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

by Gerald Posner

  74 Anton Weber interview with Gitta Sereny in Sereny, Into That Darkness, 318. Some countries that were willing to accept baptized Jews still wanted to ensure they were getting real converts and not merely Jews who claimed to be Catholic to avoid being killed. Brazil, for instance, offered the Vatican three thousand visas but insisted they only be issued to Jews who had been Catholics for at least two years.

  75 Anton Weber interview with Gitta Sereny in Sereny, Into That Darkness, 319.

  76 Adolf Eichmann, “Meine Flucht: Bericht aus der Zelle in Jerusalem,” CIA, War Crimes, CIA name files, IWG, RG 263, Box 14, Eichmann, Adolf, Vol. 1, NARA.

  77 Sereny, Into that Darkness, 321–22.

  78 Monsignor Karl Bayer interview with Gitta Sereny, Into That Darkness, 309; Goñi, The Real Odessa, 342. As for the misplaced hope in the Vatican leadership that the Ustaša might be able to return to power, see Phayer, Pius XII, the Holocaust, and the Cold War, 234.

  79 Most of the files about Pius’s overt support of the efforts to free Ustašan and other war criminals were released by the U.K. National Archives in 2001 and 2002. One of the first journalists to put those files into their historical context was Uki Goñi, The Real Odessa, 328–34. Osborne to Foreign Office, August 27, 1945, Foreign Office, 371/48920 R14525; Appeal of the Vatican, March 27, 1946, War Office 204/1113; Osborne to Foreign Office, January 16, 1947, Foreign Office, 371/67370 R 1166, all files at the National Archives, Kew, UK.

  80 Appeal of the Vatican, March 27, 1946, War Office 204/1113, National Archives, Kew, UK.

  81 In fact, the Italians and Allies never searched monasteries. Church officials even successfully extended their Lateran Pact sovereignty to many schools, churches, and convents. See Steinacher, Nazis on the Run,143–46.

  82 Quoted in Goñi, The Real Odessa, 330

  83 Osborne, instructions provided by the Foreign Office, 1947, Foreign Office files, 371/59423 R17521 and R17586, cited in Goñi, The Real Odessa, 330–31.

  84 Quoted in Goñi, The Real Odessa, 331.

  85 D’Arcy Osborne to Foreign Office, January 16, 1947, Foreign Office files, 371/67370, R1166, National Archives, Kew, UK.

  86 Deposition of William E. W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-04041 MMC, USDC Northern District of California, December 12, 2005, 40–41.

  87 Aarons and Loftus, Unholy Trinity, 59, citing Draganović’s statement to the Yugoslav authorities, September 1967, 26; Ibid., 108, citing the report of a British diplomat in Italy in 1947. Major Stephen Clissold was sent to Genoa to detain some Ustašan criminals, but they managed to escape by sea. According to Clissold, the fugitives were “sponsored by the Pontifical Commissione de Assistenza,” and a “trusted collaborator” of Draganović had given them safe shelter while in Genoa; citing telegram from Rome to Foreign Office, February 22, 1947, Public Records Office, Foreign Office, 371 673372, and an unpublished manuscript of Stephen Clissold. See also Goñi, The Real Odessa, 332. Further evidence that Pius personally protected Draganović is that the Croatian remained in his position as the head of San Girolamo until Pius’s death in 1958, at which point the next Pope, John XXIII, promptly evicted him.

  88 Aarons and Loftus, Unholy Trinity, 32.

  89 Father Ciro Benedettini quoted by Diana Jean Schemo, “A Nazi’s Trail Leads to a Gold Cache in Brazil,” The New York Times, September 23, 1997, 1.

  90 Since the 1944 death of Cardinal Secretary of State Maglione, Pius had relied on two undersecretaries, Monsignors Domenico Tardini and Giovanni Montini, for all foreign policy and refugee issues. Goñi, The Real Odessa, 331; see also Aarons and Loftus, Unholy Trinity, 34–35.

