability in this direction, he had his Mafia training and he also had available to him the talents of the most skilled blackmailer then practising the art in Italy, Licio Gelli. When Bordoni had contemptuously thrown Sindona’s Mafia and Masonic connections in his face, he was playing with double fire. Sindona was not a member of a Masonic Lodge that could claim to trace its origin back to the stonemasons of Solomon. His was no Lodge inspired by the Italian patriot Garibaldi. There was no Duke of Kent as the Grand Master. The Lodge was ‘Propaganda Due’ or P2 and its Grand Master was Licio Gelli. 

Gelli was born in Pistoia, central Italy on April 21, 1919. His formal education ceased when he was expelled from school in his mid-teens. A story from Gelli’s school days indicates that a peculiar kind of cunning came early to him. There was a youth in one particular class attended by Gelli who was bigger and stronger than the rest. He was admired by many and feared by all. One day Gelli stole the youth’s lunch and during the ensuing uproar said to him, ‘I know who stole your food but I have no wish to get the boy into trouble. You’ll find it hidden under the third bench.’ The youth became Gelli’s friend and protector from that day and Gelli had learned the art of manipulation. By the age of 17 he had already acquired a hatred of Communism comparable to King Herod’s attitude towards the first born. As members of the Italian Black Shirt Division, Gelli and his brother fought alongside Franco’s army against the Communists in Spain. Of this period in his life Gelli observes: ‘Only I returned alive.’ 

During the early stages of the Second World War Gelli fought in Albania. Subsequently, he obtained the rank of Oberleutnant in the SS in Italy and worked for the Nazis as a ‘liaison officer’. His work involved spying on the partisans and betraying them to his German masters. Some of his early wealth was derived from his presence in the Italian town of Cattaro, where, during the war, the national treasures of Yugoslavia were hidden. A significant proportion of those treasures have never been returned to Yugoslavia but were stolen by Gelli. Gelli’s early devotion to a hatred of all things Communist lessened in direct proportion to the defeats suffered by the Axis powers as the war progressed. He began to collaborate with the partisans, who were very largely Communists. Thus he would locate a partisan hideout, dutifully tell the Germans, then advise the partisans to move before the raid. 

He continued to play both ends against the middle throughout the remainder of the war and was one of the last of the Fascists to surrender in Northern Italy, close to where a young priest Albino Luciani had been hiding partisans in Belluno. 

Gelli’s agreement to continue to spy for the Communists after the war was instrumental in saving his life when he faced an anti-Fascist Commission sitting in Florence. The evidence that he had tortured and murdered patriots was deemed, after discreet intervention by the Communists, to be insufficient. 

Having been cleared of these charges he immediately organized a ‘rat line’ for Nazis wishing to flee to South America. His fee was 40 per cent of their money. Another organizing member of the ‘rat line’ was the Catholic priest from Croatia, Father Krunoslav Draganovic. Among the men who escaped was the Gestapo Chief Klaus Barbie, usually referred to as The Butcher of Lyons. Barbie was not obliged to pay either Father Dragonovic or Gelli. The cost was borne by the US Counter Intelligence Corps which employed Barbie in espionage work until February 1951. 

While continuing to assist Vatican officials and US Intelligence, Gelli also continued spying for the Communists until 1956. The termination of his espionage work for the Communists coincided with the commencement of his work for the Italian secret service. Part of his fee for spying for his own country was the closure of the file the secret service had on him. This also occurred in 1956. Two years earlier he had followed the same path on which he had sent so many members of the Third Reich to South America, aligning himself with extreme right-wing elements in Argentina, where he became a close friend and confidant of General Juan Peron. When Peron was excommunicated by the Catholic Church, Gelli experienced one of his few failures in attempting to intercede with the Vatican. Peron’s anticlerical campaign, which had led to his excommunication, weighed more heavily with the Church than Gelli’s assurances that the General was a greatly misunderstood genius. When Peron left the country after a military coup in 1956, Licio Gelli promptly set about befriending the incoming junta. Slowly and carefully Gelli set about building a power base that began to stretch through much of South America. It was always the rich and powerful, or the potentially rich and powerful whom Gelli courted. In terms of political philosophies or ideals, Gelli was a whore. If you could afford him he would perform for you. While helping the right-wing junta of Argentina, he simultaneously recommenced spying on behalf of the Soviet Union, through his links with Romania. He carried a recommendation from the Communists of Italy which had saved his life after the war, and the phone numbers of the CIA contacts to whom he also sold information. In addition he continued to work for SID, Italian Army Intelligence. 

While Sindona was moving upwards through the financial jungles of post-war Milan, Gelli was ascending the complex power structure of South American politics. A general here, an admiral there, politicians, senior civil servants – while Sindona cultivated contacts in the belief that power lay in money, Gelli, through his new friends, aspired to the source of real power: knowledge. Information, the personal file on this banker, the secret dossier on that politician – his network spread from Argentina into Paraguay, into Brazil, Bolivia, Colombia, Venezuela, and Nicaragua. In Argentina he acquired dual nationality and became that country’s economic adviser to Italy in 1972. One of his principal tasks was to negotiate and arrange the purchase of quantities of arms for Argentina. These included tanks, planes, ships, radar installations, and ultimately the deadly Exocet missile. Before that he held less exalted positions. In Italy, they included the post of General Manager to Permaflex, a company making mattresses, and a spell as Manager of Remington Rand in Tuscany. Among the directors listed at that time on the board of Remington Rand was Michele Sindona. 

Ever anxious to increase his circle of power and influence Gelli saw the rehabilitated Masonic movement as the perfect vehicle. Ironically it had been his beloved leader Mussolini who had banned the Freemasons. Mussolini had considered them ‘a state within a state’. It was equally ironic that the democratic Italian Government Gelli held in such total contempt restored the freedom of Masons, though they retained an aspect of the Fascist Law that made it a punishable offence to create a secret organization. Consequently the reformed Masons were obliged to deposit lists of their members with the Government. 

Gelli joined a conventional Masonic Lodge in November 1963. He rapidly rose to third degree membership, which made him eligible to lead a Lodge. The then Grand Master Giordano Gamberini urged Gelli to form a circle of important people, some of whom might eventually become Masons but all of whom could be useful to the growth of legitimate Freemasonry. Gelli leapt at the opportunity. What he in fact conceived was an illegal secret organization. This group was given the name Raggruppamento Gelli – P2. The P stood for Propaganda, the name of an historic lodge of the nineteenth century. Initially he brought into it retired senior members of the Armed Forces. Through them he obtained the entrée to the active Service Heads. The web he spun was gradually to cover the entire power structure of Italy. The ideals and aspirations of genuine Freemasonry were rapidly abandoned, though not officially. Gelli’s aim was somewhat different: extreme right-wing control of Italy. Such control would function as a secret state within a state, unless the unthinkable happened and the Communists were elected to power. If that happened then there would be a coup. The right wing would take over. Gelli was confident that the Western Powers would accept the situation. Indeed, from the early formation of P2, he had the active support and encouragement of the CIA operating in Italy. It may sound like the scenario of a madman, doomed to the fate of all such schemes, but it should be noted that within the membership of P2 in Italy alone (there were, and still are, powerful branches in other countries) were the Armed Forces Commander Giovanni Torrisi, the Secret Service Chiefs Generals Giuseppe Santovito and Giulio Grassini, the Head of Italy’s Financial Police, Orazio Giannini, cabinet ministers and politicians of every political shade (except of course the Communists), thirty generals, eight admirals, newspaper editors, television executives, top industrialists, and bankers, including Roberto Calvi and Michele Sindona. Unlike conventional Freemasonry, the list of members of P2 was so secret that only Gelli knew all the names. 

Gelli used a variety of techniques to increase the power of P2. One of them was the innocuous method of personal contact and introduction from an already existing member. Others were less tasteful. Blackmail was the most prevalent. When a ‘target’ joined P2 he was obliged to demonstrate loyalty by placing at Gelli’s disposal documents that would compromise not only the new member but other possible targets. Confronted with the evidence of their own misdeeds the targets joined P2. This technique was used for example on the President of ENI, the State oil company, Giorgio Mazzanti. Shown the evidence of his own corruption concerning proposed huge bribes and pay-offs on a pending Saudi oil deal, Mazzanti caved in and joined P2, bringing to Gelli even more compromising information. 

Another technique Gelli used to seduce a new member was to ascertain from already corrupted sources the shortlist of three on a top job. He would then telephone all three applicants and announce that he intended to fix it for them. Next day he would have one very grateful new member of P2. 

On the surface P2 was, and still is, a fanatical insurance policy against potential Communist governments. Excluding Italy there are still branches functioning in Argentina, Venezuela, Paraguay, Bolivia, France, Portugal and Nicaragua. Members are also active in Switzerland and the USA. P2 interlocks with the Mafia in Italy, Cuba and the USA. It interlocks with a number of the military regimes of Latin America, and with a variety of groups of neo-Fascists. It also interlocks very closely with the CIA. It reaches right into the heart of the Vatican. The central common interest of all these elements is apparently a hatred and fear of Communism. 

In fact, P2 is not a world conspiracy with the aim of preventing the spread of Marxism or its many variations. It is an international grouping with a number of diverse aims. It combines an attitude of mind with a community of self interest, its main goals being not the destruction of a particular ideology but an insatiable greed for power and wealth and the furtherance of self, hiding behind the acceptable face of ‘defenders of the free world’. In the world of P2, however, nothing is free. Everything has a price. 

Licio Gelli’s contacts and associates spread far and wide. They included Stefano Delle Chiaie, Pierluigi Pagliani and Joachim Fiebelkorn, all members of the private army set up in Bolivia by ex-Gestapo Chief Klaus Barbie. The group took the name ‘Fiancés of Death’. Political assassinations were performed to order, including that of Bolivian Socialist leader Marcelo Quiroga Cruz. The ‘Fiancés of Death’ were also instrumental in bringing to power in Bolivia in 1980 General Garcia Meza. Klaus Barbie used his Nazi training as ‘security adviser’ to Colonel Gomez, a man with a great deal of Bolivian blood on his hands. 

The group that Barbie controlled with the blessing of the Bolivian junta expanded its activities after a coup of 1980. The murders of political opponents, investigating journalists, labour leaders and students increased. Added to this work was the task of ‘regulating’ the cocaine industry – destroying the small dealers to ensure that the big drug traffickers could flourish with the junta’s protection. From 1965, Barbie’s activities in Bolivia had included arms deals not only on behalf of Bolivia but also for other right-wing South American regimes and Israel. It was through such arms deals that Klaus Barbie, an unrepentant member of the SS, and Licio Gelli became business partners: Barbie, who between May 1940 and April 1942 was responsible for the liquidation of all known Freemasons in Amsterdam, and Licio Gelli, the Grand Master of Masonic Lodge P2. The two men had much in common, including the mutual high regard they had for men like Stefano Delle Chiaie. The Italian Delle Chiaie has been involved in at least two attempted coups in his own country. When a civilian Government returned to office in Bolivia in October 1982, Delle Chiaie fled to Argentina. There he was given comfort and aid by P2 member José Lopez Rega, the creator of the notorious Triple A death squads. 

