God's Bankers: A History of Money and Power at the Vatican

by Gerald Posner

  The day after the Vatican gave Calvi that authority over the ghost companies, Marcinkus and Calvi were in Zurich for another Cisalpine board meeting. According to the minutes, Marcinkus asked far more questions than usual, but neither he nor Calvi disclosed to their fellow directors anything about the patronage or indemnity letters.74

  Pope John Paul II had created a special commission of fifteen cardinals to study Vatican finances and devise safeguards to prevent future Sindona-like scandals.75 The panel included American cardinals John Krol of Philadelphia and New York’s Terence Cooke.76 But few inside the Vatican thought that the Polish-born Pope intended the investigation to be hard-hitting. Marcinkus, meanwhile, did not tell the cardinals about the patronage letters. When they later learned about them they were enraged. Cardinal Pietro Palazzini’s reaction was typical: it “was crazy.”77 German Cardinal Joseph Höffner, another committee member, was so furious at Marcinkus’s deception that he insisted to John Paul that the IOR chief promptly resign.78 The Pope refused.79

  During this time, Calvi made a critical acquaintance separate from the Vatican. He spent his August holiday on Pazienza’s yacht, off Costa Smeralda. They chanced upon another yacht, owned by Flavio Carboni, a forty-nine-year-old Sardinian property developer. Carboni also happened to be the partner of Carlo Caracciolo, the publisher of La Repubblica and L’Espresso.80 Italy’s Secretary of the Treasury was on the boat that day. The flashy Carboni, with his fleet of fast cars, a plane, and two mistresses in addition to his wife, was a well-known personality in southern Italy.81 His solid connections, Calvi hoped, might allow him to offset Gelli’s lost influence.82

  Although Calvi was not the most personable man, Carboni got along with him from the moment they met.83 The Sardinian wanted something from the Ambrosiano too, a $500 million loan for an ambitious seaside resort project. Though short of money, Calvi nevertheless agreed.84 It took only a couple of months for the relationship to go beyond lender and borrower, to friendship, and then to confidants. Carboni visited Calvi at his home and was often at the Ambrosiano’s headquarters. Knowing of Calvi’s pending prison sentence, Carboni offered to lobby important politicians on his behalf.

  Some close to Calvi were unsure about Carboni’s intentions. Carlo Calvi did not like him. Nor did Calvi’s Ambrosiano deputy, Roberto Rosone, who warned others there was something sinister about him.

  As 1981 drew to a close, Calvi also got involved with one of Italy’s leading businessmen, Carlo De Benedetti, a former ranking executive at Fiat. In 1976, De Benedetti had taken control of office equipment firm Olivetti. Acclaimed for turning the company around, much as Lee Iacocca was later for his 1980s turnaround of Chrysler, he thought the Ambrosiano was a bargain.85 In November, Calvi and De Benedetti announced that the Olivetti chief had invested $45 million to buy a 2 percent stake. De Benedetti became an Ambrosiano director and its deputy chairman.86

  The financial world was astonished at the union between Calvi, the convicted felon, and De Benedetti, whose reputation was flawless.87 It was a moment of personal triumph for Calvi. “He considered it maybe a last opportunity to really revitalize himself and the bank,” recalls Carlo Calvi. “He was so proud when he introduced me to De Benedetti.”88

  Sixty-five days later the honeymoon was over. Once De Benedetti had full access to the bank’s records, he was “appalled” to discover its finances were utterly dismal.89 The Ambrosiano’s Peruvian unit had accumulated a massive $800 million in debt in just over a year. De Benedetti was stunned that most of the borrowers were unknown foreign companies whose creditworthiness he could not verify. He wanted out. Calvi was resistant but when De Benedetti threatened to go public, he had no choice. Within two months, their brief “marriage” was annulled. De Benedetti got back his original investment with interest.90 (When he met the following month with the Vatican’s Secretary of State Casaroli, De Benedetti warned him that there were grave problems at the Ambrosiano.)91