  91 CIA memorandum, “A Dangerous and Uncompromising Extremist,” Subject: Dr. Krunoslav DRAGANOVIC, Report No (redacted), Date of Intelligence Information 1945–1952, Date of report, July 24, 1952, CIA Operational Files, Declassified, NARA.

  92 Deposition of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-04041 MMC, USDC Northern District of California, March 9, 2006, 760–61; John Triggs, “The True Story of the Looted ‘Nazi Gold,’ ” The Express, November 20, 2004, 53.

  93 Triggs, “The True Story of the Looted ‘Nazi Gold,’ ” 53.

  94 “Illegal Emigration Movements in and Through Italy,” Vincent La Vista to Herbert J. Cummings, May 15, 1947, Holocaust-Era Assets, Civilian Agency Records, RG 19, File 10, NARA.

  95 Memo to J. Graham Parsons, State Department, July 28, 1947, “Political General 1947,” RG 59, Box 17, Entry 1068, Location 250/488/29/01-05, NARA; see Aarons and Loftus, Unholy Trinity, 44.

  96 CIC documents set forth “the provisional agreement” to work with Draganović, describing him as “head of the Vatican resettlement project for refugees.” Steinacher, Nazis on the Run, 200. When John Moors Cabot, the U.S. ambassador to Belgrade, learned about the Allied intelligence–Vatican ratline, he complained to Washington, “We are conniving with [the] Vatican and Argentina to get people to haven in latter country.” The OSS was under no illusion about Draganović, calling him a “Fascist, war criminal.” “Klaus Barbie and the United States Government,” A Report to the Attorney General of the United States, August 1983, Office of Special Investigations, U.S. Department of Justice, 136; see also Mark Fritz, “The Secret History of World War II: From Hot Conflict to Cold War; US Made Moral Compromises in Using Former Nazi Spy Network Against Soviet Threat,” The Boston Globe, Part 9 of 9, December 26, 2001, 1.

  97 Operations Paperclip and Overcast were OSS programs that recruited 765 Nazi rocket scientists and engineers in the decade following the war. The recruits ranged from Wernher von Braun, the “father of rocket science,” to Hubertus Strughold, who was involved in medical experiments at the Dachau concentration camp. Reinhard Gehlen, a Catholic and Wehrmacht officer, was put in charge of an eponymously named counterintelligence group that spied on the East Germans and the Soviets. The Gehlen Group consisted of ex-Nazis, quite a few of whom were involved in wartime atrocities. (The Gehlen Group was eventually absorbed into West Germany’s Federal Intelligence Service or Bundesnachrichtendienst, the BND.)

  The same was true of Allied intelligence recruitment in other fields such as chemical warfare, electronics, and to a smaller extent medicine and cryptography. In some instances, after supplying information, fugitives were simply given a free pass to a safe country. SS Officer Klaus Barbie is the most prominent example. See generally Linda Hunt, Secret Agenda: The United States Government, Nazi Scientists, and Project Paperclip, 1945 to 1990 (New York: St. Martin’s/Thomas Dunne, 1991); Heinz Hone and Hermann Zolling, The General Was a Spy: The Truth About General Gehlen and His Spy Ring (New York: Putnam, 1972); Magnus Linklater, Isabel Hilton, and Neal Ascherson, The Nazi Legacy: Klaus Barbie and the International Fascist Connection (New York: Henry Holt, 1985); Simpson, Blowback.

  98 Paul S. Lyon, “Rat Line from Austria to South America,” appendix to “Klaus Barbie and the United States Government,” A Report to the Attorney General of the United States, August 1983, Office of Special Investigations, U.S. Department of Justice, http://www.justice.gov/criminal/hrsp/archives/1983/08-02-83barbie-rpt.pdf.

