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

by Gerald Posner

  The leaks started to pour. On February 1, the story broke about the messy fight between Bertone and Gotti Tedeschi over the failed San Raffaele Hospital bid.29 The documents made Bertone look as if he were reckless in trying to force the quarter-billion-dollar offer against the advice of almost everyone, including the Pope. A week later, the next episode of The Untouchables added fuel to what the media had dubbed “Vatileaks.”30 Italian prosecutors had opened criminal investigations against four priests whose IOR accounts were used to launder Mafia cash. On the program, Luca Tescaroli, a Roman prosecutor, said that he had submitted to the Vatican three formal requests for information relating to Roberto Calvi’s death. The Vatican had not answered.31

  Benedict’s Papacy had by this point been marked by six years of inept handling of the church’s public image.32 With the advent of Vatileaks, Lombardi and his staff did not morph into a world-class public relations unit. It was admittedly not easy for them. They had no idea who was the leaker or what was coming next. Still, all they offered were reactive and often weak responses to each subsequent disclosure. In the first week they established the defensive tone that became the hallmark of their approach. As for the four priests under investigation for money laundering through IOR accounts, Lombardi dismissed the story as “recycled accusations” and “sadly defamatory.”33 Worse than the generic denials was when the Vatican tried countering the substance of the leaks. After the story about how Viganò had been transferred because of his corruption busting, his former colleagues at the Governorate issued a statement dismissing Nuzzi’s account as the “fruit of erroneous evaluations or based on unproven fears.” They boasted that their own quick investigation proved that the “suspicions and allegations” were “completely unfounded.” Most observers thought that self-serving statement was evidence the Vatican was not serious about getting to the bottom of the charges.34

  The next round of leaked information—an internal memo reporting what Palermo’s Cardinal Paolo Romeo said during a trip to China the previous November—found its way to the front page of Il Fatto Quotidiano. The leakers had hoped that the press would concentrate on a portion where Romeo said the Bertone-Benedict relationship “was full of conflict.” That would add to the public perception that Benedict might be better off with a different Secretary of State. But instead, the press jumped all over a different portion of Romeo’s remarks in which he said that the fight for power at the top of the church had become so nasty that he predicted that Benedict would be dead within twelve months. It did not matter whether Romeo meant someone was plotting to murder the Pope or if he believed the stress would take its toll on the nearly eighty-five-year-old Pontiff. But the result of that leak was different from anything that Gabriele could have imagined. Instead of Bertone being tarnished, the entire hierarchy of the church appeared to be in the middle of internecine warfare so great that the Pope’s very life was threatened.35

  No faster did one story break and grab headlines than the next slew of documents changed the focus to another embarrassment. The attention frequently fell off of Bertone. Vatileaks dominated all other news about the city-state. At a Vatican summit held in early February about the sex abuse crisis, it was disclosed that in America alone some $2.2 billion had been spent to settle claims by nearly 100,000 victims (it was estimated that another billion had gone to lawyers).36 The shocking figures barely got noticed. Sexual abuse was, by 2012, a story to which the media occassionally returned, but Vatileaks and its depiction of the church as a den of snakes was all encompassing.37

  By late February, Nuzzi aired an interview with Gabriele, in which his face and voice were digitally disguised.38 He claimed to be a whistleblower working inside the Secretariat of State: “Maybe there is a kind of omerta to prevent the truth from surfacing. Not because of a power struggle but maybe because of fear” was his ominous message.39

  Gabriele—acting on his own, he later insisted implausibly—or the entire group that had gathered the previous November, had underestimated the difficulty of controlling a breaking news story. Many commentators concluded correctly that Bertone was the target of leaks that cast him as a poor manager who spent much of his time expanding his Curial influence. Some Vatican watchers thought that Benedict himself was the target, since his hands-off management style had fostered many of the problems. And others thought the leaks were not targeting a single person but more generally corruption and inefficiency inside the Vatican’s financial institutions.