  The Ambrosiano was desperate for cash. Calvi again approached the Vatican Bank but this time Marcinkus turned him away. He warned Calvi that the IOR expected to be “made whole.” Calvi was more concerned about finding a financial lifeline than figuring out how to repay the Vatican. But the IOR chief did do one last favor for him. According to the byzantine paperwork between the IOR and the Ambrosiano, the Vatican owed about $18 million on some phantom loans used to boost the balance sheets of Banco Andino and the Cisalpine. With Marcinkus’s approval, Calvi used an old holding company, Zitropo, to pay $18 million to IOR accounts at Chase Manhattan and the Banca di Roma per la Svizzera. The Vatican Bank then passed that money back as payments it supposedly owed on the outstanding loans. The problem was that Zitropo was essentially bankrupt. Although it tapped lines of credit to pay the IOR, it was eventually liquidated with $46 million in debt (for allowing Calvi to use its accounts for the questionable trading, the IOR collected a small percentage of the transferred monies, a profit of $267,492).92

  Although Marcinkus deemed any further investment into the Ambrosiano as too perilous, a few businessmen with a healthy appetite for risk thought the distressed bank offered an opportunity for fast, huge gains. Only days after De Benedetti’s departure, Orazio Bagnasco, a wealthy Genovese property developer and owner of the luxury hotel group Ciga, invested $20 million in the Ambrosiano.93 Bagnasco became the bank’s deputy chairman.94 And not long after he came aboard, in January 1982, his faith seemed justified when the bank announced that its prior year’s profits had tripled. The financial press heralded the results as proof that the Ambrosiano was intrinsically sound and thriving despite Calvi’s legal problems.95

  The Bank of Italy, meanwhile, was still pursuing a probe into possible criminal wrongdoing. In February, only a month after Bagnasco’s investment, the central bank sent investigators to Peru to follow up on suspicious Banco Andino transactions. But Peruvian banking officials refused to cooperate.

  A small circle within the Ambrosiano knew that the stellar earnings meant nothing. The debt through its foreign subsidiaries was staggering. Marcinkus was increasingly concerned about having provided the patronage letters. He confided in Calvi that he was having difficulties inside the Curia maintaining a unified front for the beleaguered banker. Still, in March, Marcinkus went public with his support. He gave an interview to the Italian newsweekly Panorama. “Calvi merits our trust,” he said. Some of the investments with Calvi, claimed Marcinkus, “are going very well.” As a result, he said, the Vatican did not intend to sell its stake in the Ambrosiano.96

  That interview set off stormy arguments and accusations inside the Vatican between the IOR’s boosters and those who thought Marcinkus had again tarnished the church’s reputation. At the Ambrosiano, when executives like the deputy chairman, Roberto Rosone, questioned some of the immense Panamanian loans, Calvi dismissed them by citing the Panorama interview: “Behind those loans is the Vatican, the Pope,” Calvi told his fellow directors. “Do you have the slightest doubt about the Vatican bank?”97

  Calvi was, of course, aware that the Bank of Italy was investigating his foreign subsidiaries. In a display of bluster (or possibly denial), he directed Coopers & Lybrand to prepare the documents so the Ambrosiano could offer a new class of preferred stock to raise millions of dollars (the bank had already issued additional shares earlier in the year, increasing the number of shareholders by 30 percent and nearly doubling its available capital).98

  By the spring of 1982, Calvi warned his family that he feared for their safety. He told his wife, Clara, that the Vatican and Sindona were all his enemies. Calvi started carrying a pistol in his black attaché. He showed the handgun to his daughter, Anna: “If they come, I will kill them.”99 She also overheard one day a telephone conversation that her father had with Carboni. Calvi told him: “I’m just tired . . . I’ve had enough and if I have to, I will speak and tell everything about everyone.”100

  A few minutes before 8 a.m., on April 27, a gunman ran up to Roberto Rosone on a quiet side street in central M
ilan. Rosone, who had just left his apartment, was shot twice. An accomplice was waiting on a motor scooter and the would-be assassin jumped on and sped away. A security guard rushed toward the fleeing bike and put two deadly bullets into the shooter’s head.101 The man turned out to be the boss of a local drug syndicate, Danilo Abbruciati.102

  Not many outside the bank knew that Rosone—who survived—had encouraged a small group of the bank’s investors to write a personal appeal to Pope John Paul II. The note, which was translated into Polish before being sent to the Vatican by messenger, warned about serious problems at the Ambrosiano. It asked whether the Pontiff knew about the many dealings between Calvi and Marcinkus. (It cannot be confirmed that John Paul ever saw the note.)103