  99 Bishop Hudal to Juan Perón, August 31, 1948, Collegio Santa Maria dell’Anima, Nachlass Hudal, Box 27, August 1948.

  100 John Hobbins, “Memorandum for the Record, Subject: Informant Disposal, Emigration Methods of the 430th CIC Detachment,” Top Secret, reproduced in “Klaus Barbie and the United States Government,” A Report to the Attorney General of the United States, August 1983, Tab 96 and 145n.

  101 Dianne Kirby, “Divinely Sanctioned: The Anglo-American Cold War Alliance and the Defence of Western Civilization and Christianity, 1945–48,” Journal of Contemporary History 35, no. 3 (July 2000): 385–412.

  102 Kent, The Lonely Cold War, 239.

  103 Adriano Ercole Ciani, “The Vatican, American Catholics and the Struggle for Palestine, 1917–1958: A Study of Cold War Catholic Transnationalism” (PhD thesis, University of Western Ontario, Canada, 2011).

  104 Cooney,
The American Pope, 161, citing undated Spellman memo to Marshall; Simpson, Blowback, 91.

  105 Telegram to the State Department from J. Graham Parsons, January 16, 1948, J. Graham Parsons Papers, Series 4, Special Collections, Georgetown University. Myron Taylor also reported to the State Department that Pius’s main worries were that the election could easily result in a “leftist dictatorship” and that the communists “remain the best organized and most active party with indefatigable will to [gain] power and seemingly limitless funds.”

  106 Griffiths memo to Cardinal Spellman, March 4, 1948, cited in Cooney, The American Pope, 159.

  107 “Pope Sees Senators; Says Hate and Greed Bar Peace,” The New York Times, November 11, 1947, 29; Pope Receives Congressman,” The New York Times, 42; Cooney, The American Pope, 157; see also Pollard, Money and the Rise of the Modern Papacy, 224.

  108 Phayer, Pius XII, the Holocaust, and the Cold War, 145–46.

  109 Martin, Rich Church, Poor Church, 48.

  110 Aarons and Loftus, Unholy Trinity, 56, 237–38.

  111 The extent of fear in the Truman administration about a communist electoral victory in Italy was revealed by George Kennan, then chief of the State Department’s Policy Planning Staff, when he cabled U.S. diplomats in Europe: “As far as Europe is concerned, Italy is obviously key point. If Communists were to win the election there our whole position in Mediterranean, and possibly in Europe as well, would probably be undermined.” Kennan recommended American military intervention and occupation of Italy if the communists won. Thomas Powers, The Man Who Kept the Secrets: Richard Helms and the CIA (New York: Alfred A. Knopf, 1979), 31–32; Simpson, Blowback, 89–92; Steinacher, Nazis on the Run.

  112 Author interview with Elan Steinberg, April 12, 2006. See also Chalmers Johnson, Dismantling the Empire: America’s Last Best Hope (New York: Metropolitan Books/Henry Holt), 79; James E. Miller, “Taking Off the Gloves: The United States and the Italian Elections,” Diplomatic History 7, 1983. See generally George J. Gill, “The Truman Administration and Vatican Relations,” The Catholic Historical Review 73, no. 5, July 1987; Martin A. Lee, “Their Will Be Done,” Mother Jones, July/August 1983.

  113 Quoted in Gollin, Worldly Goods, 464.

  114 John F. Pollard, “The Vatican, Italy and the Cold War,” in Diane Kirby, Religion and the Cold War (London: Palgrave Macmillan, 2002), 110.

  115 Pollard, Money and the Rise of the Modern Papacy, 202; Cooney, The American Pope, 155–58; Phayer, Pius XII, the Holocaust, and the Cold War, 146-47.

