92 Henry Gaggiottini, “Marcinkus Consecrated Bishop,” Chicago Tribune, January 7, 1969, A9.
93 Francesco Pazienza, an Italian intelligence agent, told the author, “The Pope knew the IOR needed a son of a bitch.” Author interview, September 18, 2013.
94 Cody interviewed in “Cody to See Marcinkus Elevated,” Chicago Tribune, December 26, 1968, B3.
95 Hooper, “Luigi Mennini: Shadow over the Vatican,” 14. There was little doubt Marcinkus took charge at an important time. A thinly sourced but widely covered book about Vatican finances was coincidentally published just before his appointment. In The Vatican Empire, former Boston Globe reporter Nino Lo Bello asserted the IOR had close to $13 billion in cash ($85 billion in 2014 dollars) and exposed some of the bank’s secret business deals. After Germany’s Der Spiegel and Italy’s Il Mondo widely covered the book’s revelations, the Vatican issued its answer in an unsigned article in the church’s L’Osservatore Romano, in which it claimed that its cash wealth was “in reality . . . a hundredth” of what Lo Bello asserted. The church did not comment on Lo Bello’s claim that Marcinkus was a good manager in part because he had “established close links with [the] Rothschild banking interests.” Alfred Friendly Jr., “Vatican Denies It Has Billions: Book on Wealth Is Termed Greatly Exaggerated,” The New York Times, July 22, 1970, 8.
96 The fifteenth-century tower, sometimes called the bastion of Nicholas V, has walls nearly thirty feet thick near its base. They were built to withstand an armed assault.
97 Cornwell, A Thief in the Night, 159. Marigonda was also a former USIA officer assigned to the U.S. embassy at Rome before leaving to take a position with Marcinkus; email from Peter K. Murphy to Gerald Posner, January 30, 2014.
98 Sindona interviewed in Tosches, Power on Earth, 124.
99 Hoffman, Anatomy of the Vatican, 187.
100 Eight-page attachment to Letter from William Wilson to William French Smith, July 15, 1982, William A. Wilson Papers, Box 2, Folder 66, Georgetown University Library, Special Collections Research Center, Washington, D.C.
101 Marcinkus and Marigonda interviewed in Cornwell, A Thief in the Night, 87–88, 141.
102 Sindona interviewed in Tosches, Power on Earth, 124–25.
103 Author interview with Philip Willan, Rome, September 19, 2013; Philip Willan, “Three Jailed for 1969 Milan Bomb,” The Guardian, July 1, 2001, 14; “U.S. supported anti-left terror in Italy,” June 24, 2000, 19; Giovanni Mario Ceci, “The Explosion of Italian Terrorism and the Piazza Fontana Massacre Seen by the United States,” Historia, vol. 31, February 9, 2013, 29–40. See also Hutchinson, Their Kingdom Come, 269–75. Author interview with Francesco Pazienza, Rome, September 21, 2013.
104 Robert C. Doty, “Pontiff Sees a Difficult Road to Unity,” The New York Times, June 11, 1969, 14.
105 “Pope to Meet African Heads on Next Trip,” Chicago Tribune, July 23, 1969, A5; “Pope Paul, Nigerian Peace Official Meet,” Chicago Tribune, August 2, 1969, W13.
106 Hoffman, “Bishop with Chicago Roots Is Managing Pope’s Travels.”
107 Nino Lo Bello, “Bodyguard to Pope,” Boston Globe, January 5, 1969, A19.
108 “They use the word here [Italy] and everyone knows it is bodyguard.” Handwritten notes by Philip Willan of audiotaped interviews between John Cornwell and Marcinkus, January 15, 1988, 2a, provided to author courtesy of Willan. See also Thomas and Max Morgan-Witts, Pontiff, 139; and see also Marcinkus interviewed in Cornwell, A Thief in the Night, 84.
109 “Archbishop Paul Marcinkus: Vatican Bank Head Hit by Scandal,” The Independent (London), February 23, 2006.
