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

by Gerald Posner

  De Bonis was a trusted aide to Marcinkus. He had started working at the Vatican Bank in 1954 when he was only twenty-nine years old, and spent the first sixteen years of his career as the protégé of the IOR’s chief prelate, Cardinal Alberto di Jorio. When Marcinkus rose to power in 1970, he relied on veterans like De Bonis.13

  De Bonis so enjoyed working at the Vatican Bank that he passed on an appointment as an auxiliary bishop to Genoa so that he could instead remain inside the Tower of Nicholas V.14 As the bank’s secretary, he had cosigned some key documents for Calvi’s companies, including Intermax, United Trading, and Suprafin. He and the IOR’s accountant, Pellegrino de Strobel, had signed off on most of the questionable Calvi transactions, including an inflated $60 million partial sale of Vianini, a Vatican-owned company. Italian prosecutors later heatedly debated indicting De Bonis as an accessory to fraudulent bankruptcy in the Ambrosiano collapse. They concluded, however, he was a mere functionary and not a substantive decision maker.15

  But now that De Bonis was under investigation in the fuel tax scheme, it added to the perception that the Vatican Bank had systematic problems.16 Marcinkus’s image was further under siege in “God’s Banker,” a Frontline documentary that aired to huge audiences in the United States and Britain in February 1983. It introduced millions of viewers to the scandal.17 It was not long before the top-rated U.S. TV news program, 60 Minutes, investigated the unfolding crisis. Reporter Mike Wallace spent several on-air minutes telephoning Marcinkus’s office, only to be given an ever-changing, evasive runaround by the archbishop’s secretary.18 (Some credited Frontline with encouraging a British court the following month to overturn the suicide finding in Calvi’s death and order a new inquest.)19

  Top clerics worried that the steady drumbeat of scandal had begun souring the public about the church. When Italy forced the Ambrosiano into compulsory liquidation, it transferred the bank’s remaining good assets to a new bank (Nuovo Banco Ambrosiano). Since the government underwrote the venture, taxpayers were furious they got stuck with a $700 million bill.20 Opinion polls showed many Italians blamed the church.

  In March, the IOR responded to the joint commission’s many requests for records and financial ledgers by releasing eleven thin files of internal documents that addressed in the vaguest terms its relationship to the ghost companies in the letters of patronage. It was the first time the Vatican Bank ever produced private files for the investigators of another sovereign. And that was the result of a hard-fought compromise to an Italian demand that forensic accountants be allowed direct access to the IOR archives.21 The Vatican’s limited cooperation did not prove helpful to the joint commission, whose work was already hobbled by resistance from some major banks entangled with the Ambrosiano, including the Gottardo, Cisalpine, and Kredietbank. The commission was also stymied in accessing 1,500 pages of Calvi’s working papers as a Bahamian court had frozen a safe deposit box in Nassau’s Roywest Bank.

  The biggest obstacle confronting the joint commission, however, was that the Vatican had refused to allow Italian investigators to question Marcinkus, Mennini, and de Strobel.22 Hoping the church might change its mind, the commission twice postponed its original March 31 deadline. An intense struggle inside the Vatican about whether the three officials should cooperate played out during the spring of 1983.23 The compromise was a July 1, twenty-two-page memorandum signed by Marcinkus that claimed to be a “detailed description of the relationships at issue.”24 To the great disappointment of investigators, the Marcinkus memo—prepared under the close supervision of Vatican attorneys—provided little new information. It was mostly a defiant reargument of his long-standing contention that the bank did not have any responsibility for the Ambrosiano collapse.I

  The joint commission hoped that Licio Gelli, the former P2 chief who was under arrest in a Swiss prison, might help unravel the mess in return for leniency on charges he faced in Italy. That was dashed on August 9 when several prison guards Gelli had bribed helped him escape. He was driven to Monte Carlo hidden in the back of a van. From there, he traveled on a fake passport to South America, taking with him many of the documents on the commission’s wish list.26,II

