The Annals of Unsolved Crime

by Edward Jay Epstein

  Once in London, Carboni and the Klienszig sisters stayed at a deluxe hotel, but Calvi and Vittor checked into an inexpensive suite at a second-rate residential hotel, the Chelsea Cloisters. Calvi used the alias “Calvino.” It was the last place any witness saw him on June 18. When policed searched the suite the next day, Vittor was gone. All police found in the suite was Calvi’s personal belongings, including his toilet kit and sleeping pills, neatly packed inside two locked suitcases, as if they were waiting to be picked up by someone. His black attaché case was missing, however. Despite an intense search, Scotland Yard could not find a single hotel employee, taxi driver, or other witness to Calvi’s movements that night (or, for that matter, in the three days he had been in London prior to his death). During these London days, he was “the invisible man,” as Police Deputy Superintendent White told me. “We don’t even know how he got from his hotel, four and one half miles away, to Blackfriars Bridge. And we do not know how Calvi’s body got onto the end of that rope.”

  Although the coroner’s jury did not find direct evidence of murder, Carlo Calvi, Calvi’s only son, was convinced, as he told me, “my father did not commit suicide.” He was also determined to prove it to the insurer Unione Italiana, which could avoid a $10-million payment if the death was in fact by suicide. In 1989, he hired Kroll Associates, one of the world’s leading private-detective agencies, to reinvestigate the case. Kroll, with Carlo Calvi’s permission, gave me access to their meticulous reconstruction of the crime. After locating, authenticating, and reassembling the original scaffolding that Calvi had been hanged from, Kroll’s forensic experts conducted a reenactment in which a movie stuntman was retained as a stand-in for Calvi. He was roughly the same size and weight, and he walked all the possible routes along the scaffolding poles that Calvi would have to walk if he had indeed tied the rope and hanged himself. The stand-in wore exact copies of the handmade loafers Calvi wore that night. These shoes were then put in water for the same time that Calvi’s shoes had been submerged, and then microscopically examined by a former London police laboratory chemist. On every route, the chemist found that the soles of the stand-in’s shoes had picked up yellow paint smears that matched those on the scaffolding poles. Given Calvi’s weight, and the pressure of the shoe on the narrow pole, he concluded that such telltale traces were unavoidable. Yet, when he microscopically examined the soles of the shoes Calvi had actually worn, he found no traces of yellow paint on the soles. Since there was no way Calvi could have hanged himself except by walking on the scaffolding, this investigation concluded that “Someone else had to have tied him to the scaffolding and killed him.”

  The reconstruction convinced me that this was indeed a murder, but the final proof came in December 1998, when a Rome court authorized the exhumation of Calvi’s corpse, which had been buried for sixteen years. His bones and other remains were reexamined by a panel of forensic experts, who concluded that the injuries to his neck were inconsistent with self-hanging, and that therefore he had most likely been murdered. If so, it was a murder disguised to look like a suicide.

  But who killed Calvi?

  II.

  It was not difficult to find a motive for silencing Calvi. For those who ruled the world of money, Calvi’s death in June 1982 closed a Pandora’s box of troubles. Not only was $1.2 billion of Calvi’s bank’s money missing, but through a subsidiary in Luxembourg, Calvi had been acting for the sovereign state of the Vatican. His departure from Italy on June 11, 1982, had caused a panic. It reached Italy’s top monetary authorities while they were aboard a military jet en route to Brussels to face the grim prospect of a devaluation of the lira—the fifth in three years. Whatever might happen to the lira in Brussels that day, the concern of these men was now focused on the missing banker. The collapse of Calvi’s bank, the second-largest private bank in Italy, was now practically unavoidable, and this, in turn, could seriously undermine the credibility of the entire Italian banking system. One of the officials on the plane, Mario Sarcinelli, the director general of the Treasury Ministry, also had a special interest in the Calvi case. It had almost destroyed his career three years earlier, when, as the deputy director of the Bank of Italy, he had begun an investigation into the Banco Ambrosiano. Before he could complete it, police arrived at the palatial headquarters of the Bank of Italy in Rome and arrested him on what he called “trumped up charges.” He was accused of withholding information and confined to a dungeon in the Regina Coeli prison in Rome. Finally, after ten days, he was freed on condition that he leave the Bank of Italy, and this ended Sarcinelli’s investigation.