110 Published reports agree that Compendium was a Luxembourg holding company, that Calvi renamed it Banco Ambrosiano Holding, and that Calvi used Compendium to start Cisalpine (which means South of the Alps). Three authors write that Compendium was founded in 1963 by Ambrosiano, in connection with Lovelok, a Liechtenstein holding company: Robert Hutchinson, The Kingdom Come: Inside the Secret World of Opus Dei (New York: St. Martin’s, 1999), 241; Raw, The Moneychangers, 63; Rupert Cornwell, God’s Banker, 33. Two other authors write instead that Sindona owned Compendium and that Calvi bought it from him in 1970: Gurwin, The Calvi Affair, 17; Tosches, Power on Earth, 120. Tosches was the only author who had unrestricted access to Sindona. But Sindona’s recollection, years after the event, does not guarantee it is accurate. His recall is often incorrect when compared to the documentary record. The problem with settling the issue of precisely when and by whom Compendium was founded is that its records are no longer available for public review in Luxembourg, nor are any records available in the Bahamas for the Cisalpine Bank.
All the authors agree that by 1980, Calvi built Cisalpine into the second largest bank in the Bahamas, with about $500 million under its control. “Banks Ranked,” The American Banker, July 25, 1980. Time, in a 1982 special investigation, sided with the 1963 incorporation of Compendium by the Ambrosiano, without any Sindona involvement. Peter Stoler, with Jonathan Beaty and Barry Kalb, “The Great Vatican Bank Mystery,” Time, September 13, 1982, 24.
111 The IOR started by buying five thousand of the initially offered fifteen thousand Class A shares. Over several years, the church’s stake grew to 16,667 shares, 8.3 percent of the bank. Sindona, through his Finabank, owned 2.5 percent. Tosches, Power on Earth, 120; Rupert Cornwell, God’s Banker, 50; memorandum of Paul Marcinkus to the Joint Investigating Committee, Vatican and Italy, into the Affairs of the IOR, quoted in Raw, The Moneychangers, 67; see also pages 66–71.
112 Unnamed Bank of Italy official quoted in Gurwin, The Calvi Affair, 17. When Cisalpine’s links to Calvi, Sindona, and the church later became public, the Nassau bank became a fulcrum of conspiracy theorists. One of the most often repeated is a tale in which Cisalpine laundered Mafia heroin profits through an Asian bank run by a CIA-linked Cuban expatriate. All that is missing is credible evidence.
113 Ann Crittenden, “Growing Bahamian Loan Activity by U.S. Banks Causes Concern,” The New York Times, March 3, 1977, 1. Penny Lernoux, in her 1984 book, In Banks We Trust, wrote: “Then, as now [1984], the Eurocurrency market was a giant floating crap game in which exchange dealers (mostly banks) bet on the rise or fall of national currencies.”
114 Sindona quoted in Stoler, Beaty, and Kalb, “The Great Vatican Bank Mystery.”
115 Handwritten notes by Philip Willan of audiotaped interviews between John Cornwell and Marcinkus, February 8, 1988, 7a, provided to author courtesy of Willan.
116 Marcinkus quoted in Raw, The Moneychangers, 71.
117 Raw, The Moneychangers, 8, 219; Cornwell, God’s Banker, 50.
118 Cornwell, God’s Banker, 50.
119 Willey, God’s Politician, 211.
120 Clara Calvi quoted in Gurwin, The Calvi Affair, 26.
121 Marcinkus also visited the following year. Raw, The Moneychangers, 94; Cornwell, God’s Banker, 50, 54; DiFonzo, St. Peter’s Banker, 65; Tosches, Power on Earth, 170.