Rega had also created a large cocaine-smuggling connection between Argentina and the USA. Clearly Licio Gelli is as skilful at selling his particular vision of the world as he once was selling mattresses. To have a range of close friends and associates that includes a man like José Lopez Rega, Klaus Barbie and the esoteric Cardinal Paolo Bertoli is a considerable achievement. Like Gelli, the Cardinal is a Tuscan. His career includes forty years in the Vatican diplomatic service. Bertoli was not without support in the Conclave that elected Albino Luciani. 

Cardinal Bertoli was only one of the many doors to Gelli’s entry into the Vatican. He dined with Bishop Paul Marcinkus. He had a number of audiences with Pope Paul. Many a cardinal, archbishop, bishop, monsignor and priest, who today would deny all knowledge of Licio Gelli, was only too pleased to be seen in his company in the 1960s and the 1970s. 

One of Gelli’s closest P2 associates was Italian lawyer and businessman Umberto Ortolani. Like ‘The Puppet Master’, Ortolani learned early in life the value of secret information. During the Second World War he became head of two large operational units of SISMI, the military intelligence agency in Italy. His speciality was counterespionage. A Roman Catholic, he appreciated while still a young man that one of the real centres of power was across the Tiber within Vatican City. Consequently his penetration of the Vatican and its corridors of influence was total. 

Vatican dignitaries were frequent dinner guests at Ortolani’s Rome house in Via Archimede. An indication of how far back Ortolani’s excellent Vatican contacts reached can be gauged from the fact that he was first introduced to Cardinal Lercaro in 1953. Lercaro had immense influence within the Church and was destined to become one of the four ‘moderators’ of the Second Vatican Council. He was widely regarded as one of the liberal enlightened influences which helped to ensure that many of the reforms which flowed from the Council became realities. Ortolani was generally known as the Cardinal’s ‘cousin’, a misconception he actively encouraged. 

In the run-up to the Conclave which elected Paul VI, the central issue was whether the work of Pope John XXIII would continue or whether the Papacy should revert to the reactionary ethos of Pius XII. The ‘liberals’ needed a safe house to debate strategy. Lercaro, one of the liberal front-runners, asked Ortolani to host the meeting. It was held at Ortolani’s villa in Grottaferrata, near Rome, a few days before the Conclave. A large number of Cardinals attended, including Suenens of Brussels, Doepfner of Munich, Koenig of Vienna, Alfrink of Holland and ‘Uncle’ Giacomo Lercaro. 

This highly secret meeting was the single most important factor in what subsequently occurred in the Conclave. It was agreed that if Lercaro’s very considerable support should prove insufficient then his votes should swing to Giovanni Battista Montini. Thus on the third ballot Montini suddenly found himself twenty additional votes nearer to the Papacy he eventually acquired. 

Within months the new Pope bestowed upon Umberto Ortolani the Vatican award of ‘Gentleman Of His Holiness’. He subsequently received many more Vatican honours and awards. He even succeeded in affiliating Licio Gelli, a non-Catholic, to the Knights of Malta and the Holy Sepulchre. A close friend of Casaroli, the man usually referred to as the Vatican’s Kissinger because of his major involvement in foreign policy, lawyer Ortolani provided his P2 master with an unrivalled access to any Vatican dignitary. Like his master, Ortolani is a man who, on paper at least, is the citizen of many countries. Born in Viterbo in Italy, he has since become a Brazilian national. A useful byproduct of that arrangement is that no extradition treaty exists between Italy and Brazil. 

The list of P2 members grew ever larger. In 1981 when a huge quantity of Gelli’s secret documents were seized in Tuscany, they revealed that the secret society had nearly 1,000 members in Italy alone. But that 1,000 is merely the tip of the iceberg. SISMI, Italy’s military intelligence agency, puts the membership at nearly 2,000. Gelli himself puts the figure at 2,400. In either event a number of Europe’s intelligence agencies are agreed that the identity of the majority of P2 members has yet to be revealed and that within their ranks are nearly 300 of the most powerful men in what it pleases the twentieth century to call the free world. 

When the Italian exposure of nearly 1,000 members of this illegal secret society occurred in 1981, one P2 member, Senator Fabrizio Cicchitto, stated a fundamental truth: ‘If you wanted to make it to the top in Italy in the 1970s the best way was Gelli and P2.’ 

The close relationship between P2 and the Vatican was, like all relationships formed by Gelli, self-serving to both parties. Gelli played on the almost paranoid fear of Communism existing within the Vatican. He was particularly given to quoting pre-Second World War statements that had justified Fascism, including one by Cardinal Hinsley of Westminster who had told Catholics in 1935: ‘If Fascism goes under, God’s cause goes under with it.’ 

The most bizarre factor in the close and continuous contacts that existed between P2 and the Vatican is that various cardinals, bishops and priests could smile so benevolently on this bastard child of orthodox Masonry. The Roman Catholic Church has viewed Freemasons for many hundreds of years as sons of evil. The organization has been repeatedly condemned and has inspired at least six Papal bulls that have been specifically directed against it; the earliest being ‘In eminenti’ from Pope Clement XII, in 1738. 

The Church regards this secret society of self-interest as an alternative religion controlled by the godless. It considers that one of Freemasonry’s principal aims is the destruction of the Catholic Church. Consequently any Catholic discovered to be a member has been subjected to automatic excommunication from the Church. 

There can be little doubt that many historical revolutionary movements utilized Freemasonry in their quarrels with the Church. A classic example is the Italian patriot Garibaldi, who forged the Masons of the country into a force that aroused the general populace, overthrew Papal domination, and resulted in a unified Italy. 

Today Freemasonry means different things in different countries. All Masons contend that it is a force for good. Non-Masons view this self-serving, secret society with varying degrees of hostility and suspicion. But until very recently the Roman Catholic Church has maintained an entirely consistent position: Freemasonry is a profound evil and all who belong to it are in the eyes of the Church anathema. If this was the thinking of the Church on conventional Freemasonry, then it makes the close ties between P2 and the Vatican even more extraordinary: one of the smallest but most powerful States on earth embracing a state within a state. The overwhelming majority of P2 members were, and are, practising Roman Catholics. 

Though the complete Italian Lodge of P2 never met in its entirety (they would have needed to hire La Scala for that), there were undoubtedly meetings of selected groups. Discussions were not confined merely to lamenting the evils of Communism. Active steps were planned to combat and contain what Gelli and his friends saw as the ultimate disaster, a Communist Government democratically elected to power. 

There have been over the past two decades a number of bomb outrages in Italy which remain unsolved. If the Italian authorities ever catch Gelli they will be in a position, if he chooses to talk and tell the truth, to solve some of those mysterious attacks. These include: Milan 1969, the Piazza Fontana bomb attack – 16 people killed; Bologna 1974, bomb attack on the Rome–Munich express, ‘The Italicus’, near Bologna – 12 people killed; Bologna 1980, railway station bombing – 85 people killed, 182 injured. According to a disenchanted follower of Gelli, a neo-Fascist called Elio Ciolini, this last outrage was planned at a P2 meeting held in Monte Carlo on April 11th, 1980. Licio Gelli was the Grand Master at that meeting. Again, according to the sworn testimony of Ciolini, three of the men allegedly responsible for the railway station bombing are Stefano Della Chiaie, Pierluigi Pagliani and Joachim Fiebelkorn. 

The purpose of this series of appalling attacks was to direct public outrage towards Italian Communists by making it appear that they were responsible. 

In July 1976 Italian magistrate Vittorio Occorsio was in the middle of an investigation into the links between a neo-Fascist movement called National Vanguard and P2. On July 10th the magistrate was murdered by an extended burst of machine-gun fire. The neo-Nazi group New Order subsequently claimed responsibility. New Order, National Vanguard – the names become academic. What mattered was that Vittorio Occorsio, a man who could not be bought, lay dead and the investigation into P2 had been halted. 

By the late 1960s Michele Sindona was a member of P2 and also a close friend of Licio Gelli. He had much in common with Gelli, not least the close attention they were both paid by the CIA and Interpol. The functions of these two organizations do not always run in tandem. Interpol’s investigation of Sindona is a perfect illustration of this. In November 1967 Interpol, Washington, telexed the following message to the Rome Police Headquarters: 

Recently we have received unverified information that the following individuals are involved in the illicit movement of depressant, stimulant and hallucinogenic drugs between Italy, the United States and possibly other European countries. 

Top of the list of four names was Michele Sindona. The Italian Police replied that they had no evidence to link Sindona with the drug trade. A copy of the Interpol request and the response were in Sindona’s hands the same week. A similar request by Interpol, Washington to the CIA operating out of the Rome Embassy and the Milan Legation, if answered honestly, would have produced confirmation that the information Interpol had was entirely correct. 

The CIA file on Sindona was by this time extensive. It details Sindona’s link with the New York Mafia family Gambino, with its 253 members and its 1,147 ‘associates’. It tells how the five New York Mafia families, Colombo, Bonanno, Gambino, Lucchese and Genovese were interlocked in a range of crimes that included drug refining, smuggling and dealing, the drugs in question being heroin, cocaine and marijuana. Further criminal activities of these Mafia families which are annotated on the CIA files include prostitution, gambling, pornography, usury, protection, racketeering, fraud, and large-scale thefts from banks and pension funds. 

The files are full of details of how the Sicilian Mafia families Inzerillo and Spatola moved the refined heroin from Sicily to their colleagues in New York; of their infiltration of the Italian airline Alitalia, and of how 50,000 dollar contracts were awarded by the New York families to ‘associates’ to collect unaccompanied baggage from Palermo – baggage that contained heroin which had been refined at one of the five Inzerillo narcotics laboratories in Sicily. By the late 1960s the profits from heroin sales to these two Sicilian families were in excess of 500 million dollars per year. 

The files detail the journeys of nearly thirty ships per year which until very recently left Lebanese ports with cargoes of both unrefined and refined heroin, destined for a variety of ports in Southern Italy.

The most serious question this information raises is why did such incriminating evidence lie dormant and unused throughout the 1960s and the 1970s? The CIA never initiates policy, it merely implements or attempts to implement Presidential instructions. Did a succession of Presidents take the view that the Mafia’s activities were to be tolerated if they helped to ensure that NATO member Italy did not fall to the Communists through the polling booths? 

The Mafia families themselves desperately needed men like Michele Sindona. The extraordinary growth of bank deposits and the array of new banks and branches in Sicily, one of the poorest regions in the country, is mute testimony to the size of the Mafia’s problem. Enter Michele Sindona. On one occasion Sindona was asked where he obtained the money for his grandiose schemes. He replied: Ninety-five per cent of it is other people’s money.’ It was a response that was 95 per cent true. 

Michele Sindona was the man chosen by Pope Paul VI to act as financial adviser to the Vatican; the man chosen, after a long friendship with the Pope, to relieve the Church of its high-profile business position in Italy. The plan was to sell Sindona some of the major assets acquired under Nogara. Vatican Incorporated was about to distance itself from the unacceptable face of capitalism. Theoretically it was going to embrace the philosophy contained in the message Pope Paul VI gave the world in his 1967 encyclical Populorum Progressio: 

God has destined the earth and all it contains for the use of all men and of all peoples, so that the goods of creation must flow in just proportion into the hands of everybody, according to the rule of justice which is inseparable from charity. All other rights, of whatever kind, including those of private property and of free trade, must be subordinated to it: they must not obstruct, but on the contrary foster its achievement, and it is a grave and urgent social duty to restore them to their original aims. 