  Two other specially chartered jets took to the air on June 11. The first of these planes had been chartered in Luxembourg to go to Milan. It carried secret documents that up to this time had been seen only by Calvi and his top deputy. They were hand-delivered to Michel Leemans, Calvi’s trusted deputy at the investment banking unit of Banco Ambrosiano, who subsequently told me that the documents identified the true owner of a group of anonymous companies that held the mystery block of Banco Ambrosiano stock that had stymied Sarcinelli’s investigators four years earlier.

  The other chartered plane was an Alitalia Boeing 727 carrying Pope John Paul II to Geneva, Switzerland. Accompanying the pope on this flight was Archbishop Paul Casimir Marcinkus, the president of the Vatican’s bank, which was called the Istituto per le Opere di Religione (Institute for Religious Works). For the past week, Calvi’s deputies at the Banco Ambrosiano had been desperately trying to reach Marcinkus because Calvi had made him a director of the Banco Ambrosiano subsidiary in the Bahamas that had served as a staging post for the international operations of the Banco Ambrosiano. The son of an immigrant window-washer, Marcinkus had come to the Vatican in 1950 as a twenty-eight-year-old student priest and had never left. He quickly rose through the ranks of the bureaucracy to become the right hand of first Pope Paul and then Pope John Paul II. Three months before Calvi’s disappearance, the pope had stood by Marcinkus’ side at a meeting of the fifteen Cardinals on the Commission for Vatican Finances. When questions were raised about the Vatican’s faltering income and rising deficits, the pope had held his hand up to Marcinkus and replied “If you have any problems—ask [him], he’ll know how to solve them.” The cardinals also had no doubts about Marcinkus’ loyalty to the pope: he had, as one cardinal remarked, “the fidelity of a Saint Bernard.”

  When Marcinkus returned with the pope from Geneva, according to Leemans, he immediately asked for a meeting with Leemans, who was now in charge of the faltering Banco Ambrosiano. Leemans said that he then showed Marcinkus two documents that he had been sent from Luxembourg on the chartered jet. Marcinkus, according to Leemans, acknowledged that they were “letters of patronage,” signed by his deputy and initialed by him. They clearly identified the Vatican Bank as the owner of the key anonymous companies through which the Vatican had incurred huge debts. Leemans explained that the Banco Ambrosiano Group would be forced into bankruptcy in a matter of hours unless these debts were repaid by the Vatican.

  Leemans said that the archbishop replied that the Vatican recognized no debt to the Banco Ambrosiano. He dismissed the letters of patronage as legally meaningless because he held a trump card—a “counter-letter,” signed by Calvi, which released the Vatican from any responsibility proceeding from his initialing of the “letters of patronage.” As far as he was concerned, initialing these letters was merely a personal mistake on his part. “I did it purely as an act of friendship to Calvi,” he told Leemans. “I realize that I will have to pay personally for that error of judgment.”

  Leemans could not accept this explanation at face value. He did not believe that these letters of patronage, which involved the Vatican in a debt exceeding one billion dollars, had been simply dashed out by Marcinkus as a token of friendship. Moreover, before these letters had been issued, Marcinkus had sent his deputy to Lugano, Switzerland, to see secret records held in a bank vault—a vault to which the Vatican held one key and the Banco Ambrosiano
the other. These records confirmed that the Vatican’s bank was listed as the owner of record of the companies in question. They also showed that these companies held as their main asset over 10 percent of the shares of the Banco Ambrosiano. If that were true, Leemans reasoned, the archbishop had an interest in issuing the letters that went beyond personal friendship with Calvi.

  But the Vatican was a sovereign state that did not have to answer to any authority other than the pope. It could only be sued in a court in the Vatican with the permission of the pope. If Marcinkus stood his ground and insisted that the letters, and whatever other evidence turned up, proceeded from his personal errors and naivety, the Vatican could not be held legally responsible for the huge debt. Seeing that there was no practical way around the stonewall erected by Marcinkus, Leemans suggested that they work together to prevent the collapse of the Banco Ambrosiano with all the attendant public revelations. Specifically, he proposed raising a loan on the world market for the Vatican bank that would be used to save the Banco Ambrosiano.