122 Stoler, Beaty, and Kalb, “The Great Vatican Bank Mystery.”
123 Raw, The Moneychangers, 81–83. The back-to-back operations picked up steam after an April 25, 1972, Cisalpine board meeting in New York. Marcinkus and Calvi agreed to expand the scope of the deposits, although they kept their agreement secret from the other directors, as well as from Cisalpine’s titular president, Peter Siegenthaler. Radowal, a Liechtenstein holding company owned by Calvi, became a key way station between the Vatican Bank and other elements of the Calvi empire.
124 The back-to-back arrangements, which also involved joint IOR and Ambrosiano accounts at Banca del Gottardo in Lugano, were initially oral agreements, but were committed to writing in two November 1976 letters from Calvi to Marcinkus. Stoler, Beaty, and Kalb, “The Great Vatican Bank Mystery”; Raw, The Moneychangers, 74, 131–37.
125 Marcinkus made that statement to Paul Horne during a telephone interview for the in-depth 1971 Institutional Investor article about the finances of the church. Horne attributed it in the published
piece only to “one Vatican insider,” but it was widely known in the Vatican that it was Marcinkus. (Horne, “How the Vatican Manages Its Money,” 83.) Marcinkus later tried to step back from that quote: “The bank we have here is a service organization for the Church; it’s involved particularly in apostolic works. Somebody asked me one time, ‘Why this?’ I said, ‘When my workers here come to retire they expect a pension; it’s no use my saying to them, ‘I’ll pay you 400 Hail Marys.’ Now that’s been misquoted all over the place. They use that all the time, see? I’m quoted as saying, ‘You can’t run the Church on Hail Marys.’ It would be very nice if the Church could live without depending on these things, but you find a church you have to buy bricks, have a bricklayer.” Marcinkus interviewed in Cornwell, A Thief in the Night, 76. See also reference to a November 1982 interview by Marcinkus with Il Sabato, the weekly publication of the influential lay organization Comunione e Liberazione (Communion and Liberation); Cornwell, God’s Banker, 58. See also Hooper, “Luigi Mennini: Shadow over the Vatican,” 14; and see also Gurwin, The Calvi Affair, 14.
Chapter 16: Operation Fraulein
1 Infighting between the two principals gave him an opportunity to seize the company. Raw, The Moneychangers, 69; Tosches, Power on Earth, 127–28; see also Henry Tanner, “Italy Suspends All Stock Trading: Moves to Halt Price Collapse,” The New York Times, July 9, 1981, D4.
2 Carl Bernstein, “The CIA and the Media,” Rolling Stone, October 20, 1977. Sindona interviewed in Tosches, Power on Earth, 131–32. The Daily American, started by three American soldiers after World War II, was the only competitor in Italy to the International Herald Tribune. It went out of business in 1986.
3 Hoffman, Anatomy of the Vatican, 191.
4 Felix Kessler, “Italy’s ‘Howard Hughes’ Said to Prepare for Sizable Increase in His U.S. Investments,” The Wall Street Journal, February 17, 1972, 12.
5 Ibid.
6 H. Erich Heinemann, “Loews Sells Million Franklin Shares,” The New York Times, July 13, 1972, 47.
7 H. Erich Heinemann, “A Question of Control: European Encounters American Bank Rules,” The New York Times, F5. Through Fasco, Sindona bought 18.4 percent of Franklin, less than the 25 percent that would have required Fasco to register with the Federal Reserve as a bank holding company. That would have immediately subjected Fasco to far greater scrutiny. New York State law presumed that control of a bank existed with as little as 10 percent ownership.
8 H. Heinemann, “Loews Sells Million Franklin Shares, 47; see also DiFonzo, St. Peter’s Banker, 138–39; “Sindona: He’s Popped Up Again,” The Economist, July 23, 1972.
9 In June 1972, one of Calvi’s companies, Cimafin Finanza Anstalt, agreed to buy Sindona’s Zitropo Holding S.A. and Pacchetti S.p.A. for $44,317,876 (the IOR made $860,000 on currency conversion commissions on that sale, on its way to earning $5.6 million that year just on exchanging lire for Calvi). Full transfer of ownership and payment for Franklin was not until February 1973. All money passed through Sindona’s Fasco. “Sindona Speaks,” The Economist, September 16, 1972, 100. See also Turone, Il caffè di Sindona, 123–24, 126; DiFonzo, St. Peter’s Banker, 145–47; Raw, The Moneychangers, 84–86, 94–95.