Pope Paul in the same encyclical quoted St Ambrose, ‘You never give to the poor what is yours; you merely return to them what belongs to them. For what you have appropriated was given for the common use of everybody. The land is given to everybody, and not only to the rich.’ 

When that statement was uttered the Vatican was the biggest owner of private real estate in the world. Populorum Progressio also contained the memorable observation that even when entire populations are suffering massive injustice revolutionary insurrection is not the answer. ‘One cannot fight a real evil at the cost of a greater evil.’ 

Confronted with the problem of the evil of a wealthy Roman Catholic Church when he apparently desired a poor Church for the poor, the Pope and his advisers decided to liquidate a sizeable proportion of their Italian assets and re-invest in other countries. Thus they would avoid heavy taxation, and the yield on the investment would be better. When Pope Paul proclaimed the magnificent aspirations of Populorum Progressio in 1967, Vatican Incorporated had already for a number of years been a close working partner of Michele Sindona. Through the illegal flight of currency from Sindona’s Italian banks via the Vatican Bank to the Swiss Bank which they jointly owned, Sindona and the Vatican, if not making the goods of creation flow to the poor, were certainly making them flow out of Italy. By early 1968 another Vatican-controlled bank, the Banca Unione, was in trouble. The Vatican Bank owned approximately 20 per cent. It was represented on the Board of Directors by Massimo Spada and Luigi Mennini. By 1970, two years after Sindona bought control and with the Vatican still substantial part-owners, the bank in theory had become an astonishing success. Aiming at the small saver and offering superior rates of interest the bank’s deposits rose from 35 million dollars to over 150 million dollars – in theory. 

In practice during the same period, the bank was robbed of over 250 million dollars by Sindona and his associates. Most of this fortune was poured through yet another Sindona bank, the Amincor Bank of Zürich. Much was lost in wild speculation on the Silver Market. One of the men who was deeply impressed with Sindona at this time was David Kennedy, Chairman of Continental Illinois, soon to be appointed Treasury Secretary in the President Nixon Cabinet. 

In 1969 it was clear to Vatican Incorporated that it had lost the long battle with the Italian Government over taxation of its share dividends. Realizing that to unload its entire stock on the market would result in the possible collapse of the Italian economy, it occurred to the Vatican that such an action would be self-defeating. A collapse of that magnitude would result in Vatican losses. 

The Pope, in conjunction with Cardinal Guerri, Head of the Special Administration of the APSA, decided to unload from the Italian portfolio a major asset, the Vatican’s share in the giant Società Generale Immobiliare. With assets in excess of half a billion dollars scattered around the world, that was certainly highly visible wealth. They again sent for The Shark. 

The shares of Società Generale Immobiliare were selling at around 350 lire. The Vatican held directly and indirectly some 25 per cent of the 143 million shares. Would Sindona like to buy? The question was put by Cardinal Guerri. Sindona’s response was immediate and positive. He would take the lot – at double the market price. Guerri and Pope Paul were delighted. The agreement between Sindona and Guerri was signed at a secret midnight meeting in the Vatican, in the spring of 1969. 

For the Vatican this was a particularly good meeting. It also wished to unload its majority shares in Condotte d’Acqua, Rome’s Water Company, and its controlling share of Ceramica Pozzi, a chemical and porcelain company which was losing money. The Shark smiled, agreed a price, and snapped up both holdings. 

Precisely who had conceived this entire operation? Who was the man who collected a handsome commission from Sindona and high praise from Pope Paul VI and Cardinal Guerri? The answer is powerful evidence of not only how far P2 had penetrated the Vatican but also how the interests of P2, the Mafia and the Vatican were often identical. Licio Gelli’s number two, Umberto Ortolani, was the man responsible for arranging the mammoth transaction. All Sindona had to do now was to pay for it. 

It is easy to purchase massive companies if you are using other people’s money. Sindona’s initial payment was made entirely with money illegally converted from the deposits of Banca Privata Finanziaria. In the last week of May 1969 Sindona transferred 5 million dollars to a small Zürich bank, Privat Kredit Bank. The Zürich bank was instructed to send the money back to BPF for the account of Mabusi Beteiligung. Mabusi resided in a Post Office Box in the Liechtenstein capital of Vaduz, and was a company controlled by Sindona. From there it was transferred again to another Sindona-controlled company, Mabusi Italiana. From there the 5 million dollars were paid to the Vatican. Further money was raised to pay for the huge acquisitions by bringing in Hambros and the American giant Gulf and Western. 

Sindona obviously has a highly developed sense of humour. One company owned by Gulf and Western was Paramount and one of its most successful films of the period was the adaptation of Mario Puzo’s book The Godfather. Thus a film taking a highly glamorous and amoral look at the world of the Mafia produced enormous profits, some of which went to sustain Michele Sindona, financial adviser to the Mafia families Gambino and Inzerillo. They in turn were channelling the multi-million profits acquired largely from heroin dealing into Sindona’s banks. The circle was complete. Life was imitating Art. 

By the early 1970s the massive illegal flight of money from Italy was having a serious effect upon the economy. Sindona and Marcinkus might be making significant profits through their efforts at diverting this money out of Italy, but the effect on the lira was devastating. Unemployment rose. The cost of living increased. Uncaring, Sindona and his associates continued to play the markets. By pushing up share prices to a much inflated level, the Sindona banks went through millions of dollars of other people’s money. 

Sindona and his close friend Roberto Calvi of Banco Ambrosiano openly boasted that they controlled the Milan Stock Market at this time. It was a control which they criminally exploited again and again. Shares went up and down like yoyos. Games were played with companies for the amusement and financial benefit of Sindona and his associates. The manipulation of a company called Pacchetti gives an example of the everyday activities of these men. 

Pacchetti began as a small, insignificant, leather-tanning company. Sindona acquired it in 1969 and decided to transform it into a conglomerate. He took as his model the Gulf and Western, an American giant with a wide spread of interests ranging from Paramount studios through publishing to airlines. Sindona’s acquisitions for Pacchetti were more modest. In fact it became a commercial dustbin containing interests in unprofitable steelworks and commercially unsuccessful household cleaners. There was, however, one jewel in it: he had acquired from Bishop Marcinkus an option to purchase Banca Cattolica del Veneto. Doubtless the fact that the Administrative Secretary of the Vatican Bank, Massimo Spada, was also the President of Pacchetti and President of Banca Cattolica helped Marcinkus forget the prior claims of the Veneto clergy and Patriarch Luciani. 

Roberto Calvi, who was a party to these negotiations, agreed to buy on a specified date a Sindona company called Zitropo. The scenario was now ready to manipulate the Milan Stock Market illegally yet again. The book value of the Pacchetti shares was about 250 lire per share. Sindona instructed the Stock Exchange department of the Banca Unione to purchase Pacchetti shares. By using nominees the shares were then illegally parked in Sindona-owned companies. The price of the shares began to surge dramatically, eventually reaching 1,600 lire on the Exchange. In March 1972 the day for Calvi’s purchase of Zitropo duly arrived. Simultaneously all the parking companies dumped their Pacchetti shares into Zitropo. The effect was to inflate artificially the value of Zitropo. Calvi paid an astronomically higher price than the company was worth. Sindona, having funded the entire operation with fictitious guarantees, made a huge illegal profit. An indication of just how much profit he made on this one operation can be appreciated from the fact that in 1978 a Government-appointed liquidator, Giorgio Ambrosoli, discovered incontrovertible evidence that Sindona had paid an illegal kickback to Calvi of 6.5 million dollars, and that Calvi shared this criminal payment fifty-fifty with Bishop Paul Marcinkus. 

Why would Calvi pay so much over the odds for Zitropo? There are three reasons. Firstly, he used money belonging to others to effect the purchase. Secondly, there was a 3.25 million dollars profit for him. Thirdly, at the conclusion of the Pachetti/Zitropo deal he acquired an option to buy Banca Cattolica del Veneto. Sindona had acquired the option from Marcinkus earlier. The fact that no one had consulted Albino Luciani, the Patriarch of Venice, or the members of his diocese who had lodged their shares with the Vatican Bank, was considered an irrelevance by Bishop Marcinkus. 

Sindona and Calvi became very adept at this form of robbery. Never in the history of banking has so much been paid for so little. In 1972 Calvi pocketed a further 5 million dollars from Sindona when Bastogi shares changed hands, and an additional 450 million Swiss francs when Sindona sold him 7,200 shares in Finabank. Each time Sindona paid the kickback to Calvi through his MANI account in Finabank. These huge amounts were paid into Calvi’s secret Swiss accounts which he held jointly with his wife. At the Union de Banques Suisses and Credit Bank of Zürich the Calvi's held four secret accounts: Account number 618934; Account number 619112; Account number Ral Rov/G21; and Account number Ehrenkranz. The very minimum that Sindona himself would have made on each deal was equivalent to the amount he was kicking back to Calvi. 

Roberto Calvi developed an insatiable appetite for this particular game and on occasions played it as a solo performer. Hence he obliged one of his own banks, Centrale, to buy a large block of Toro Assicurazioni shares in 1976 for 25 billion lire more than they were worth. The 25 billion ended up in one of the Swiss accounts previously noted. So did a further 20 billion lire after Calvi played the game again with over one million shares in Centrale. These huge sums of money were not just items on a balance sheet. The money physically moved from a variety of shareholders’ pockets directly into the pockets of the Calvi's and Sindona. What Bishop Marcinkus did with his 3,250,000 dollar kickback from the Pacchetti swindle has yet to be established. 

The shares in the Banca Cattolica were also subjected to this treatment. Sindona was aware that Calvi was negotiating with Marcinkus to acquire control of the bank – hence the share push. At the end of that exercise everyone except the Veneto Diocese was immeasurably richer. 

Calvi had been introduced to Marcinkus by Sindona in 1971. Thus Bishop Marcinkus, the man who on his own admission ‘knew nothing about banking’, had two excellent tutors. Meanwhile Marcinkus had been promoted by Pope Paul and was now President of the Vatican Bank. 

The various Vatican departments continued to unload a wide variety of companies on Sindona and then on Calvi. In 1970, for example, they finally sold Serono, a pharmaceutical works which featured among its more successful lines an oral contraceptive pill. 

An additional source of profit for the Sindona/Vatican-owned Finabank was another part of the cause of Italy’s faltering economy: double invoicing. As Bordoni observed: ‘It was less succulent than the kickbacks earned through the illegal exportation of black money but it still reached a high figure.’ 

Exports would be invoiced at costs that were much lower than the real ones. Thus the bent invoice would be officially paid via the Bank of Italy which, of course, would pass the information on to the Taxation Department. The exporter would be taxed on this low figure. 

The balance was paid by the receiver of the goods abroad direct to Finabank. In many instances Italian exporters actually showed a loss which was converted into tax credits by the Government. 

The large number of Sindona-owned exporting companies showed such losses. Sindona would bribe various Government politicians to allow this situation to continue. He would also argue that by doing so the Government was helping to keep down unemployment. 

A similar crime was worked on imports. Then the invoice would be for a much higher figure than the actual cost of the goods. When the goods passed through customs, payment of the artificially high figure would be made by the company to the foreign supplier. The foreign supplier in turn would assign the balance to a numbered account at Finabank or occasionally one of the other Swiss banks. 