  Calvi commiserated with the recuperating Rosone, contending that the failed hit was meant to intimidate the bank’s directors. “Madonna, what a mad world!” Calvi told his wounded colleague.104 It would be another couple of months before investigators tracked a $150,000 payment from Calvi to the hit man.105 In the wake of the shootings, most marveled at Calvi’s composure and apparent coolness. At home, however, stripped of his public bravado, his wife and family saw that he was increasingly glum.106

  Adding to his angst, Marcinkus reminded him that the IOR’s patronage letters were set to expire at the end of June. Carboni had been lobbying Marcinkus for an extension. He now appealed to Luigi D’Agostini, a Rome lawyer with solid Vatican connections. D’Agostini enlisted the help of Cardinal Pietro Palazzini, another Marcinkus friend.107 Calvi and Carboni met with the cardinal, and Calvi even sent a pleading letter, in which he complained about how “Marcinkus and Mennini refuse” to be reasonable. He also wrote about the “many loans and bribes . . . to political parties and politicians.”108 Palazzini tried intervening on Calvi’s behalf but later informed the beleaguered banker that there was nothing he could do since the IOR was “impenetrable.”109 Marcinkus could not be swayed. By then, he was intently focused on limiting the Vatican Bank’s exposure.

  When Marcinkus traveled with the Pope to the United Kingdom in May, Carboni took the opportunity to meet with Mennini at the Vatican.110 The Sardinian developer had made a bold proposal to Calvi: if he could repair the relationship between the IOR and the Ambrosiano and bring fresh money into the partnership, his reward would be a staggering $100 million. Enticed by that supersized commission, Carboni made an all-out effort. But he made little headway with the IOR’s number two man. When Marcinkus returned to Rome and learned Carboni had tried circumventing him, he telephoned Calvi and angrily demanded he stop looking to the Vatican for assistance.111

  Calvi was more desperate than ever to find a white knight. Two back-to-back loans to the IOR, totaling $124 million, were due on May 15 (Marcinkus reluctantly gave him a one-month extension just before the deadline).112 Calvi claimed to his family that he was working on a Vatican-approved rescue plan involving Opus Dei, the secretive Catholic organization founded in 1928. For nearly twenty years, Opus Dei had wanted its status as a religious order upgraded from a secular institute, under the bureaucratic supervision of the Vatican, to a personal prelature that reported directly to the Pope.113 In the deal Calvi spoke about, Opus Dei would somehow assume the Ambrosiano’s debt and shield the church from financial losses and public fallout.114 In return, John Paul would elevate Opus Dei to a personal prelature. Even if Calvi hoped to broker such an accord, it is doubtful it went beyond a few initial conversations. In May, he stopped talking about Opus Dei (later, when the story went public, the order issued a formal denial).115

  Calvi switched his attention to his Coopers & Lybrand accountants, who suggested an eleventh-hour deal with another of its clients, Bahamian-based Artoc Bank & Trust. Peter de Savary, Artoc’s British-born chairman, had invested in a Kuwaiti oil company. He and his Arab partners had opened Artoc in Nassau. The Ambrosiano already owned 20 percent of Artoc, and the accountants suggested the companies merge to form Artoc Ambrosiano.116

  Since the Ambrosiano was headquartered in Italy, the Italian central bank had to approve the merger. Any chance that might happen was dashed on May 31 when the Bank of Italy’s Milan branch sent a four-page, single-spaced, typed letter to Calvi, demanding that the Ambrosiano explain in detail its $1.4 billion in loans to subsidiaries in the Bahamas, Peru, and Nicaragua.117 The central bankers insisted that their letter of inquiry be read at the next Ambrosiano board meeting, and that each director state publicly whether or not they had approved the massive foreign loans.118 That letter kicked off a raucous clash when the board met a week later, on June 7. Calvi refused the requests of several directors to produce the underlying loan documents to the ghost companies. For the first time during his seven-year tenure as chairman, the board voted 11 to 3 against him, passing a resolution authorizing the Ambrosiano to gather all the necessary financial documents requested by the Bank of Italy.119

  The next morning, Calvi again told his family he thought they should leave Italy. And he met a final time with Marcinkus at the Vatican, asking his longtime friend to help him buy a large block of Ambrosiano shares at a significant premium to the market price. Calvi promised to repay the IOR, and hoped the purchase might rally its battered shares. Marcinkus again passed.120