10 Sindona interviewed in Manny Topol and Adrian Peracchi, Newsday, October 17, 1982, 1
11 H. Erich Heinemann, “Roth Asks Inquiry on Bank-Stock Sale,” The New York Times, July 18, 1972, 41.
12 Ibid.; DiFonzo, St. Peter’s Banker, 148–49. Tisch ignored Roth’s campaign to further question Sindona. Six years later (1978), the FDIC, in its role then as a receiver of a bankrupt Franklin, filed a federal lawsuit against Tisch, charging that he failed to thoroughly investigate Sindona’s bona fides. The FDIC asked in its complaint for Tisch to return the profit he had made by selling his Franklin shares to Sindona. The lawsuit was settled out of court. See Max H. Seigel, “F.D.I.C. Suit Against Franklin National Head,” The New York Times, July 13, 1978, D6.
13 John V. Conti, “Oxford Electric, Interphoto Data Show Tangled Debts and Conflict of Interest,” The Wall Street Journal, January 17, 1972, 10; see also Farnsworth, “Sindona’s Empire: Sharp Trading, Big Losses,” 57.
14 Kessler, “Italy’s ‘Howard Hughes’ Said to Prepare for Sizable Increase in His U.S. Investments,” 12.
15 Federal regulatory authorities deferred usually to the classifications given the buyers by state regulators. When Sindona used Fasco to buy Franklin, since he was Fasco’s sole owner, for New York State banking rules he was considered an “individual purchaser.” That meant he was not subject to the scrutiny to which a company would have undergone. “Sindona Speaks,” The Economist, 100.
New York’s Superintendent of Banks proposed a change to state law so that after Franklin, all individuals were subject to the same rigorous examination as companies. See also Heinemann, “A Question of Control,” F5.
16 Bordoni had been dismissed from Citibank in 1965, allegedly for having exceeded the trading limits set by the bank. Against the advice of David Kennedy, the respected chairman of Continental Illinois, Sindona had picked Bordoni to run Moneyrex. Bordoni was later a director of Sindona’s Banca Unione. See Raw, The Moneychangers, 58.
Sindona was appointed to a specially created executive board, a technical distinction that allowed him, despite being an Italian citizen, to perform all the duties of any normal director at a U.S. financial institution. At the time, foreigners were not allowed to serve directly on U.S. bank boards: “Sindona Is Named to Bank’s Board,” The New York Times, August 18, 1972, 45.
17 That money came from part of a $24 million loan from the IOR; Gurwin, The Calvi Affair, 22; Raw, The Moneychangers, 98.
18 Author interview with Carlo Calvi, September 10, 2006.
19 David Burnham, “Sindona Discusses Issuing Role with U.S. Controller,” The New York Times, May 15, 1974, 61; Robert E. Bedingfield, “Franklin Bank Solvency Reiterated by Controller,” The New York Times, May 23, 1974, 59. Kennedy and Sindona had met when Continental Illinois Bank bought a minority interest in Banca Privata, the Sindona-IOR-owned institution; see Farnsworth, “Michele Sindona, the Outsider as Insider.”
20 Tosches, Power on Earth, 77. Kennedy and Sindona are at the center of a long-standing conspiracy theory that has Continental Bank transferring $4 million in 1967 to Sindona’s PBF, which he in turn loaned to a right-wing Greek army colonel, Georgios Papadopoulos. In April of that year Papadopoulos led a coup d’état in his native country. Conspiracy theorists believe it was all part of a P2 subplot to topple Greece with the hope it would encourage the Italian military to do the same in Italy. Although the plot was reprinted in one book as fact (DiFonzo, St. Peter’s Banker), the author is unable to find any credible evidence of it.