Pope Paul’s poor Church for the poor grew instead immeasurably richer. The Vatican divestment of Italian wealth had resulted in men like Sindona and Calvi robbing the world to pay St Peter and Pope Paul. 

Finabank was also a part of the giant laundry for Mafia/P2/criminal money. With the Vatican retaining a 5 per cent of Società General Immobiliare it owned part of that laundry. With the further use by the Mafia of the Vatican Bank to move money both into and out of Italy, the Vatican ultimately owned the entire laundry. Use by Sindona and his staff of the Vatican Bank’s accounts at BPF has already been explained. That was one of the methods of getting dirty money out of the country and cleaning it at Finabank, but this was a two-way operation. Dirty money from the Mafia operating in Mexico and Canada and the USA was also being cleaned as it flowed into Italy. The operation was very simple. To quote again from Carlo Bordoni: 

These companies in Canada and Mexico were used to bring into the USA over the Canadian and Mexican borders dollars from the Mafia, from the Freemasons and from numerous illegal and criminal operations; the money arrived in suitcases and was then invested in US State Bonds. These were then sent to Finabank. Clean and easily negotiable. 

The USA Mafia obviously had no problems with borders. Their money was converted to State Bonds directly by Edilcentro of Washington, a subsidiary of SGI; then the Bonds also found their way to Finabank. If the Mafia wished to bring some of their clean money into Italy they used Vatican Bank channels. 

In the early 1970s Sindona extolled his own virtues to Bordoni. ‘My operating philosophy is based on my personality which is unique in the world, on well-told lies and on the efficient weapon of blackmail.’ 

Part of the blackmail technique was to bribe. A bribe in Sindona’s view was ‘merely an investment. It gave you a hold over the individual bribed’. Thus he unofficially ‘financed’ the ruling Italian political party, the Christian Democrats: 2 billion lire to ensure the promotion of party nominee Mario Barone to the position of Managing Director of Banco di Roma; 11 billion lire to finance the same party’s campaign against the divorce referendum. He arranged for the Christian Democrats to ‘earn’ billions of dollars. He opened an account for the party at Finabank, account no SIDC. Throughout the early 1970s three-quarters of a million dollars were transferred to this account. Sindona, the self-proclaimed hero of anti-communism, was also a man to hedge his bets. He opened another account at Finabank for the Italian Communist Party. Into this he also poured three-quarters of a million dollars per month, of other people’s money, account no SICO. 

He speculated against the lira, the dollar, the German Mark and the Swiss franc. With regard to his massive speculation against the lira (a 650 million dollar operation entirely created by Sindona), he told Italian Prime Minister Andreotti that he was aware of the existence of heavy speculation against the lira, and in order to learn more about the size of the operation and the source, he had instructed Bordoni through Moneyrex to join in in a ‘symbolic’ manner. Having reaped enormous profits by attacking the lira, he was hailed by Andreotti as ‘The Saviour of the Lira’. It was during this period that he received a citation presented by the American Ambassador to Rome. He was named ‘Man of the Year for 1973’. 

A year earlier, at a reception given to celebrate his purchase of the Rome Daily American, Sindona had announced that he intended to expand his interests and move a further 100 million dollars into the USA. Among those listening to his speech was his close friend Bishop Paul Marcinkus. In reality, by purchasing the Daily American Sindona was already expanding his USA interests. The paper had been backed by the CIA. American Congress was pressing the CIA to make precise disclosures of exactly what they did with the millions allocated to them. Like Pope Paul, they thought the moment seemed propitious to jettison a few embarrassing investments. Sindona insists that he bought the paper at the specific request of Ambassador Martin, who feared that it would ‘fall into the hands of the leftists’. Martin in decidedly undiplomatic language has denied this. He called Sindona ‘a liar’. 

Whoever asked him, there is no doubt that the paper had been previously subsidized by the CIA. There is equally no doubt that this was not the first favour Sindona did for The Company. In 1970 the CIA had asked him to buy a 2 million bond issue from the National Bank of Yugoslavia. Sindona obliged. The CIA placed the bonds in Yugoslavia in what they considered ‘friendly hands’. Sindona also moved money on behalf of the CIA into the hands of right-wing groups in Greece and Italy. 

Thwarted in his attempt to take over Bastogi, the large Milan-based holding company, by the Italian Establishment, who were motivated partially by fear of an ever-increasingly powerful Sindona and partially by racialism towards a Sicilian, The Shark turned his attention to the USA. There this man, who already owned more banks than many men have shirts, bought another bank, the Franklin National Bank of New York. 

The Franklin was the twentieth largest bank in the country. Sindona paid 40 million dollars for one million shares in it, representing 21.6 interest. He paid 40 dollars per share at a time when the share price was 32 dollars. More important, this time he had bought a very sick bank. It was tottering on the edge of bankruptcy. The fact that he used 40 million dollars of other people’s money from his Italian banks without reference to the owners should not hide from us that, for once, a few people in New York saw the boy from Patti coming. 

The true megalomania of Sindona can be gauged from the fact that, having realized what he had acquired, he did not give a damn. To him dealing with tottering banks was an everyday event as long as huge deposits could be kept whirling around on paper – as long as the Telex machine was there to transfer A to B and then to C and then back to A again.

Within twenty-four hours of his purchase and before he had even had an opportunity to try out the boardroom for size, the Franklin Bank announced its trading figures for the second quarter of 1972. They showed a 28 per cent drop from the same period for 1971. Sindona The Shark, the saviour of the lira and the man Marcinkus considered to ‘be well ahead of his time as far as banking matters are concerned’, took the news in typical Sindona manner. ‘I have important connections in all important financial centres. Those who do business with Michele Sindona will do business with Franklin National.’ The previous owners meanwhile were laughing all the way to another bank. 

As to the ‘important connections’, none could deny the truth of that. They ranged from the Mafia families Gambino and Inzerillo in Sicily and New York to Pope Paul VI, Cardinals Guerri and Caprio and Bishop Marcinkus in the Vatican. They covered the political spectrum from Andreotti and Fanfani in Italy to President Nixon and David Kennedy in the White House. They included intimate banking relationships with some of the most powerful institutions in the world – the Vatican Bank, Hambros of London, Continental of Chicago and Rothschilds of Paris. Through Gelli’s P2 he had forged close links with the men who ruled in Argentina, Paraguay, Uruguay, Venezuela, and Nicaragua. Of the Nicaraguan dictator, Somoza, he told a Rome lawyer: 

I prefer to deal with men like Somoza. Doing business with a one man dictatorship is much easier than doing business with democratically elected Governments. They have too many committees, too many controls. They also aspire to honesty, that’s bad for the banking business. 

This is a perfect illustration of the P2 philosophy given to its members by its founder Licio Gelli: ‘The doors to all bank vaults open to the Right.’ While Sindona was doing business with Somoza and looking for a United States equivalent, Gelli had not been idle in Argentina. Sensing the nation’s disenchantment with the ruling junta, he began to plot the return of General Peron from exile. In 1971 he convinced the then President Lanusse that the only way Argentina could regain political stability was through the return of Peron. The General returned in triumph. One of his first actions was to kneel in gratitude at the feet of Licio Gelli, a gesture witnessed by, among others, Italian Prime Minister Andreotti. By September 1973, Peron had become President of Argentina. 

While Gelli was busy making one President, Sindona, having surveyed the political arena. in the United States, focused on the man who to his mind was closest to the political ideals of Somoza and Peron, Richard Millhouse Nixon. 

To help along his good connections, Sindona arranged a meeting with Maurice Stans, Nixon’s chief fund raiser in the 1972 Presidential Campaign. He took with him to the meeting a very large suitcase. It contained one million dollars in cash. Sindona offered it to Stans for the Campaign Fund to ‘show his faith in America’. His faith was clearly limited, as he insisted the gift to assist Nixon back into the White House must remain a secret. According to later statements, Stans declined the gift because under a new Federal Law anonymous election gifts were no longer allowed. 

At about the time that Bishop Marcinkus was extolling the banking brilliance of The Shark to the USA attorneys investigating the billion dollar counterfeit securities operation, he was also writing out a cheque for 307,000 dollars. It was the amount Sindona had cost the Vatican as a result of illegal dealings on the American Stock Exchange in the shares of a company called Vetco Industries. In violation of SEC regulations a Los Angeles investment broker had acquired on behalf of Sindona and Marcinkus some 27 per cent of Vetco. The Vatican paid the fine, then sold its shares at a profit. 

By mid-1973 the hole in Sindona’s banks had reached enormous proportions. It is one thing to move large amounts of money on paper from bank to bank, contravening all kinds of laws and committing countless offences (provided the bribes are placed in the right hands it is a game that is endless). It is something else when you syphon off capital in large amounts to third parties. A hole begins to appear. It fills up with the declaration of false and nonexistent profits, but that is only on paper. The hard cash meanwhile is continuing to pour out to the third parties. The hole grows bigger and the false and nonexistent profits needed to fill it have to be proportionally greater. Sindona was pouring out other people’s money in a variety of directions. P2, The Christian Democrats, The Vatican, right-wing juntas in South America – these were just a few of the major beneficiaries. Many of his staff were creating their own personal fortunes too. 

Appropriately The Shark sat at his desk practising the Japanese art of Origami. The executive suite in his Sixth Avenue office in New York was littered with countless examples of his paper-folding expertise – just like so many of his companies, empty little boxes piled one upon another. The Shark was now involved in a wild, intercontinental juggling act – the merging of this company with that finance house, the transfer of those shares for that company. Merge. Divide. Re-merge. 

Il Crack Sindona, the Italians called it. When it came, the collapse of the monument to greed and corruption that Sindona had erected was not unimpressive. He had talked grandly of not knowing what his personal wealth was, but accepted that it was in the order of half a billion dollars. Sindona was a trifle confused. The reality was somewhat different: but then a grasp of reality had never been one of The Shark’s attributes. His self-delusions were fed by the illusions of others, as the meteoric pattern of his career shows: 

September 1973: at the Waldorf Astoria in New York the Prime Minister of Italy, Giulio Andreotti, rises to his feet at a luncheon and, delivering a eulogy to The Shark, hails him as ‘the Saviour of the Lira’. 

January 1974: Grand Hotel, Rome. American Ambassador John Volpe awards The Shark, ‘The Man of the Year’ citation. 

March 1974: prices on the Milan Stock Exchange are flying high, as is the exchange rate against the dollar at 825 lire. If Sindona were to close down the huge currency operations now he would emerge with a profit of at least 100 billion lire. Anna Bonomi, a rival in the Milan financial world, makes an excellent offer for Sindona’s holding in Immobilaire. Sindona refuses to sell. 

April 1974: the Stock Market goes into decline and the exchange rate falls dramatically. It is the beginning of Il Crack Sindona. The Franklin Bank in New York announces a net operating income for the first quarter of 2 cents per share compared with the previous year’s 68 cents per share. Even this is a falsified figure. The reality is that the bank had suffered a 40 million dollar loss. 

May 1974: Franklin has the brakes put on its massive currency speculation. National Westminster of London object to the volume of Franklin’s sterling clearings through its account. In the previous week they have averaged £50 million per day. Franklin now announce that they will not declare a quarterly dividend, the first time since the Depression that a major American bank has been forced to omit a payment to shareholders. The Shark tells the Board of Società Generale Immobiliare that the balance sheet is the best in the company’s history. 