  The joint commission was frustrated at every turn. In the preamble to its subsequent report, the members agreed, “What has emerged is a complicated web of facts, documents and opinions, from which it was extremely difficult to distinguish truth from falsehood.”28 Compounding the problem, by late summer 1983, Italian and Vatican negotiators were sharply divided. The church-appointed commissioners were unwavering that there was no evidence proving the IOR was the real owner of the ghost companies. The Vatican Bank, they argued, was an innocent “intermediary.” Their position was summarized in an August memo to Secretary of State Casaroli, concluding that Calvi had taken advantage of Marcinkus.29

  The Italians meanwhile thought that the Vatican Bank and its top officials were knowing partners in the scheme. Two—lawyer Alberto Santa Maria and corporate finance professor Mario Cattaneo—were hard-liners, contending that the “IOR’s knowledge of the decisions and arrangements adopted . . . was both continuous and constant.”30 The duo admitted there was no smoking gun, but they were convinced a preponderance of the evidence buttressed that conclusion. The third, Christian Democrat chief Pasquale Chiomenti, feared that too hard a stance against the church might prevent the two sides from ever reaching a deal. He moderated his colleagues’ view of the Vatican Bank’s role.31

  Chiomenti had a well-deserved reputation as an adept mediator. He feared that any deal struck by Italy with the creditor banks—clamoring for some $600 million—would fail if it did not include the Vatican. The banks had indicated that if they could not get a decent offer from the Vatican, they would sue the church in multiple jurisdictions.32 Through most of the summer of 1983, Chiomenti was crestfallen that the negotiations had stalled in a nasty round of mutual recrimination.33

  On August 10, at a country house near Lucca, Chiomenti met with Ted Sturmer, a senior partner at the British law firm that represented National Westminster, one of the lead creditors. After several intense hours they had agreed that the banks should be repaid 70 percent of their losses.34 In return, both men decided to work on persuading the Vatican to pay as much of that as possible. They knew it would not be easy, but the carrot they offered the church was freedom from all lawsuits as well as no need to be publicly contrite or to admit any responsibility for the Ambrosiano affair.

  Inside the Curia a fiery debate raged about how much, if anything, the church should offer to end the scandal. Marcinkus was firm that it should not pay a single cent. “You’re crazy!” he said. “Don’t even open up that conversation. If we’re not guilty, we don’t pay. And we’re not guilty. . . . If you’re preaching the truth, you’ve got to fight for it.”35

  Although the IOR chief was not fazed by the possibility of years of costly litigation, at times in jurisdictions that might subject the church to embarrassing discovery, it frightened many top clerics. Marcinkus, it seemed, was the only one in a fighting mood.

  The following month, when Secretary of State Casaroli met with the leaders of Italy’s newly elected socialist-led coalition, he made the church’s first settlement offer. Casaroli said that even if the church sold some assets, the most it could pay was $140 million. Although it was a huge amount for an institution that had long insisted it owed nothing, it was also far less than what the creditors demanded. That offer was rejected. Casaroli dispatched more firepower into the negotiations with his committee of “wise money men”: ex–Emigrant Savings Bank CEO Joseph Brennan; Carlo Cerutti, the vice chairman of the telecommunications giant STET; and Philippe De Weck, a Union des Banques Suisses director (the controversial Hermann Josef Abs had resigned by then).

  After several meetings with the creditors, the trio advised the church to bump its figure by $10 million and insist it was “not negotiable.”36 The no-more-negotiating stance crumbled within a couple of weeks when the church raised its offer to $160 mil
lion. The creditors did not budge. Despite pressure from Italy, the Vatican fell silent. Delay was second nature to a bureaucracy that thought in terms of centuries instead of years.

  The following March the stakes became much higher. Milan’s State Prosecutor, Maurizio Grigo, sent letters to Marcinkus, Mennini, and de Strobel, notifying them they were formal targets of a criminal investigation into an $86 million 1972 Vatican Bank loan to Milanese holding company Italmobiliare.37 Prosecutors contended the loan was designed to hide illegal kickbacks between church officials and financier Carlo Pesenti, who was Italmobiliare’s president as well as the Ambrosiano’s largest shareholder.38 To avoid the problem they had confronted the previous year when the Vatican refused to accept judicial communiqués for Marcinkus and his two lay assistants, this time prosecutors submitted their “notice of investigation” through formal diplomatic channels at the Italian Foreign Ministry.39

  The day it arrived at the Vatican, Marcinkus told reporters, “I will have nothing to hide from the Italian judges, especially because the operation [loan] was carried out in the most absolute normality.”40 But no matter how brave a front Marcinkus put on, the criminal probe was a terrible turn of events.