  None of the leakers had foreseen how the scandal weighed on Benedict. “The secretary of state is increasingly alone, in a curia he does not govern and with a pope he does not help,” wrote Sandro Magister in L’Espresso.40

  Benedict gave a “Pontifical mandate” to a special committee of three cardinals to conduct their own investigation. The chairman was eighty-two-year-old Cardinal Julián Herranz, the longtime private secretary to the founder of Opus Dei. Their simple brief was to take whatever action was necessary to find the whistleblower.41 No one at that time knew that Bertone had ordered his own secret probe and had used Vatican police commander Domenico Giani to tap the telephones of some officials in the Curia (when it later became public, press spokesman Lombardi tried minimizing it by saying there were “only a few wiretaps, possibly as few as three”).42

  As the damage built from the financial mismanagement portrayed in the leaked documents, there were Italian press reports “of political jockeying among church officials who, sensing an increasingly weak and aging pontiff, are already preparing for a conclave.”43 The idea that Benedict might not long be Pope was boosted by how frail he looked. For a February ceremony in St. Peter’s Basilica in which he officially gave the twenty-two new cardinals their red hats, birettas, and rings, the Pontiff was wheeled in on a moving platform. For his upcoming trips to Cuba and Mexico, few public events were planned. When senior clerics complained to Benedict about his Secretary of State, the Pontiff’s standard response was now “We are an old Pope.”44 As veteran Vatican journalist Nicole Winfield noted, that Benedict “has been slowing down recently” meant “that a conclave is very much on the minds of cardinals new and old.”45

  Benedict had appointed Bertone in 2007 as his Camerlengo, the person responsible for running the church after his death and before the selection of a new Pope. Bertone running the church unchallenged, even if briefly, was a prospect to which few of the cardinals looked forward.

  * * *

  I. This chapter is largely based on extensive interviews by the author with two people in Rome during September 2013. Both of them had regular and close access to Pope Benedict during his Papacy. They are in a position to know the details of what took place behind the scenes up until Benedict’s unexpected 2013 resignation. Each is still affiliated with the church, and since they fear retribution for their disclosures, they have asked that I not only omit their names but make certain that they cannot be identified by too detailed a description of their work or exact quotations about what they saw and heard. I have tried my best to deliver in full the facts while preserving their anonymity.

  II. Of course, to the extent that there was any casting couch inside the Vatican, it had to be gay since it is a self-contained society of men living and working together. Any chance of promotion into the hierarchy of the church is only available by men appointing other men. An equivalent form of advancement among heterosexual priests who abandoned their celibacy vows is simply not possible.

  III. Marinelli’s book might have gone unnoticed had not a Vatican court ordered him to appear before it to answer as to why he should not be punished. He refused to show up, and told a reporter he would not recant. The Vatican tried removing the tell-all from bookstores, which catapulted it almost overnight from unknown to a bestseller. Marinelli told The New York Times that he was not surprised but nevertheless disheartened by the church’s campaign against him: “The book does not question the sanctity of Jesus Christ, the Eucharist or the Catholic Church. It just points out that the Vatican is made
up of men, like me, who are flawed.” Marinelli died in October 2000, a year after the publication.8

  IV. Mäder’s revelations came only a few weeks after another member of the Swiss Guard told the same newspaper that he and others in the small force regularly received many “unambiguous sexual requests” from clerics in the Curia. New arrivals to the Guard were warned about the more aggressive prelates. For Vatican veterans, Mäder’s charges brought back memories to the 1998 murder-suicide in the city-state of the then commander of the Swiss Guard, his wife, and a corporal in the Guard. The official motive was that the corporal had been passed over for a promotion and sought revenge on his superior and his wife. Contemporaneous stories in the Italian press speculated that Opus Dei was involved since two of the murdered were members (Opus Dei denied that). An East German spy link was also reported but never confirmed. Publications since have suggested that the commander and corporal were having an affair. Typical is the 2011 headline in the Daily Beast, “Vatican Murder Mystery: Was It a Gay Love Triangle?”12

  V. In conversations with friends, Gabriele indicated he was somewhat surprised that he was working only one floor underneath the Papal residence without anyone having done a background check. All it took was the right word from a well-placed prelate, in his case Monsignor Harvey, to land the job. And he was not required to sign any employment contract, nor any confidentiality form regarding what he saw during his work.17