July 1974: the holes are showing in Italy and the USA. In an attempt to fill the Italian hole, The Shark merges Banca Unione and Banca Privata Finanziaria. He calls the new creation Banca Privata. Instead of two medium-size bent banks in Milan, he now has one very large bent bank in Italy’s financial centre. Instead of two large holes, one gigantic hole is revealed: a 200 billion lire hole. 

August 1974: it is time for the Establishment to rally round. In Italy Banco di Roma, having taken a large part of the Sindona empire as collateral, pushes 128 million dollars into Banca Privata in an attempt to fill the hole. In the United States the Government, fearing the collapse of Franklin will trigger off a capitalistic Armageddon, give the Franklin unlimited access to Federal funds. Over two billion dollars flow from the reserve into the Franklin. 

September 1974: Banca Privata goes into compulsory liquidation. Estimated losses are in excess of 300 million dollars. This includes 27 million dollars of Vatican money plus their share of the Bank. 

October 3rd: Licio Gelli repays a little of the huge investment that Sindona has made in P2. By courtesy of P2 members planted in the judiciary and the police force, he is advised that Sindona will be arrested the following day. Gelli tips off Sindona. 

October 4th: an arrest warrant for Michele Sindona is issued. Sindona has fled the country. Ever a man of vision, he has previously changed his nationality. He is now a citizen of Switzerland. The boy from Sicily flies to his homeland in Geneva. 

October 8th: the Franklin Bank collapses. Losses to the Federal Deposit Insurance Corporation – 2 billion dollars. It is the biggest bank crash in American history. 

October 1974/January 1975: Europe resounds to the noise of crashing banks that are either Sindona-controlled or -linked – Bankhaus Wolff A.G. of Hamburg, Bankhaus I.K. Herstatt of Cologne, Amincor Bank of Zürich, and Finabank of Geneva. With regard to Finabank, Swiss banking sources estimate Vatican losses at 240 million dollars. The Finabank’s losses on foreign exchange dealings alone are a minimum of 82 million dollars. 

The Italian authorities, or rather that section of Italian authority not controlled by P2, had by this stage become very agitated. Sindona, having eventually surfaced in the USA, showed a marked disinclination to return to Italy. From October 1974 a long battle began to extradite him. This battle was destined to have a direct influence on the ultimate fate of the man who, at that time, was preoccupied in Venice with trying to raise money to help a group of mentally handicapped people. It would be difficult to find a greater contrast between two men than the values which separated Albino Luciani from The Shark. 

Though Sindona’s presence was urgently required in Italy, he had most certainly become persona non grata inside the Vatican. As Secretary of State Cardinal Villot brought Pope Paul news of each new aspect of The Crack. His Holiness grew more distressed. It has been said that Pope Paul had aspired to be the first poor Pope in modern times. This is a fallacy. The divestment of the majority of the Vatican’s Italian holdings had but one aim: more profit. Prompted by the desire to avoid Italian taxes on share profits and for a lower profile in Italy, Vatican Incorporated had been seduced by Sindona and his clan with the prospect of greater wealth through investment in the USA, Switzerland, Germany and other countries. 

The story that the Vatican would have one believe today is that Pope Paul alone was responsible over nearly a decade for the Vatican’s deep and continuing involvement with Michele Sindona. It is yet another Vatican fallacy. Significantly this particular lie never floated to the surface during Pope Paul’s lifetime. Persuaded by his secretary Monsignor Pasquale Macchi, by his advisers Cardinals Guerri and Benedetto Argentieri from the Special Administration, by his Secretary of State Cardinal Villot and by Umberto Ortolani, that Sindona was the answer to the Vatican’s prayers, the Pope undoubtedly opened the bronze doors to The Shark and beckoned. Once inside he did not want for company. Indeed, the Pope might have been alerted if his advisers had exercised elementary caution. Close study of the events already described lead to the irresistible conclusion that many within the Vatican walls were ready, willing and eager to join in the criminal activities of Michele Sindona. Were Macchi, Argentieri, Guerri and Villot all honourable men? Were Marcinkus, Mennini and Spada of the Vatican Bank all honourable men? Was His Holiness Pope Paul VI an honourable man? 

Bishop Marcinkus was obliged to suffer the indignity of several sessions of intensive questioning by the Italian authorities about his personal and business relationship with Sindona. Marcinkus, who sat at the behest of Sindona and Roberto Calvi as a director in the Bahamas tax haven of Nassau, Marcinkus, the close friend of Sindona, in April 1973, during another intensive interrogation, had told the USA Government attorneys: 

Michele and I are very good friends. We’ve known each other for several years. My financial dealings with him, however, have only been very limited. He is, you know, one of the wealthiest industrialists in Italy. He is well ahead of his time as far as financial matters are concerned. 

Less than two years later the honourable Bishop Marcinkus was questioned by the Italian magazine, L’Espresso about his relationship with Sindona. On the morning of February 20th 1975, the Bishop said: ‘The truth is that I don’t even know Sindona. How can I have lost money because of him? The Vatican has not lost a cent, the rest is fantasy.’ 

For a bank president, Bishop Marcinkus constantly displayed an alarmingly poor memory. He had told the USA Government attorneys in 1973: ‘My financial dealings with Michele Sindona have only been very limited’. On the contrary, his financial dealings with the Mafia’s banker were large and continuous from the late 1960s until shortly before Il Crack Sindona in 1975. Less than two years before his interrogation by the US attorneys and the FBI Sindona had played a crucial role in Marcinkus sale of Banca Cattolica to Roberto Calvi for 46.5 million dollars, a deal that resulted in Sindona paying an illegal kickback to Calvi and Marcinkus of 6.5 million dollars. This, like the later losses inflicted on the Vatican by Sindona, was no ‘fantasy’. 

Dr Luigi Mennini, Secretary Inspector of the Vatican Bank, was arrested as a result of the Sindona crash and his passport was withdrawn. Mennini, who worked directly under Marcinkus, denied everything and knew nothing. Possibly one of his sons, Alessandro, who held a high executive position in the foreign affairs section of Banco Ambrosiano, the nerve centre of much of the currency speculation, would have been equally mystified if questioned about the criminal activities of both Sindona and Calvi. 

Before Il Crack Sindona, Mennini speculated, on behalf of the Vatican Bank, in foreign currencies alongside Sindona’s colleague, Carlo Bordoni. Over the years Bordoni got to know him well. 

Despite the fact that he acted like a prelate he was a seasoned gambler. He tormented me in every sense of the word because he wanted to earn money in ever-increasing quantities. He speculated in Finabank, in shares, in commodities. I recall one day he gave me a short letter from Paul VI which gave me his benediction for my work as consultant to the Holy See. Mennini was virtually a slave to Sindona’s blackmail. Sindona had often threatened to make public information about Mennini’s illegal operations carried out with Finabank. 

Massimo Spada, administrative secretary to the Vatican Bank, again directly under Bishop Marcinkus, although officially retired from the Bank in 1964, continued to represent a wide cross section of Vatican interests. Like Mennini, Spada opened his front door at dawn one morning to find the Italian Finance Police there armed with search warrants. His personal bank accounts were frozen by Court Order, his passport was withdrawn. Three separate legal cases were started against him, all alleging a wide range of banking law violations and fraudulent bankruptcy. 

Spada, who on Carlo Bordoni’s sworn statements was another slave to Sindona’s blackmail, who was fully acquainted with all of Sindona’s illegal operations, expressed the classic Vatican Bank position when questioned by L’Espresso in February, 1975: ‘Who would have thought that Sindona was a madman?’ Spada asked. This man who was a director of three of Sindona’s banks, for which he was very highly paid, continued, ‘In 45 years I have never found myself in a situation of this kind. I have lived through the most difficult periods, but I have never seen anything like it. Raving lunatics started to buy billions of dollars with European currencies. All the losses come from that. Who could have known that every day Mr Bordoni was selling 50 or 100 million dollars against Swiss francs or Dutch guilders? What does a Board of Directors know of the mad operations which took place between January and June 1974?’ 

At the time Spada made these observations he was considered, at the age of 70, to be so brilliant as a business man that he was still on the board of directors of 35 companies. 

And so it went on. No one in Vatican Incorporated knew Sindona or anything about his criminal activities. The trusting Men of God had been ‘conned’ by the Devil. 

Is it possible that they were indeed all honourable men who were betrayed by Michele Sindona? Is it possible that Vatican representatives like Mennini and Spada could sit on the boards of Sindona’s banks and remain ignorant of the crimes Sindona and Bordoni were perpetrating? Massimo Spada gave the game away during his interview with L’Espresso. He was asked if it was indeed only Sindona and Bordoni who were guilty of currency speculation. 

You must be joking. Using hundreds and hundreds of billions in currency operations has become a habit for the banks. When an average-sized dealer on the Milan market moves an average value of 25–30 billion lire and a small Milanese bank moves 10–12 billion a day in currency, one has to conclude that if the entire Italian banking system did not go up in smoke we have to thank Providence, God, St Ambrose, St George and above all St Januarius. I would say in this respect that they should have sent legal letters to all Italian banks warning them they were being investigated. 

So, according to Spada, a man whose name was synonymous with Vatican Incorporated, a man who was born into the business dynasty of the Spada family – his great grandfather banker to Prince Torlonia, his grandfather a director of the Bank of Italy, his father Luigi an exchange agent, he himself having worked for Vatican Incorporated since 1929 – according to a man with that illustrious record, the entire Italian banking industry was up to its neck in criminal activity, yet he claimed to be ignorant of what was going on in the very banks where he sat as a director. 

After the crash estimates of the size of the Vatican losses were many and varied. They ranged from the Swiss banking estimate previously referred to of 240 million dollars to Vatican Incorporated’s own estimate: ‘We have not lost a cent’. The truth can probably be found in the region of 50 million dollars. When the multinational across the Tiber talked of not losing a cent they were no doubt allowing into the calculation the previous massive profits made through their association with The Shark, but a reduction of overall profit from 300 million dollars to 250 million is a loss in any language, including Latin. 

Added to that 50 million dollars, Sindona-created loss, was a further 35 million dollar loss sustained by Vatican Incorporated in the curious affair of Banco di Roma per la Svizzera in Lugano (Svirobank). The Vatican Bank held the majority 51 per cent share in the Swiss bank – the Bank President was Prince Giulio Pacelli, the Executive Director, Luigi Mennini. Like other Vatican-linked banks, Svirobank speculated with the black funds which it held on behalf of the illegal exporters of lire and sections of the criminal fraternity of Italy. Gold and foreign exchange speculation was an everyday occurrence. In 1974 a hole began to appear. The blame was fastened upon Deputy Manager Mario Tronconi which, in view of the fact that the person who materially transacted the deals was another Sviro bank employee Franco Ambrosio, is odd. 

In the autumn of 1974 Mario Tronconi was ‘suicided’ – his body was found on the Lugano–Chiasso railway line. In his pocket was a farewell letter to his wife. Before his death, doubtless for the sake of tranquillity, Pacelli, Mennini and the other Sviro Bank directors had obliged Tronconi to sign a confession in which he assumed full responsibility for the 35 million dollar hole. No one denounced Ambrosio, the man who had actually created the hole. Indeed, Ambrosio was given the task of recovering the loss. The truth came to light only two years later when Mario Barone, one of Banco di Roma’s joint chairmen of the board (Banco di Roma held the other 49 per cent of Svirobank), was arrested and questioned about Il Crack Sindona. Clearly Italian banking has many attendant risks. Mario Tronconi was only one member of the fraternity whose death was made to look like suicide. In the following decade the list would grow alarmingly. The Italian Solution would be applied to a growing number of problems. 