  The prosecutors were weighing fraudulent bankruptcy charges against the archbishop and his top aides. Italian law allowed those who suffered damages in civil matters to attach themselves as additional parties to the criminal proceedings. The creditors had so far declined to do that. They feared it might hurt their chances of reaching an out-of-court settlement with the IOR. If those negotiations failed, however, the creditors had unanimously decided to hitch their fortunes to any criminal prosecution and immediately move to obtain court orders freezing all Vatican Bank assets inside Italy.

  The news kicked off a new round of speculation about whether Marcinkus could hold on to his Vatican Bank post. In April, John Paul announced seventeen significant Curial reforms, a shake-up that Italian newspapers called il terremoto (the earthquake).41 By shuffling some of the bureaucracy’s top prelates and appointing reformers, the Pope hoped to weaken the Curia’s stranglehold on power and to make it less Italian.42 The reorganization was the first signal that Marcinkus’s power was on the decline. In the reworked Curia, he no longer had unchecked administrative powers as governor of Vatican City.43

  Possible fallout from the criminal probe dominated the church’s internal debate over how much money to offer the Ambrosiano creditors. If Marcinkus and his top aides were found criminally liable, it would open the floodgates to huge civil liability. Marcinkus still tried rallying his colleagues. He contended that it was hypocritical for them to say the church was short of money and plead for contributions during the Holy Jubilee, and then at the same time make a massive payout to settle the Ambrosiano. “How is it you’re telling everybody you’ve got no money [but] you’re paying out money you don’t owe?” he argued. If the church paid anything, he charged, it would be “just throwing it out the window” and create a permanent “stigma.”44 As for proposed settlement language that would require the church accept only moral responsibility, Marcinkus was incensed. It would fool no one, he said, but simply mean “we must be guilty.”45

  Marcinkus was outvoted. Pope John Paul personally overrode his objections.46 In early May, the Vatican and 120 creditor banks announced a deal. The church agreed to pay a stunning $244 million as a “voluntary contribution” to acknowledge its “moral involvement” with the Ambrosiano.47 The paperwork was executed on May 25 in Rome, with De Bonis and a glum Marcinkus signing on behalf of the IOR.48 The 161-page agreement absolved the Vatican Bank of all culpability.49 It also granted Italian courts exclusive jurisdiction for resolving any disputes over its terms. It was the first time the Vatican had allowed the Italian judiciary to have control over any of its affairs.50

  Although the quarter-billion-dollar payoff was only a fifth of what the IOR was committed to by the letters of patronage, it was a body blow to the city-state. It came on top of what some investigators believed were tens of millions in losses from worthless investments in the wake of the Ambrosiano’s collapse.51 The settlement consumed half of all the Vatican’s cash, forcing it to sell its remaining $35 million stake in Vianini, one of Italy’s premier construction conglomerates, as well as to borrow heavily from London banks, and to unload some stocks and real estate in France and America.52 In exchange for some wide-ranging modifications demanded by the socialist government to the church’s 1929 concordat, Italy agreed to underwrite the remainder of the $406 million settlement.53

  The changes to the concordat would have once been unthinkable. The church dropped its insistence that Roman Catholicism be the state religion. Moving forward, the state had to confirm church-annulled marriages. Parents were given the right to opt their children out of formerly mandatory religious education classes. And Rome was no longer considered a “sacred city,” a classification that had allowed the Vatican to keep out strip clubs and the porn industry. Italy even managed to get the church to relinquish control of the Jewish catacombs. “The new concordat is another example of the diminishing hold of the Roman Catholic church in civil life in Italy,” noted The New York Times.54

  In return, Italy instituted an“eight-per-thousand” tax, in which 0.8 percent of the income tax paid by ordinary Italians was distributed to one of twelve religious organizations recognized by the state. During its early years, nearly 90 percent of the tax went to the Catholic Church (by 2010, the church received less than 50 percent as the tax was more equitably distributed). Not only did the tax relieve Italy of its responsibility for the $135 million annual subsidy it paid for the country’s 35,000 priests, it meant the church had a steady and reliable source of much needed income.55