  39

  A Vote of No Confidence

  Not all the bad news came from Vatileaks. The State Department announced in early March that for the first time it had added the Vatican to a list of sixty-eight countries it considered a “concern” for money laundering.1 And a few days later the investment bank JPMorgan Chase announced it was shuttering a Vatican Bank account in Milan since the IOR had failed to respond to multiple queries about the account for two years. That account was a so-called sweeping facility, meaning that at the end of each day any funds were transferred to a Vatican Bank account in Germany. Over some eighteen months, while JP Morgan had been waiting for answers about the origin of the money in that account, some $2.2 billion had passed through it.2 JP Morgan was one of the IOR’s correspondent banks, institutions through which it conducted its foreign transactions. All the correspondent banks had themselves been pushed hard by European regulators for strict compliance. They were in no mood to cover for any sloppiness by the Vatican Bank.3

  That a major American investment bank had to close an active IOR account because it could not get information required by anti-money-laundering laws did not look good for an institution that was supposedly working hard to get on the OECD white list. And it did not reflect well on Gotti Tedeschi. Did he know about the JP Morgan requests and ignore them or did his management style mean he was uninvolved in the bank’s details? Neither answer was comforting.

  That spring, Moneyval sent a top secret draft to the Vatican with its preliminary conclusions.4 It wanted to give the church an opportunity to comment before the report was released that July. Gotti Tedeschi told colleagues he felt he had made considerable progress in meeting the EU standards, but he was frustrated about how long it took directives he issued to become operational. Approaching three years as the bank’s director, he was still surprised at the enormous divide between efficiency and performance in his private finance work and what passed for banking inside the city-state.5

  The Moneyval draft was unequivocal: the Vatican had a long way to go before it would be transparent and compliant enough to qualify for OECD’s white list. Moneyval’s recommendations included reorganizing the Financial Intelligence Authority (AIF) and reducing the power of the Secretariat of State over financial affairs. The European inspectors did not like a change that Bertone had made to AIF’s oversight of the Vatican Bank: any monitoring had to have the Secretary of State’s express permission.

  Bertone privately castigated the draft’s recommendations as an undue interference with the church’s sovereignty. But others, like APSA’s Cardinal Nicora, felt vindicated. Nicora had opposed Bertone’s power grab over money matters, and at the time had written a secret letter to the Secretary of State warning, “We are taking a step back and remaining a tax haven.”6

  Gotti Tedeschi advanced the most logical argument: since the Vatican had agreed to EU oversight, change was coming one way or the other. There was no use in postponing the inevitable.7

  Moneyval’s reorganization suggestions to further empower AIF got a boost in May when Italian prosecutors complained they had subpoenaed records for an IOR account held by a Sicilian priest. The Vatican had stonewalled for a month. That criminal investigation focused on $1.5 million that went through the cleric’s IOR account over two years. The probe also centered on several real estate investments and sales both by the priest and his local bishop, all disguised to clean mob profits.

  “We have made a request for information to the Vatican City State in the spirit of collaboration with regard to an investigation into sums of money in financial transactions undertaken by the Diocese of Trapani,” the prosecutor said in a public statement.8 No one from the church initially made any comment. When they did, it was to say that the paperwork the prosecutors wanted was missing.9 (When the priest turned into a witness for the civil authorities, the Pope suspended the cleric and dismissed the bishop.)10