21 Lucinda Franks, “Sindona’s $1-Million Offer to Nixon Group Examined,” The New York Times, July 15, 1974, 1. Foreigners are not allowed to contribute to U.S. elections unless they have a so-called green card, a permanent resident’s permit. Stans later said he was not certain if the banker had a green card or merely a work visa that allowed him to temporarily conduct business in the country.
22 Tosches, Power on Earth, 134; “Hambros in Italy,” The Economist, October 16, 1971, 100, 103; Raw, The Moneychangers, 79–80, 91–93. Calvi bought Hambros Bank’s share in Le Centrale (the IOR had historically owned a substantial minority share in Hambros). Calvi took a share in the Le Centrale interests held by Credito Varesino and the Pacchetti Group, both of which were consolidated under a Sindona holding company, Zitropo. And as a final element in the deal, Sindona gave Calvi the first option he owned to purchase Invest, a trading company. Marcinkus stayed involved by authorizing a short-term $43.5 million loan to Cisalpine on November 30, 1972. That money was used by Calvi to pay Sindona what he still owed on Varesino, Pacchetti, and Zitropo. Marcinkus also helped the sellers of the Varesino shares transfer part of their profits to a Lugano holding company, and earned for the IOR an additional $930,000 in the conversion of those funds from lire to Swiss francs. S
ee also Cornwell, God’s Banker, 62–63.
23 Raw, The Moneychangers, 134.
24 In 1978, Italy’s banking regulators discovered that the IOR’s accountant, Pellegrino de Strobel, had written a 1975 letter to the Ambrosiano in a clumsy effort to mask Calvi’s ownership share in Suprafin S.p.A. The plan to secretly accumulate the Ambrosiano shares also involved two Swiss banks, Zurich’s Credit Suisse and Chiasso’s Union de Banques Suisses, as well as an Ambrosiano holding company in Lausanne, Banca del Gottardo. Two offshore accounts were also used, Ehrenkreuz Anstalt and Radowal Financial Etablissement. Calvi’s wife, Clara, held an undisclosed power of attorney in each offshore company. Benton E. Gup, Bank Failures in the Major Trading Countries of the World: Causes and Remedies (Westport, CT: Greenwood/Quorum, 1998), 31–32; Tosches, Power on Earth, 135.
25 Tosches, Power on Earth, 131.
26 During World War II, the Banca Cattolica had come under Mussolini’s state ownership, but in 1946 the Vatican reclaimed private control. See Raw, The Moneychangers, 56.
27 Gallagher, “The Pope’s Banker,” G15–16.
28 Raw, The Moneychangers, 70.
29 Gurwin, The Calvi Affair, 19.
30 Calvi quoted in ibid.
31 According to Pollard, “It was Spada who masterminded the passage of the majority share-holding of the Banca Cattolica to the IOR.” Pollard, Money and the Rise of the Modern Papacy, 207; Tosches, Power on Earth, 135. Calvi used his Le Centrale holding company for the Cattolica purchase. Raw, The Moneychangers, 77–78.
32 Raw, The Moneychangers, 77–78.
33 Ibid., 70.
34 The initial $12 million was paid by the Swiss holding company Lovelok to the IOR, and then deposited by Marcinkus that same day into Cisalpine. Each subsequent installment involved an extra step of obfuscation. Calvi formed Vertlac, another Liechtenstein holding company. Cisalpine made loans to Vertlac in the exact amount of each installment due to the IOR. Vertlac then wired the money to the Vatican Bank, which in turn deposited it into six-month certificates of deposit at Cisalpine. The IOR even managed to squeeze $2.5 million in profit by getting an artificially high exchange rate at Cisalpine when converting the U.S. dollars used in the installment payments into lire. Raw, The Moneychangers, 70, 74, 78; see also Gurwin, The Calvi Affair, 19.
God's Bankers: A History of Money and Power at the Vatican Page 91