  Calvi brought a letter he had written a few days earlier, addressed to Pope John Paul. In it, he pleaded that the Pontiff was his “last hope.”121 Calvi boasted of having been a strategic front man for the Vatican in fighting Marxism around the globe.122 And he warned that upcoming events would “provoke a catastrophe of unimaginable proportions in which the Church will suffer the gravest damage.”123 He implored John Paul for an immediate meeting so he could explain everything, and “put at your disposal important documents in my possession.”124

  That letter was a few days old by the time Calvi met with Marcinkus. If he had any thought of asking the IOR chief to pass it to the Pope, Marcinkus’s chilly reception was enough to change his mind. When Calvi left he gave it instead to Carboni, who in turn handed it to a Czechoslovakian bishop working inside the Vatican.125 (It is not known if the Pope ever received the letter, as the Vatican will not confirm or deny anything about it. Its existence was not known for another decade, when it turned up as part of yet another Italian government investigation into the Ambrosiano.)

  Three days later, Friday, June 11, when Calvi’s driver arrived to take the banker to work, he was not there. Aided by Carboni, Calvi had begun his circuitous journey to reach London, flying from Milan to Rome the night before. News that he had disappeared spread fast, and many colleagues feared for his safety. Later that same day he called his daughter, Anna, and Graziella Teresa Corrocher, his private secretary, to assure them he was safe.126 “Stay calm,” he said.127 Since Calvi’s real passport was in the custody of the court pending the appeal of his conviction, Carboni had used his underworld contacts to obtain a false travel document.128,III

  Calvi was now a fugitive. On the first working Monday after he had fled the country, the Bank of Italy dispatched six inspectors to the Ambrosiano’s headquarters with court orders providing access to all the bank’s records.129 Its stock price fell 12 percent that day. That was the same day that $250 million in back-to-back IOR loans came due.130 Panic began setting in at the Vatican Bank. Late that afternoon, Marcinkus wrote to Cisalpine chairman Pierre Siegenthaler saying that because of his “many other commitments,” he had to resign his director’s post at the Nassau-based bank.131 It is difficult to imagine why it had taken Marcinkus so long to draw some distance between himself and that offshore bank. (He would later disingenuously claim that the resignation “had been in the works for a couple of years.”)132

  Secretary of State Agostino Casaroli again confronted Marcinkus.133 John Paul had entrusted Casaroli with oversight of all the Vatican’s finances with the notable exception of the IOR.134 Casaroli and Marcinkus had worked together on some of John Paul’s first foreign trips and had a good early bond but it had deteriorated. They now often scrapped over money and power.135 Marcink
us was in no mood to be castigated. “I’ve done my best and if it’s not good enough you can always get someone else.”136 Casaroli did not then know that only a day after Calvi disappeared, forensics investigators for Italy’s central bank discovered that the Ambrosiano’s biggest debtor was the Vatican Bank.

  Rosone, the Ambrosiano’s acting chairman, requested an urgent meeting with Marcinkus. The Vatican Bank chief was in Switzerland and suggested Rosone caucus instead with Mennini and de Strobel. On Wednesday, June 16, Rosone flew to Rome and met with the two IOR officials. He emphasized the patronage letters the duo had signed. Mennini then pulled out his “trump card,” the indemnity letter in which Calvi assured the Vatican that it was not responsible for any of the Ambrosiano’s debts.137 Rosone was stunned. It was the first anyone at the Ambrosiano knew that Calvi had secretly indemnified the Vatican. He asked if Michel Leemans, the managing director of the Ambrosiano’s holding company, La Centrale, could join them. Mennini agreed.138

  When Leemans arrived and learned about Calvi’s secret indemnity letter, he contended that the Ambrosiano had been as duped by Calvi as was the Vatican Bank. They should share the risk. If the IOR accepted responsibility for all the debt, Leemans would help them raise a billion-dollar loan at 5 percent (he thought Olivetti owner De Benedetti might be interested in such a deal). Mennini said no. It put all the risk on the Vatican. Why should the Vatican accept responsibility for any debt? As far as the IOR executives were concerned, Calvi’s indemnity letter cleared the church of any responsibility.139

  Leemans was totally exasperated. “Don’t you realize that this is a fraud. This will be a worldwide scandal.”140

  The two IOR officials appeared unfazed.

  What about the shares the IOR owned of the Ambrosiano, asked Rosone?