While Michele Sindona fought his extradition from New York and plotted revenge, Vatican Incorporated was already back speculating again through his successor, Roberto Calvi. Calvi was known in Milan business circles as ‘Il Cavaliere’, The Knight; a curious nickname for the man who was paymaster to P2. It originated in 1974 when Giovanni Leone, the then President of Italy, made him a Cavaliere del Lavoro (Knight of Labour) for his services to the economy. Calvi was to be Sindona’s replacement as laundryman for the Mafia, and the man who carried out the biggest theft in the history of banking. 

Roberto Calvi was born in Milan on April 13th, 1920, but his family roots are in the Valtellina, a long alpine valley near the Swiss border and near the home of Albino Luciani. They were both men of the mountains. After studying at the prestigious Bocconi University he fought for Mussolini on the Russian front in the Second World War. Then he followed his father into banking. In 1947 he went to work for Banco Ambrosiano in Milan. Deriving its name from St Ambrose, the bank exuded religiosity. Like Banca Cattolica del Veneto it was known as ‘The Priests’ Bank’. Baptismal certificates establishing the holder was Catholic were obligatory before a bank account could be opened. Prayers thanking God for the annual figures were offered at the end of board meetings. In the early 1960s there was a greater air of reverence inside the bank than in a number of the nearby churches. 

The Knight with the ice-cold eyes had other plans for this sleepy diocesan bank which included among its customers the Cardinal Archbishop of Milan, Giovanni Montini. By the time Montini became Pope Paul VI in 1963 Calvi had advanced within the bank to Central Manager. When Pope Paul decided to call Sindona into the Vatican to relieve the Church of its embarrassingly large Italian holdings, The Shark and The Knight were close friends. They were already plotting to gain control of Banco Ambrosiano and transform it into a very special kind of international banking institution. 

In 1971, Calvi became Managing Director of the Bank. At fifty-one years of age he had risen far above his father’s humble clerical position. The average man might have been content to rest on his laurels for a while and enjoy leading the prayers at the board meeting. The only thing that was average about Roberto Calvi was his height. His ability to dream up crooked schemes for laundering Mafia money, exporting lire illegally, evading tax, concealing the criminal acts of buying shares in his own bank, rigging the Milan Stock Market, for bribery, for corruption, for perverting the course of justice, arranging a wrongful arrest here, a murder there – his ability to do all of this and more puts The Knight in a very special criminal class. Calvi was prone to advise all and sundry that if they really wanted to understand the ways of the world then they should read Mario Puzo’s novel The Godfather. He carried a copy everywhere, rather like a priest with his Bible. 

Calvi was introduced to Bishop Marcinkus by Sindona in 1971 and instantly joined the very select Vatican clan of ‘uomo di fiducia’, men of trust: that small elite group of laymen who worked with and for Vatican Incorporated; men such as Sindona, Spada, Mennini and Bordoni; men chosen with the greatest possible care. 

In 1963 he formed a Luxembourg company called Compendium – the name was later changed to Banco Ambrosiano Holdings SA. This shell company was the keystone to Calvi’s schemes. Millions of borrowed eurodollars were destined to flow through the Luxembourg holding company. The number of banks world-wide which would be conned into lending money direct to this small shell company is in excess of 250. The amount of money is in excess of 450 million dollars. 

The Knight’s empire grew rapidly. Already in the early 1960s Banco Ambrosiano had acquired Banca del Gottardo in Lugano, Switzerland. This became the main conduit for washing Mafia money after the collapse of Sindona’s Amincor in Zürich. Other foreign assets were to follow. One of these was Banco Ambrosiano Overseas Ltd, Nassau. This branch in the Bahamas tax haven was founded in 1971 and had from its inception on its board of directors Bishop Paul Marcinkus. It was originally called Cisalpine Overseas Bank to deflect further any inquiring members of Italy’s Finance Police. 

The profits being channelled into the coffers of the Vatican Bank grew proportionately with Calvi’s empire. To understand many of the very complicated and often deliberately over-complicated financial convolutions in which Calvi indulged throughout the 1970s, one fact has to be grasped: essentially, Banco Ambrosiano of Milan and the Vatican Bank were interlocked. Many of the crucial operations were joint operations. The reason that Calvi was able to break the law again and again was because of the ready assistance given to him by the Vatican Bank. Thus when on November 19th, 1976 Calvi wished to acquire 53.3 per cent of Banco Mercantile SA of Florence, the purchase appeared to be on behalf of the Vatican Bank. The shares found their convoluted way on December 17th to Milan stockbrokers Giammei and Company, who frequently acted on behalf of the Vatican. By dexterous paperwork the shares were ‘parked’ on the same day at the Vatican Bank. The fact that the Vatican did not have adequate funds in a particular account to pay for the shares was overcome by crediting on December 17th to the Vatican Bank, in a newly opened account, number 42801, 8 billion lire. The following summer, on June 29th 1977, Giammei bought the shares back from the Vatican Bank through Credito Commerciale of Milan. As the shares followed this snake-like path they were undergoing, at least on paper, a dramatic price increase. The original purchase had been made at 14,000 lire per share. By the time the shares found their way back to Giammei they were deemed to be worth 26,000 lire per share. On June 30th 1977 the shares were then sold by Credito Commerciale to Immobiliare XX Settembre SA, which was controlled by Calvi. On paper the Vatican Bank had made a profit of 7,724,378,100 lire as the price of the shares was hiked. The reality was that Calvi paid the Vatican Bank 800 million lire for the privilege of using their name and facilities. The Vatican Bank, situated in the independent State of Vatican City, was beyond the reach of the Italian Bank Inspectors. By selling himself shares he already owned at twice the original purchase price Calvi vastly increased the worth, on paper, of Banco Mercantile and stole 7,724,378,100 lire, less, of course, the kickback he gave to the Vatican Bank. Subsequently Calvi sold his shares to Milan business rival Anna Bonomi for 33 billion lire. 

With the close and continuous co-operation of the Vatican Bank, Calvi was able to dance an illegal and criminal path through the Italian laws again and again. Operations such as that described above could not take place without the full knowledge and approval of Marcinkus. 

With regard to the Sindona/Calvi/Marcinkus scheme concerning Banca Cattolica del Veneto all the available evidence suggests a criminal conspiracy involving all three men. 

Marcinkus wanted to keep the operation secret, even from Pope Paul VI. Some years afterwards Calvi recalled the deal to friend and business associate Flavio Carboni: * 

Mercinkus, who is a rough type, born in a suburb of Chicago of poor parents, wanted to carry out the operation without even telling the boss. That is the Pope. I had three meetings with Marcinkus regarding Banca Cattolica del Veneto. He wanted to sell it to me. I asked him: ‘Are you sure? Is it available to you? Is the boss in agreement with it?’ It was I who insisted and told him, ‘Go to the boss, tell him’. Marcinkus took my advice. Later Marcinkus told me, yes, he had spoken with Paul VI and had his assent. Some time later Marcinkus got me an audience with Paul VI, who thanked me because in the meantime I had sorted out some problems of the Ambrosiano Library. In reality I understood he was thanking me for buying Banca Cattolica del Veneto. 

If anyone seeks confirmation that by the early 1970s the Pope had acquired the new title of Chairman of the Board it can be found in Calvi’s description. The Holy Father and Vicar of Christ is reduced to ‘the boss’. Equally illuminating are Roberto Calvi’s anxious questions to Bishop Marcinkus. ‘Are you sure? Is it available to you?’ The Milanese banker was obviously fully aware of the close ties that bound the bank to the Vicenza clergy. The fact that Marcinkus wished to keep the Pope ignorant of the transaction is a further indication of just how dubious the sale to Calvi was. Cardinal Benelli’s advice to Albino Luciani that the Pope would not intercede on behalf of the Patriarch, his bishops and his priests, is demonstrated as being wise. There was not much point in complaining about the sale to the man who had given it his personal blessing. What Pope Paul VI, with the aid of Calvi, Marcinkus and Sindona, had created was a time bomb which would continue to tick until September 1978. 

Fearful of a hostile reaction from Venice, all news of the sale of the bank was suppressed by Marcinkus and Calvi. On March 30th, 1972 Calvi’s group announced that they had acquired 37.4 per cent of Banca Cattolica, but the documentary evidence I have acquired tells another story. 

On July 27th, 1971 Calvi wrote to Marcinkus: 

With this letter we wish to inform you of our firm offer to buy up to 50 per cent of the shares of the Banca Cattolica del Veneto, Vicenza, at a price of 1,600 lire each share with normal usufruct to take place through the following steps: 

1 For 45 per cent of the shares making up the aforesaid company, that is 16,254,000 shares with the application depending on your acceptance of our firm offer and against a payment by us of $42 million. 

2 For the remaining shares, that is up to a further 5 per cent of the capital, 1,806,000 shares, to take effect from the date of the ‘declaration of intent’ concerning the aforementioned Banca Cattolica del Veneto, to take place before October 31, 1971, and against a payment of $4,500,000 on 29.10.1971. 

The Vatican Bank received 46.5 million dollars, at the 1971 value. A comparable figure today would be 115,000.00 million dollars. 

Calvi, who was aware that, at his insistence, this offer would be shown to the Pope, continued in his letter: 

We inform you that we formally assume the responsibility of maintaining unchanged from the point of view of the high social, moral and Catholic religious purposes the conduct of Banca Cattolica del Veneto’s activities. 

The Vatican copy of this letter is officially stamped and signed by Marcinkus. Thus the secret sale of 1971 became known to Venice nearly one year later. 

The ‘high social, moral and Catholic religious purposes’ were so rapidly dispensed with by Calvi at the Banca Cattolica that the entire clergy of the region had been up in arms and besieging Luciani’s residence in Venice by mid-1972. Luciani had hurried to Rome, but 1972 was clearly not the time for remedial action, with Paul VI blessing the transaction. The time for action was to be September 1978. 

During the intervening years a curious situation pertained. The shares never left the Vatican Bank. On October 29th, 1971, the date on which the final 5 per cent was sold to Calvi, the shares – which were still held in their entirety by the Vatican Bank – were re-assigned to Zitropo, a company owned at that time by Sindona. Later Zitropo became firstly a Calvi-owned asset and subsequently a Vatican Bank asset. And the shares of Banca Cattolica continued to remain in the Vatican safe. It is little wonder that as late as March 1982 the then Archbishop Paul Marcinkus would talk of ‘our investments in Banca Cattolica, which are going very well.’ 
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When the Milan Stock Exchange began to fall in 1974, among those to be hurt was Banco Ambrosiano. Calvi was particularly vulnerable. The main ingredient in international banking is confidence. It was known that he was a close associate of Sindona. When Il Crack occurred, the banking world began to take a more cautious view of The Knight. Credit limits to Ambrosiano were cut back. Loans on the international market became difficult to obtain and, most ominous of all, the demand by small investors for the Bank’s shares began to diminish, with a consequent drop in the price. Magically, at what was fast becoming the eleventh hour for Ambrosiano, a company called Suprafin SA with a registered office in Milan, entered the market. This finance house began to display supreme confidence in Signor Calvi. It bought shares in his bank daily and before there was time for the name Suprafin to be written on the list of shareholders, the shares were resold to companies in Liechtenstein and Panama. Confidence in Calvi began to return and Suprafin kept on buying. In 1975, 1976, 1977 and 1978, throughout all of these years Suprafin continued to display massive faith in the future of Calvi’s bank – 50 million dollars’ worth of faith. 