  The archbishop, calculating that the interest for such a loan would amount to more than a hundred million dollars per year, according to Leemans, said, “We just don’t have that kind of money.”

  As soon as he left the gates of the Vatican, Leemans placed a telephone call to Milan that interrupted the tense Board of Directors meeting of the Banco Ambrosiano. “Call in Grandmother,” Leemans said, which was the prearranged signal to ask the Bank of Italy to take over the bank. It was the last meeting that the Board of Directors ever held. Trading in its shares was immediately suspended. The eight-six-year-old bank, founded by priests in Milan, had expired.

  While the stunned employees of the bank milled around, a grey-haired woman plummeted from the executive office on the top floor to her death on the pavement below. Amidst the commotion, the acting president interrupted a press briefing to announce, “Calvi’s secretary just killed herself.” Graziela Corrocher not only had been Calvi’s secretary since he had become head of the bank; she was the only other person at the bank who knew his full calendar of appointments and meetings. She left behind a note scrawled in red that cursed Calvi.

  Later that evening at an office on the Avenue des Citronniers in Monte Carlo, the employee on duty received a phone call ordering him to immediately close down what had been the European headquarters of Banco Ambrosiano Overseas in the Bahamas. His eleven years of night duty in this lonely room had consisted mainly of typing cryptic telephone messages from Milan into a telex machine, which had been specially constructed so that, unlike standard machines, it did not produce any copy of its messages on paper. There was also no paper trail of the work done here which, unbeknownst to him or the other employee of this branch office, had resulted in transferring more than $1.2 billion borrowed by the Banco Ambrosiano and its subsidiaries from banks around the world to anonymous corporations in Panama and Liechtenstein.

  III.

  By this time, the corpse of Calvi had been cut down from under Blackfriars Bridge in London, and the Italian counsel in London had cabled Rome, “They have our banker.” This ended the search for Calvi, but there was a greater mystery: the whereabouts of the money.

  The trail of the money, which began at the Banco Ambrosiano in Milan and then passed through its subsidiary in Monte Carlo, led to Panama. The money had been transferred there, and at other offshore banking centers, to anonymous corporations. Although records indicated that they were owned by the Vatican, the Vatican denied that it controlled their financial activities. Indeed, the precise relationship between these shadowy companies and the Vatican was known by no more than three persons at the Banco Ambrosiano. They were Carlo Canesi, who had made the original arrangements with the Vatican in the late 1960s; Calvi, who was his assistant and successor; and possibly Graziela Corrocher, the personal secretary for both men. And all three of them were now dead. Nor could any documents be found, except for the two ambiguous “letters of patronage” in the bank’s records, which were disputed by the Vatican. The problem was that Calvi had left Italy with a black attaché case full of key documents, but it had not been recovered in London.

  If the answer to the mystery could not be found in Milan or London, it might be found in the Vatican, a technically sovereign state occupying some 108 acres in the heart of Rome. In 1983, through banking contacts I had made while writing an unrelated article for the Institutional Investor, I arranged an interview with the one person likely to know about the Calvi affair, Archbishop Marcinkus. Although it had been unprecedented for an archbishop of the Vatican Curia to sit on the board of directors of a private bank, Marcinkus had traveled to the Bahamas for bank meetings. He explained at our first meeting that he had done so to educate himself in banking because “extraordinary times called for extraordinary measures.” He was a giant of a man, standing six feet four inches tall, with huge hands that toyed with objects as he spoke. Since he was an American, there was no need for a translator. Early in the interview, he pointed out that despite its priceless works of art, and its valuable property in Italy in the form of churches, the Vatican had a financial problem that dated back over two centuries.