  116 The Popular Democratic Front consisted of the Italian Communist Party and the Italian Socialist Party. The disclosure of some of the money spent ($1 million to the center-right political parties) was made in a CIA memorandum to the Forty Committee (National Security Council), presented to the Select Committee on Intelligence, United States House of Representatives in 1975. The U.S. government provided overt aid in excess of $350 million ($3.6 billion in 2014 dollars) to Italy just in the year leading up to the election. The communists tried countering the Vatican’s influence among voters by publicizing the case of a priest in the Secretary of State’s office, Edward Prettner Cippico, who was arrested before the vote for stealing money from wealthy Italians who had used the IOR to evade currency restrictions. The church defrocked Cippico. The Cippico revelations titillated Italians but had no discernible impact on the election. (Sentenced to nine years in prison, an appellate court overturned his conviction and after the election the church reinstated him into the priesthood.) See Hoffman, Anatomy of the Vatican, 182–83. The church and CIA were not stymied simply if a country did not have free elections. In Guatemala, the CIA and Cardinal Spellman joined forces in backing a 1954 coup that put into power their handpicked anticommunist, Colonel Castillo Armas. See generally Dermot Keogh, “Ireland, The Vatican and the Cold War: The Case of Italy, 1948,” The Historical Journal 34, no. 4 (December 1991): 931–52.

  117 John Tagliabue, “Giulio Andreotti, Premier of Italy 7 Times, Dies at 94,” The New York Times, May 6, 2013, 1. Mussolini had imprisoned De Gasperi in 1927, but released him two years later to the “custody” of Pope Pius XI. See Berry, Render Unto Rome, 25.

  118 Cardinal Francis Spellman, “The Pope’s War on Communism,” Look, May 24, 1949.

  119 “Vatican Decree in Scots Churches: Anti-Communist Move,” The Glasgow Herald, August 9, 1949, 5; “Catholic Communists to Be Excommunicated,” The Advocate, July 15, 1949, 3.

  Chapter 13: “He’s No Pope”

  1 Simpson, Blowback, 67.

  2 Martha Hopkins, “For European Recovery,” Library of Congress, Information Bulletin, Vol. 56, No. 11, June 23, 1997.

  3 Article 37 in the armistice with Italy, on September 29, 1943, established the Allied Control Commission for Italy. The Allied Military Government for Occupied Territories ran the country until the Italian peace treaty was signed at the Paris Peace Conference in 1947. While under Allied military command, Italian public companies were held in the equivalent of nontrading escrow accounts, and shareholders like the Vatican had to wait until 1947 before their ownership rights in those firms were fully restored.

  4 Hoffman, Anatomy of the Vatican, 181.

  5 Pollard, Money and the Rise of the Modern Papacy, citing H. J. A. Sire, The Knights of Malta (New Haven: Yale University Press, 1994), 258–59; see also Paul Hoffman, “Curia Cardinals Rule Informally,” The New York Times, October 8, 1958, 3.

  6 Pollard, Money and the Rise of the Modern Papacy, 208.

  7 Cornwell, Hitler’s Pope, 200; see also Gollin, Worldly Goods, 465. Carlo Pacelli was the Vatican official who asked Bishop Hudal to represent the church in the October 1943 talks with the German ambassador about the Nazi roundup of Rome’s Jews. Pacelli was also at the center of a family scandal, taking a picture of Sister Pascalina and Pius’s doctor, Ricardo Galeazzi-Lisi, in what Vatican insiders said was a “compromising situation.” The picture evidently made its way back to Pius, but whatever the private fallout, it did not affect Pius’s close attachment to his doctor, nephew, or Sister Pascalina. Cornwell, Hitler’s Pope, 201.

  8 Cornwell, Hitler’s Pope, 350–51.

  9 Lai, Finanze vaticane, 107, citing Lai interview with Spada, March 7, 1979. That department was one of the few paying a competitive salary compared to private industry.

  10 Pollard, Money and the Rise of the Modern Papacy, 207.

  11 Lai, Finanze vaticane, 12; Grilli, La finanza vaticana in Italia, 76–77; see also Raw, The Moneychangers, 53.

  12 Most sources list fourteen children for Mennini, although one writer says it was ten. Hebblethwaite, Pope John Paul II and the Church, 108.