Suprafin clearly knew something no one else did. Between 1974 and 1978 Ambrosiano shares continued to fall, yet Suprafin acquired over 15 per cent of the bank. Suprafin was officially owned by two Liechtenstein companies, Teclefin and Imparfin. In theory these were technically owned by the Vatican Bank. That was the technical theory. In practice Suprafin was owned by Calvi. Consequently, with the complete knowledge of the Vatican Bank, he was supporting the market value of Ambrosiano shares by massive purchases – a totally illegal activity. The money to finance the fraud came from international loans made to the Luxembourg subsidiary and from the parent bank in Milan. 

The Vatican Bank received huge annual payments for providing the facilities for The Knight to operate a gigantic international fraud. This money was paid in a variety of ways. All Vatican deposits with Ambrosiano banks received interest payments of at least 1 per cent higher than other depositors. Another method was for Ambrosiano to ‘buy’ shares from the Vatican. On paper the Vatican Bank would sell a block of shares to a Panamanian company at a price approaching 50 per cent more than the shares were actually worth. The shares would never leave the Vatican portfolio and the bank that Marcinkus controlled would be millions of dollars better off. The Panamanian company, usually with a capital of only a few thousand dollars, would borrow the millions from Banco Ambrosiano Overseas in Nassau where Marcinkus was a director. The Nassau branch would have been loaned the money initially by the Luxembourg company, who in turn had borrowed the money from international banks. 

Calvi was obviously hoping against hope that the price of Banco Ambrosiano shares would eventually pick up so that he could offload them. By 1978 he was walking on a knife-edge. As if this entire operation was not enough to keep the banker awake at nights, he was also contending with the problems of laundering Mafia money. Allied to that were the constant demands being made by P2 for funds. This involved further embezzlement. He was also suffering from the after effects of a blackmail campaign by Michele Sindona. 

While The Knight was busy embezzling millions of dollars to maintain fraudulently the share price of Ambrosiano, The Shark had been far from inactive. Sindona reminds one forcibly of a character from a Pirandello play where all expectations may prove to be illusion. The man exudes theatre. A fiction writer would baulk at such a creation. Only real life could create Michele Sindona. 

Licio Gelli continued to repay Sindona’s commitment to P2. When the Milan public prosecutor’s office applied for The Shark’s extradition in January 1975, the American judicial authorities asked for more information, including a photograph of Sindona. They also demanded that the extradition papers be translated into English. The Milan office completed a new request running to 200 pages and sent it to the Ministry of Justice in Rome, for translation and dispatch to Washington. It was eventually returned with the observation that the Justice Department in Rome could not manage the translation. This despite the fact that they have one of the largest translation departments in Italy. The American Embassy in Rome declared that it had no knowledge of the extradition request. Licio Gelli had friends in many places. 

Sindona meanwhile was living in his luxurious Hotel Pierre apartment in New York. He retained the Richard Nixon/John Mitchell law firm to help him fight extradition. He dismissed his Italian problems when questioned by reporters: 

The Governor of the Bank of Italy and other members of the Italian establishment are plotting against me. I have never done a single foreign exchange contract in my life. My enemies in Italy have swindled me and I hope that one day justice will be done. 

In September 1975, when photographs of the dinner-jacketed Shark shaking hands with New York’s Mayor Abraham Beame appeared in the Italian Press, there was outrage from at least some quarters in Italy. Corriere della Sera observed: 

Sindona continues to release statements and interviews and continues, in his American exile refuge, to frequent the jet set. The laws and mechanisms of extradition are not equal for all. Someone who steals apples can languish in prison for months, perhaps years. An emigrant working abroad who does not reply to his call-up papers is forced to come back and face the rigours of the military tribunal. For them, the twists and turns of the bureaucracy do not exist. 

In Italy small savers appointed lawyers in an attempt to salvage some of their money from the Sindona wreckage and the Vatican declared a ‘serious budget deficit’. In the USA The Shark hired a public relations man and went on the University lecture circuit. 

Whilst senior executives of the Franklin National Bank were arrested and charged with conspiring to misapply millions of dollars by speculating on the foreign exchange, Sindona was telling the students of Wharton Graduate School in Philadelphia; 

The aim, perhaps an ambitious one, of this brief talk is to contribute to restoring the faith of the United States in its economic, financial and monetary sectors, and to remind it that the free world needs America. 

Whilst he was being sentenced by a Milan court to three-and-a-half years’ imprisonment, having been found guilty on 23 counts of misappropriating 10 million pounds, he was moralizing to the students of Columbia University. 

When payments are made with the intent of evading the law in order to obtain unfair benefits, a public reaction is clearly called for. Both the corrupted and the corrupter should be punished. 

Whilst he planned the blackmail of his fellow P2 member and close friend Roberto Calvi, he painted a visionary image to students who yearned to emulate him. 

I hope in the not too distant future, when we will have been in contact with other planets and new worlds in our myriad galaxies, the students of this University will be able to suggest to the companies they represent that they expand to the cosmos creating ‘cosmos-corporations’ which will bring the creative spirit of the private entrepreneur throughout the universe. 

Sindona was clearly in earnest. He arranged a number of meetings of the American Mafia, Cosa Nostra and the Sicilian Mafia and attempted to persuade them and Licio Gelli that they should organize the secession of Sicily from Italy. He had previously, in 1972, been a conspirator in the so called ‘White Coup’ – a plot to take over Italy. The Mafia were sceptical and Gelli contemptuous. He called the idea ‘mad’ and told Sindona that secession of Sicily could only take place with the support of the military and political members of P2, and that the members were biding their time. He advised Sindona: ‘Put the plan in the “Pending” File.’ 

In September 1976 the Italian authorities finally succeeded in having Sindona arrested in New York. It was the first significant breakthrough they had achieved in the long fight for his extradition. Sindona expressed surprise that ‘the United States chose now, some two years after the false charges were lodged against me in Italy, to begin these extradition proceedings. I want to emphasize that the charges were made in Italy on the basis of little or no investigation and, on their face, are false.’ He was subsequently released on 3 million dollars bail but by 1977 the net was finally beginning to close. A Federal Grand Jury began investigating alleged violations by Sindona involving the collapse of the Franklin Bank. 

Sindona used all the weapons at his disposal. Important people went to court to speak for The Shark as he fought extradition. Carmelo Spagnuolo, President of a division of the Supreme Court in Rome, swore an affidavit testifying that the charges against Sindona were a Communist plot. He also swore that Sindona was a great protector of the working class, that the people investigating Sindona in Italy were at best incompetent and were controlled by political persecutors. For good measure he advised the United States Court that many members of the Italian judiciary were left-wing extremists and that if The Shark was returned to Italy he would be murdered. Carmelo Spagnuolo was a member of P2. 

Licio Gelli also swore an affidavit on behalf of Sindona. He noted that he himself had been accused of being a ‘C.I.A. agent; the chief of the Argentine Death Squad; a representative of the Portuguese secret service; the co-ordinator of the Greek, Chilean and West German secret services; the chief of the international movement of underground Fascism, etc.’ 

He made no attempt to deny these various allegations, and offered no evidence that all of them or any of them were ill-founded. He attributed them to ‘the rise of Communist power in Italy’. On oath he then went on to make a few allegations of his own including: ‘Communist influence has already reached certain sectors of the Government, particularly the Justice Department, where during the last five years there has been a political shift from the centre towards the extreme left’. Again he offered no evidence. Gelli asserted that because of ‘left-wing infiltration’ Sindona would not receive a fair trial in Italy and would probably be murdered. He continued: ‘The Communists’ hatred of Michele Sindona is due to the fact that he is an anti-Communist and that he has always been favourable to the free enterprise system in a democratic Italy.’ 

On November 13th, 1977, Sindona gave a demonstration of his version of the free enterprise system at work in democratic Italy. The planned blackmail of Calvi was activated and posters and pamphlets began to appear all over Milan. They accused Calvi of fraud, exporting currency, falsifying accounts, embezzlement, tax evasion. They quoted secret Swiss Bank Account numbers belonging to Calvi. They detailed illicit deals. They referred to his Mafia links. It became more interesting to read the walls of the city than Corriere della Sera. Sindona, who had orchestrated this public washing of Calvi’s dirty laundry, had come to the conclusion that his fellow P2 member and former protégé Roberto Calvi was not taking a sufficiently active interest in The Shark’s predicament. Sindona had appealed to Licio Gelli, who agreed that Calvi should make a ‘substantial contribution’ to Sindona’s war chest. Gelli offered himself as an intermediary between his two masonic friends. This ensured that they both paid Gelli a commission. 

Roberto Calvi dipped into his pocket yet again, or more accurately dipped into the pockets of those who banked with him. Half-a-million dollars were paid by Calvi into Banca del Gottardo, Lugano in April 1978. It was placed in a Sindona account. 

The man who had organized the poster and pamphlet campaign on behalf of Sindona, Luigi Cavallo, had gone about his task with enormous relish. Cavallo had operated for some time in Italy as a one-man smear campaign unit that, like all professional whores, sold itself to the highest bidder. The posters were followed on November 24th, 1977, with a letter to the Governor of the Bank of Italy, Paolo Baffi, listing all the accusations which had appeared on the walls of Milan. It also referred to an earlier communication which had given photocopies of Calvi’s Swiss Bank accounts. Cavallo concluded his letter to the Governor with the threat to sue the Bank of Italy for failure to carry out its legal duties unless they began to investigate the Banco Ambrosiano. 

This letter shows the fundamental difference between a first-division criminal like Sindona and a third-division crook like Cavallo. The letter was Cavallo’s idea and was written without reference to Sindona, who would never have authorized such action. You may steal eggs from the golden goose but you do not kill it, at least not while it is still capable of laying. 

The same week in April 1978 in which Sindona received his half-a-million-dollar pay-off, officials from the Bank of Italy who, for a number of years had retained the gravest reservations about Banco Ambrosiano and Roberto Calvi, moved into the bank in force. The twelve men had been carefully chosen by Paolo Baffi and his senior colleague Mario Sarcinelli. The man selected to head the inspection was Giulio Padalino. Unfortunately for Calvi, Padalino was incorruptible. 

The poster and pamphlet attack by Sindona was a flea-bite compared with the problems now facing Calvi. News of the massive investigation leaked around Milan’s business world. The price of Ambrosiano shares plummeted further, forcing Calvi to divert even more money to prop up the price. By now the tangled empire he controlled had a branch in Nicaragua; another was planned for Peru. There were Calvi companies in Canada, Belgium and the USA. 

The Achilles heel was Suprafin. If the bank inspectors discovered the truth about Suprafin then the collapse of Banco Ambrosiano and the arrest and imprisonment of Calvi were inevitable. Equally the long-desired extradition of Sindona would become a much simpler operation. Both men stood to lose everything, including their liberty, if the inspectors could crack the Suprafin puzzle. In Milan Calvi became agitated. In New York Sindona stopped gloating about the half-a-million dollars he had just extorted from The Knight. The one hope for both men was Bishop Paul Marcinkus. Marcinkus duly obliged. When the Bank of Italy inspectors asked Ambrosiano’s General Manager Carlo Olgiati who owned Suprafin, he told them it was owned by the Instituto per le Opere di Religione, the Vatican Bank. 