  At the beginning of the nineteenth century, it had been sufficiently weak that Napoleon was able to kidnap the pope and keep him prisoner in France for seven years. Even after the Papal States were restored to the Vatican by the Treaty of Vienna in 1815, the cost of financing its wartime debt so exceeded its paltry income that it was only saved from bankruptcy when the French government assumed part of the Vatican debt. Finally, in 1870, in the process of unifying Italy, King Emmanuel seized Rome and all the remaining territory of the Papal States and left the pope, Pius IX, barricaded in his palace, a prisoner in the Vatican. Although the new Italian parliament passed a law offering modest compensation for all the papal territories that had been expropriated, Pope Pius IX refused, saying “I need money badly but what do you bring me, a part of what you stole from me.” That statement defined the Vatican position for the next six decades, as it negotiated with a succession of Italian governments with neither sovereign status nor money.

  The pope’s only source of income during this period was an annual collection from Catholics around the world called Peter’s Pence, which had been revived from the times of the Crusades. But Peter’s Pence rarely exceeded a million dollars in a year and, unable to borrow further to pay expenses, the pope had to curtail Vatican services as essential as the Sacred Roman Rota. Indeed, by 1922 the Vatican was so impoverished that it borrowed $100,000 from a local Roman bank to pay for the funeral of Pope Benedict XV.

  Finally, on February 29, 1929, Pope Pius XI came to terms with the government of Benito Mussolini. In the agreement, called the Lateran Treaty, the pope recognized that the Papal States, including Rome, were now part of Italy. In return, Mussolini accepted that a small parcel of land surrounding St. Peter’s, called Vatican City, henceforth would be completely independent of the laws of Italy, and the pope would be completely sovereign over this tiny territory. In addition, Mussolini awarded the Vatican compensation for the papal property seized in 1870 of $52.4 million in the form of long-term Italian bonds, paying 5-percent interest each year, and $39.7 million in cash.

  Although the Vatican became financially solvent for the first time in over a century, it had now been officially reduced from a kingdom occupying most of central Italy to a token city-state in a patch of Rome. To make it autonomous in fact as well as in law, the pope immediately expended part of the cash from the settlement on constructing a railroad station, a telephone exchange, administration buildings, a courthouse, radio transmitters, a jail, printing presses, barracks for the Swiss Guard, and an electric power plant.

  None of this left the Vatican with much money. Aside from the Peter’s Pence collection and the sale of Vatican coins, postage stamps, and museum admissions—all of which dwindled during the world depressions of the 1930s—the only income that the Vatican could count on was the approximately $2.5 million per year in intere
st from its government bonds, a sum that shrank with the declining value of the Italian currency. As the situation grew more desperate, the pope assigned the remainder of what the Vatican received in compensation to an investment unit called “Special Administration,” designed to use the Vatican’s unique sovereign standing to trade in the foreign-exchange markets. He retained Bernardino Nogara, a banker who was an expert in international finance, to run it. To protect the Vatican against further devaluations in the lira, Nogara bought gold, dollars, and other foreign currency, and then borrowed against them. He also engaged in complex arbitrage operations that increased the Vatican’s patrimony by more than 50 percent in ten years, while also providing the income necessary to pay the Vatican’s deficit. So the Vatican finally found a means of economic salvation: taking advantage of its sovereign exemption from regulation to trade.

  World War II again put the Vatican in serious jeopardy. Surrounded by Fascist Italy, and threatened with annihilation by the Communists who were battling to take over Italy, Pope Pius XII briefly considered moving the Vatican to America. In 1942, as an immediate expedient for safeguarding its funds during the war, the pope authorized the creation of a private bank within the walls of the Vatican, whose true function was obscured by its name, “The Institute for Religious Works.” The Vatican official charged with superintending this bank was Giovanni Battista Montini, a priest from a prominent banking family in northern Italy, who had served in the Vatican’s Secretariat of State for twenty years. Montini organized the bank not only as a safe haven for the Vatican’s own money but also as a channel through which Catholic dioceses, missions, orders, and other entities could invest their funds. Even after Montini left the Secretariat to become the Archbishop of Milan in 1954, he continued to oversee the operations of the bank as part of a three-man commission. When he became pope in 1963, taking the name Paul VI, he made the bank a key instrument of expanding Vatican financial power.