  13 Martin, Rich Church, Poor Church, 39; Gollin, Worldly Goods, 465. One of Mennini’s sons was a Jesuit priest and a daughter was a nun. See generally Raw, The Moneychangers, 64.

  14 Lai, Finanze vaticane, 107, n. 24.

  15 See Pollard, Money and the Rise of the Modern Papacy, 189; Chernow, The House of Morgan, hardcover, 286.

  16 Grilli, La finanza vaticana in Italia, 61.

  17 See John Lukacs, “The Diplomacy of the Holy See During World War II: Review Article,” The Catholic Historical Review 60, no. 2 (July 1974): 273; and Pollard, Money and the Rise of the Modern Papacy, 192, citing APSS (Ambasciata presso la Santa Sede), pacco 71, memorandum to the minister, 4 and 24, November 1942.

  18 In addition to the handful of men who comprised Nogara’s close circle, there was a second tier that also wielded reduced but still considerable influence. Some worked inside the Vatican, and a few represented Nogara outside the church but without any formal arrangement. They included two of Carlo Pacelli’s cousins, Marcantonio and Giulio Pacelli; and Baron Francesco Maria Oddasso, a director at Nogara’s SNIA Viscosa, the country’s largest textile company. Luigi Gedda, an ex-president of Catholic Action, was a Nogara insider, as was Antonio Rinaldi, vice president of the Apostolic Chamber and a private finance company that did business with the IOR. There were also Nogara’s longtime friends Vittorio Ce
rruti, Giovanni Battista Sacchetti, Count Enrico Galeazzi, and Count Paolo Blumensthil (whose father, Colonel Bernardino Blumensthil, had led the Vatican’s last Pontifical Army, which was disbanded in 1906). See Romano, Giuseppe Volpi, 46-47; Grilli, La finanza vaticana in Italia, 27, 97, 135; Martin, Rich Church, Poor Church, 39; “Who’s Who in Fascist Italy,” December 26, 1942, RG 226, Box 4, File 174, NARA.

  19 Pallenberg, Inside the Vatican, 188; Lai, Finanze vaticane, 14, 17; see Hachey, Anglo-Vatican Relations, 202, 226; and Chernow, The House of Morgan, hardcover, 286.

  20 Gollin, Worldly Goods, 466–67.

  21 Ibid., 467.

  22 Pollard, Money and the Rise of the Modern Papacy, 207.

  23 Grilli, La finanza vaticana in Italia, 131–32, 159–60.

  24 Martin, Rich Church, Poor Church, 53.

  25 Lai, Finanze vaticane, 18.

  26 Ibid., 20; see also Martin, Rich Church, Poor Church, 52–53.

  27 Grilli, La finanza vaticana in Italia, 91–92, 102; Pollard, Money and the Rise of the Modern Papacy, 207.

  28 In addition to buying ownership stakes in companies, the Vatican also bought bonds, some offered by the government, and others of state-owned companies such as Italy’s oil and gas enterprise, Ente Nazaionale Idrocarburi. By 1950, the church earned approximately $3 million annually in interest from its Italian bond investments. See generally Martin, Rich Church, Poor Church, 52–54.

  29 Lai, Finanze vaticane, 20, citing Lai interview with Massimo Spada, March 7, 1979; Lo Bello, The Vatican Empire, 100.

  30 Ernst A. Lewin, “The Finances of the Vatican,” Journal of Contemporary History 18, no. 2 (April 1983): 195; Grilli, La finanza vaticana in Italia, 116, 119–20, 122–23; see also Horne, “How the Vatican Manages Its Money,” 80.

  31 “Italy: Hens Nesting on Rocks,” Time, September 19, 1969.

  32 Romano, Giuseppe Volpi, 238. See also “German Penetration into European Insurance,” Economic Advisory Branch, Financial Investigative Branch, RG 260, Box 651, file 390/46/1, 6–7; Supplementary Reports, June to October 1946, RG 260, OMGUS Records, Property Division, Box 647, file 742, 1–5.