Calmly the Bank inspectors continued probing, working their way through the maze of share purchases, transfers, cross transfers, buy backs, parking. They were severely limited by Italian law. The information they could insist upon with regard to the foreign associates left much to be desired. If for example they had been able to obtain detailed information on Calvi’s Luxembourg holding company and had realized that millions of dollars borrowed on the European market had been funnelled to Nassau where Marcinkus sat on the Board with Calvi and Managua and that these two Ambrosiano-owned banks had then loaned millions to small Panamanian shell companies without security, the game would have been up there and then. But full information on the Luxembourg holding company was denied to the inspectors. Calvi stalled; he grew evasive. ‘It was so difficult, you know what these foreigners are like? I cannot breach their rules on “confidentiality”’. The Bank inspectors continued to dig. They discovered that on May 6th, 1975 Luigi Landra, a former chief executive of Banco Ambrosiano, and Livio Godeluppi, brother of Ambrosiano’s chief accountant, had been made directors of Suprafin. Had these two men clearly in the trust of Ambrosiano also joined the elite ranks of the Vatican’s ‘uomini di fiducia’ – men of trust? 

The inspectors established that Suprafin had been created in Milan in November, 1971 by two of Calvi’s closest associates, Vahan Pasargiklian, who by the time of the 1978 investigation had become Managing Director of Banca Cattolica, and Gennaro Zanfagna. Perhaps they too had become men of trust for the Vatican? Suprafin had ‘owned by Calvi’ written all over it. 

The probe continued. Careful analysis of the current accounts held by Suprafin convinced the inspectors that the company was indeed owned by Banco Ambrosiano and not the Vatican. Why would the Bank buy La Centrale shares from Suprafin at 13,864 lire as against a market price of 9,650 and then sell the shares back to Suprafin at 9,340? To obtain a letter of thanks from Pope Paul? A pat on the back from Marcinkus? 

In July 1978 they tackled Calvi’s executive colleague, Carlo Olgiati, again. Olgiati consulted Calvi. He returned bearing a letter. With great Milanese charm Olgiati gave the letter to Padalino to read. It was from the Vatican Bank to Roberto Calvi. It was dated January 20th, 1975. 

It read: 

This is to refer to the portfolio of shares as per December 31st 1974, held by the company Suprafin SA. A company pertaining to our Institute. You are herewith requested to manage and administer the said portfolio in the most appropriate form and to arrange for all suitable and divestment operations. Will you please keep us periodically up to date as regards the position of the above named portfolio and related transactions. 

The letter was signed by Luigi Mennini and the Vatican Bank’s Chief Accountant, Pellegrino De Strobel. It might well be dated January 1975 but the bank inspectors strongly suspected that it had been written after their investigation had begun in April 1978, and was written with the full approval of Bishop Marcinkus. 

If Marcinkus and his colleagues at the Vatican Bank were to be believed then the Holy See had given a new definition to the phrase ‘Christian charity’. It now embraced entering the Milan stock market and spending millions merely to defend the price of Banco Ambrosiano shares. It seemed unlikely to the Bank of Italy officials that the offerings of the poor in churches around the world had been given with quite this course of action in mind. Nevertheless, Calvi, by courtesy of Bishop Marcinkus, was off the hook, at least temporarily. Here was the apparent proof that Suprafin was indeed owned by the Vatican Bank. The normally cold and aloof Calvi became almost affable in the eyes of some of his more senior colleagues at the Milan headquarters. Confident that he had blocked the bank investigation in what was potentially his most vulnerable area, he finalized the arrangements for a trip to South America with his wife Clara. The trip was planned to be part business, part pleasure. There was to be some sightseeing of potential sites for branches on the South American continent plus the inevitable business meetings associated with such a development, then sightseeing of a more plebeian nature. 

Once in South America Calvi began to relax. Then Pope Paul VI died. The lines between Calvi’s hotel suite in Buenos Aires and various parts of Italy became busy. When he heard the name of the new Pope, Albino Luciani, Calvi was shocked. Virtually any of the other 110 Cardinals would have been preferable. 

Calvi was fully aware of the anger his takeover of the Banca Cattolica Veneto had generated in Venice; aware that Luciani had gone to Rome in an attempt to regain diocesan control over the bank. He was equally aware that Luciani was a man with a formidable reputation for personal poverty and intransigence towards clerical wheeler dealing. The episode of the two priests and the speculating salesman in Vittorio Veneto was legendary in northern Italy. From Buenos Aires Calvi phoned instructions to sell some of the shares in the bank that Suprafin held. With bank inspectors looking over their shoulders his staff had to move cautiously. Nevertheless in the first three weeks of September, 1978, they unloaded 350,000 shares. Then Calvi heard the news he had been dreading. Bishop Paul Marcinkus days were numbered. If Marcinkus went, total exposure of the entire fraud was inevitable. He recalled what Marcinkus had said to him by telephone within days of Luciani’s election: ‘Things are going to be very different from now on. This Pope is quite a different man.’ 

Albino Luciani represented a very serious threat to both Michele Sindona and Roberto Calvi. Subsequently events were to demonstrate powerfully what happened to people who represented serious threats to these two. 

The new Pope also clearly represented a major threat to Bishop Paul Marcinkus, President of the Vatican Bank. If Luciani dug into the Bank there were likely to be quite a number of vacancies. Mennini and De Strobel who had put their names to the Suprafin letter were also on borrowed time. Both had been involved over the years with the criminal activities of Sindona and Calvi. If Marcinkus was in any doubt whatsoever about the capacity of Luciani to take vigorous effective action he had but to confer with De Strobel, a lawyer from near Venice who was fully conversant with the affair of the embezzling priests in Vittorio Veneto. 

Bernardino Nogara may well have had a purely capitalistic mentality but compared with what came after him in Vatican Incorporated, the man was a saint. The company had come a long way since Mussolini gave it its modern impetus in 1929. 

By September, 1978 the Pope sat at the head of massive multinational corporation. As Albino Luciani looked out of the windows of his third-floor nineteen-room apartment this man who was dedicated to a poor Church for the poor had a task that was as supreme as his position. 

If his dream to be the last ‘rich Father’ was to become a reality then Vatican Incorporated would have to be dismantled. The Papal States might have been lost forever but in their place was an extraordinary money-making machine. 

There was the Administration of the Patrimony of the Holy See (APSA), with its President Cardinal Villot, secretary Monsignor Antonetti, and its ordinary and extraordinary sections. The ordinary section administered all the wealth of the various congregations, tribunals and offices. It specifically administered a great deal of the real estate of the Papacy. In Rome alone this amounted to over 5,000 rented apartments. In 1979, its gross assets were in excess of 1 billion dollars. 

The extraordinary section, the Vatican’s other bank was as active in its daily stock speculations as the IOR controlled by Marcinkus. It specialized in the currency market and worked closely with Crédit Suisse and the Société des Banques Suisses. Its gross assets in September 1978 were in excess of 1.2 billion dollars. 

The Vatican Bank, which Marcinkus was running, had gross assets of over 1 billion dollars. Its annual profits by 1978 were over 120 million dollars; 85 per cent of this went directly to the Pope to use as he saw fit. Its number of current accounts were over 11,000. Under the terms by which the Bank was created by Pius XII during the Second World War these accounts should have belonged very largely to religious orders and religious institutes. When Albino Luciani became Pope only 1,047 belonged to religious orders and institutes, 312 to parishes and 290 to dioceses. The remaining 9,351 were the property of diplomats, prelates and ‘privileged citizens’; a significant number of this last category were not even Italian citizens. There were four who were: Sindona, Calvi, Gelli and Ortolani. Other accounts were held by leading politicians of every shade and major industrialists. Many of the account holders used the facility as a conduit through which to export currency out of Italy illegally. Any deposits made were not subjected to any taxation. 

The two departments of APSA and the Vatican Bank were Albino Luciani’s major problems which had to be overcome before the Church could revert to its early Christian origins. There were many others, not least the wealth that had been acquired over many centuries. This took many forms, including a multitude of art treasures. 

Vatican Incorporated, like all multinationals which aspire to respectability, was not negligent in matters of art. Vatican patronage is there for all to see, opening times permitting: the Caravaggios, the Raphael tapestries, the Farnese gold altar cross and candlesticks by Gentile da Fabriano, the Belvedere Apollo, the Belvedere Torso, the paintings of Leonardo da Vinci, Bernini’s sculptures. Would the words of Jesus Christ be heard less clearly in somewhere more modest than the Sistine Chapel with its majestic Last Judgment by Michelangelo? The Vatican classifies all of these as nonproductive assets. What the founder of Christianity would classify them as can be gauged from his own comments about wealth and property. 

What would Jesus Christ have felt if he had returned to earth in September 1978 and been allowed into the Vatican City State? 

What would the man who declared, ‘My Kingdom is not of this earth’, have felt if he had wandered through the departments of APSA with its teams of clerical and lay stock analysts, each an expert in his own field, following the day-by-day and often minute-by-minute fluctuations of the shares, securities and investments that APSA owns throughout the world? What would the carpenter’s son have made of the IBM equipment that functions both in APSA and the Vatican Bank? What would the man who compared the difficulty of a rich man entering the Kingdom of Heaven with a camel passing through the eye of a needle have said about the latest stock market quotations of London, Wall Street, Zürich, Milan, Montreal and Tokyo that chatter endlessly into the Vatican? 

What would the man who said ‘Blessed are the poor’, have said about the annual profit from the sale of Vatican stamps? Profit in excess of 1 million dollars. What would have been his opinion of the annual collection of Peter’s Pence that went directly to the Pope? This annual collection, considered by many to be an accurate barometer of the popularity of the Pope, had under the charismatic John XXIII produced between 15 and 20 million dollars per annum. Under Paul VI this had dropped after Humanae Vitae to an average of 4 million dollars per annum. 

What would the Founder of the Faith have felt about these few examples of how far his teaching had been perverted? The question is of course rhetorical. If Jesus Christ had returned to earth in September 1978, or if he came now and attempted to enter the Vatican, the result would be the same. He would not get as far as the doors of the Vatican Bank. He would be arrested at the Saint Anne Gate and handed over to the Italian authorities. He would never have the opportunity to learn at first hand about Vatican Incorporated, the multinational conglomerate that is fed from so many directions. He would not hear, for example, how it derives vast sums from the USA and West Germany; how in 1978, through the State tax of ‘Kirchensteuer’, the Roman Catholic Church of West Germany received 1.9 billion dollars, of which it then subsequently passed on to the Vatican a significant proportion. 

If Albino Luciani was to succeed with his dream of a poor Church for the poor, it was going to be a Herculean task. The modern monster created by Bernardino Nogara had by 1978 become self generating. When the cardinals elected Albino Luciani to the Papacy on that hot August day in 1978 they set an honest, holy, totally incorruptible Pope on a collision course with Vatican Incorporated. The irresistible market forces of the Vatican Bank, APSA and the other money-making elements were about to be met by the immovable integrity of Albino Luciani.

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The Thirty-three Days

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