  On May 19, Gianluigi Nuzzi announced the publication of his new book, Sua Santità: Le carte segrete di Benedetto XVI (His Holiness: The Secret Papers of Benedict XVI). It was based on the trove of information leaked to him by Gabriele since 2011. Nuzzi for the first time disclosed that his source had started collecting documents after the death of John Paul II in 2005.11 Nuzzi reproduced dozens of personal letters, internal memos, faxes, and even personal notes in Sua Santità. He claimed he had omitted anything about private lives and concentrated only on matters on which he thought transparency was necessary. The book was nevertheless a titillating and mortifying look at the Vatican’s dirty laundry and an instant bestseller in Italy.12 Everyone it seemed was talking about some of its revelations: the top newsmen who gave large “donations” to the church before landing private audiences with the Pope or the prominent businessman who wangled a favor from Benedict in exchange for a $100,000 white truffle (that ended up in a soup at a Vatican-run shelter for the homeless).13 Nuzzi revealed confidential notes about how senior clerics were perplexed and fascinated by the 1983 disappearance of fifteen-year-old Emanuela Orlandi, the daughter of a church employee who was never seen again after leaving her family’s Vatican apartment to go to a music lesson.14 And despite the assurance that he steered clear of private lives, Nuzzi disclosed the secret letters of Dino Boffo, the former editor of a Catholic newspaper, complaining to Benedict and a ranking cardinal that another Catholic newspaper editor had leaked a fake document charging that Boffo was a “known homosexual who was already known to the police” for sexual harassment. That leak had kicked off a media feeding frenzy in 2009 that cost Boffo his job. Nuzzi reprinted two private letters from Boffo to the Pope’s powerful private secretary, Monsignor Georg Gänswein, in which the newspaper editor accused Bertone of engineering the character assassination.15

  The book also set out how senior Vatican officials judged America—between the sex abuse epidemic and liberal secular policies—as a moral wasteland. An assignment to Washington, as was done with Archbishop Viganò, was unquestionably a punishment.

  There was one major story playing out inside the Vatican about which Nuzzi was in the dark since Gabriele had never learned about it. Gotti Tedeschi had been methodically compiling a secret dossier about the Vatican Bank that he intended to present to Pope Benedict.16 The IOR chief had stumbled across information that he considered so explosive about how the IOR was being misused by mobsters—sometimes family members of the clerics who worked inside—that he feared his life might be in danger if others found out before he reached Benedict.17 Corriere della Sera, Italy’s paper of record, later concluded that Gotti Tedeschi uncovered
accounts in the names of the “politicians, shady intermediaries, contractors and senior (Italian) officials, as well as people believed to be fronts for Mafia bosses.”18 Part of what Gotti Tedeschi had discovered was linked to the IOR’s inexplicable obstruction for two years about inquiries from Italian prosecutors about a bank account held by two clerics in Sicily. Gotti Tedeschi had also come across a name that sent a shiver through him—Matteo Messina Denaro, an arms and narcotics kingpin who was suspected of dozens of murders over a twenty-year reign.19 The man nicknamed Diabolik had been on the run since 1993 (he is still a fugitive). “With the people I’ve killed, I could make a cemetery,” he once boasted.

  On at least two occasions Gotti Tedeschi told Benedict’s secretary, Gänswein, that he wanted to meet with the Pope. He did not share with Gänswein the full details of what disturbed him but confided it was a matter “of the greatest urgency.” The last conversation with Gänswein was on May 21. The IOR chief did not hear back.20 Gotti Tedeschi had a paper calendar on which he kept his appointments. Listed for Friday, June 1, was a shorthand notation to nudge Gänswein. Time was of the essence.21 By now, Gotti Tedeschi’s memo had more than fifty attachments of email, notes, and copies of relevant papers.22

  Gänswein was in no hurry to arrange for the IOR chief to see the Pope.23 The chief of the gendarmes, Domenico Giani, had confidentially informed Gänswein that questions had been raised about Gotti Tedeschi’s mental stability. A Rome psychotherapist, Dr. Pietro La Salvia, whose specialty was the psychology of workplace stress, had observed Gotti Tedeschi at the IOR’s 2011 Christmas party. He was “dismayed” by what he saw and wrote a letter to the Vatican Bank’s director general, Paolo Cipriani. As a result of his casual observation, the psychotherapist thought Gotti Tedeschi exhibited “traits of egocentricity, narcissism and a partial disconnection from reality that could be a psychopathological dysfunction.”24 Although La Salvia emphasized that his three-month-old opinion was not a clinical diagnosis, word spread quickly at the top of the Curia and IOR that something might be amiss with Gotti Tedeschi.