  The eight-per-thousand tax was the only glimmer of good news for the Vatican. Despite the massive Ambrosiano settlement, Marcinkus and the IOR continued getting bad ink. On June 9, just weeks after the Vatican had struck its historic deal, the press was consumed by a prepublication leak about David Yallop’s book In God’s Name, charging that a six-man clerical cabal that included Marcinkus had murdered John Paul I. Although the church believed the book was nonsense, Yallop’s front-page disclosures—about the purported reasons some might have wanted John Paul I out of the way—seemed credible to casual readers.56 In God’s Name changed in part the lay perception of Marcinkus from a wayward IOR director with shady friends to someone now thought capable of murdering a Pope to preserve his power.

  The following month a leak from the Justice Department fueled headlines about Ambassador William Wilson’s two-year-old intervention for Marcinkus with U.S. Attorney General William French Smith. A few months earlier, Ronald Reagan had overcome political opposition to establish formal relations with the Holy See and upgrade the U.S. legation to the Vatican into a small but full-fledged embassy. Now it was caught in its first firestorm.57 Reagan stood firm and resisted calls to relieve Wilson of his post.58

  Although it was Wilson who took the public heat for misusing his influence, that the American ambassador to the Vatican thought Marcinkus might be under a U.S. criminal investigation was strong evidence of how low the IOR chief’s stock had fallen.III

  In late August, about a month after the Wilson news broke, an Associated Press wire service story titled “Career of Once Powerful American Prelate in Decline” was widely picked up.60 It noted that just two years earlier Marcinkus had been “the most powerful American in the Vatican.” An unidentified archbishop was quoted saying that the Pope was “reluctant to slap him down.” Instead, church officials had “applied the typical Roman solution” of isolating him and limiting his power.61

  It seemed possible that the Pope might “slap him down” the following month when rumors swirled that Italmobiliare’s president, Carlo Pesenti, struck a deal with Italian prosecutors to tell a court about the hidden details of an $86 million IOR loan that Pesenti had repaid at a staggering 300 percent interest. The persistent gossip was that in exchange for his cooperation, prosecutors ha
d agreed to drop a probe into whether Pesenti had illegally obtained some of his enormous Ambrosiano stake. But Marcinkus’s luck had not run out. The day before the seventy-seven-year-old Pesenti was to appear in court, he collapsed while meeting with his attorney. He was pronounced dead of a heart attack a few hours later at a hospital.62

  No matter how low a profile Marcinkus adopted, he could not manage to stay out of the news. The month after Pesenti’s death, after years of high-stakes legal wrangling, Michele Sindona was extradited to Italy.63 His return, under heavy guard, was major news in Italy. Since there was little new to initially report, newspapers and magazines filled space by rehashing stale stories about the Sicilian financier and his unprecedented role as Pope Paul VI’s hand-selected banker.64

  At Sindona’s sensational trial, the Vatican seemed to be a missing unindicted co-conspirator. There were weeks of uncomfortable testimony about how the IOR lost millions through its Banca Unione investments. The following March (1985), Sindona’s conviction for fraud and his fifteen-year sentence prompted many legal analysts to wonder why no one else, especially Marcinkus, had paid a price for the more than $200 million in financial misdeeds exposed at the trial.65

  The extradition treaty by which the United States sent Sindona to Italy required that he finish his prison term in America before starting his Italian sentence. But Italy wanted to keep him so they could file charges in the 1979 murder of Giorgio Ambrosoli, the court-appointed liquidator of his Italian banking empire. The U.S. Justice Department agreed. Another widely covered trial and more unwanted coverage of the salacious history of the Vatican Bank–Sindona partnership ensued. In 1986, almost a year after his fraud conviction, a panel of six jurors and two judges returned a guilty verdict on the murder charge. Sindona got a life sentence.66 The drama was not yet over. Just two days later, after he was served breakfast in his private cell in a specially constructed high-security prison wing, Sindona stumbled from the bathroom and staggered toward the front of the cell, gasping, “Sono stato avvelenato, Sono stato avvelenato!” (I’ve been poisoned, I’ve been poisoned).67 He collapsed. By the time doctors arrived a few minutes later he had slipped into an irreversible coma. He died two days later.68