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

by Gerald Posner

  48 Lai, Finanze vaticane, 69.

  49 The Vatican payment was 60 percent of a $406 million settlement agreed to by the creditors, about two thirds of their claims against the Ambrosiano group. Italy arranged other payments from cash recovered after the Ambrosiano’s collapse as well as from the fire sale of some of its assets, including Banca del Gottardo, which Japan’s Sumitomo Bank bought for $144 million. Also, $53 million was seized from Licio Gelli’s Swiss bank account. “Vatican Pact Reported on Banco Ambrosiano,” D1. See also “Payment by Vatican,” The New York Times, July 4, 1984, D14; “Vatican Payment Reported,” The New York Times, May 26, 1984, 42.

  The execution of the agreement was cloaked in secrecy. Bankers and Vatican representatives gathered at Geneva’s grand luxe Hotel des Bergues, but when reporters arrived the group moved to the nondescript European Free Trade Association building.

  50 “Vatican Pact Reported on Banco Ambrosiano,” The New York Times, D1.

  51 Charles Raw, a London Sunday Times reporter who investigated the matter for nine years, and wrote what many consider the definitive book on the financial details of the crisis—The Moneychangers—believes the Vatican lost about $250 million in its dealings with the Ambrosiano and Calvi. See The Moneychangers, 39.

  52 “A Moral Duty,” Time; see also “Vatican Pact Reported on Banco Ambrosiano,” The New York Times, D1.

  53 Stella Shamoon, “Untangling the Banco Ambrosiano Scandal; Shadowy Web of Financial Dealings Spreads,” United Press International, Financial, London, BC cycle, May 6, 1984. For a full copy of the 1984 changes, see the articles reproduced as Accordo tra la Repubblica italiana e la Santa Sede che apporta modificazioni al Concordato lateranense, Massimo Teodori, Vaticano rapace: Lo scandaloso finanziamento dell’Italia alla Chiesa (Venice: Marsilio Editiori, 2013), 145–71. See also “New Concordat with Vatican Is Approved by Italian Senate,” The New York Times, August 4, 1984.

  54 Henry Kamm, “Italy Abolishes State Religion in Vatican Pact,” The New York Times, February 19, 1984.

  55 In 2010, the tax yielded about $900 million to the church.

  56 How to break the news of the “murder plot” was coordinated by Jonathan Cape, the U.K. publisher, and Bantam, the U.S. distributor. It was considered a coup to have kept the book’s explosive charge secret during months of presales of rights to book clubs and the scheduling of the author on television shows for the day after publication. Curt Suplee, “How the Book Industry Kept Its Pope Story Secret,” The Washington Post, June 14, 1984, B1.

  57 “Envoy’s Plea Was Opposed,” The New York Times, July 10, 1984, A10.

  58 Adding to the pressure on Wilson were disclosures that he had received a special exemption from the State Department to continue to serve on the board of two companies, Earle M. Jorgensen, a California-based steel firm, and Pennzoil. Ambassadors usually resign their corporate director’s positions to avoid any potential conflict of interest. Mary Thornton, “U.S. Envoy to Vatican Got Special Exemption,” The Washington Post, July 13, 1984, A2; “Ambassador from Pennzoil?,” Chicago Tribune, July 20, 1984, 22.

  59 Loren Jenkins, “Envoy to Vatican Denies Wrongdoing; Wilson Refuses to Discuss Controversial Ties, Travel to Libya,” The Washington Post, May 22, 1986.

  60 Miller, “Career of Once Powerful American Prelate in Decline.”

  61 When the AP reporter caught up with Marcinkus, the IOR chief said, “I’d say that 99.9 percent of my life has been an open book. Perhaps that’s my problem. Maybe I’m too frank.” Ibid.

  62 “Italian Financier Suspected in Vatican Bank Collapse Was 77,” United Press International, International News, Milan, A.M. cycle, September 21, 1984.

  63 It had been made possible by a new treaty between Rome and Washington that was aimed at fighting Mafia drug syndicates. “Financier Sent to Italy to Face Charges,” The Globe and Mail (Canada), September 26, 1984.

  64 “No one [at the Vatican] wanted anything at all to do with the subject [of Sindona],” recalls Peter Murphy, the Deputy Chief of the U.S. embassy at the time, “and [they] pushed everything off on Marcinkus.” Email from Peter K. Murphy to author, January 30, 2014.

  65 “Italian Financier Jailed for Fraud,” The Globe and Mail (Canada), March 16, 1985.

  66 “Ex-Adviser to Vatican Gets Life for Murder,” United Press International, Milan, A.M. cycle, March 18, 1987.

  67 Uli Schmetzer, “ ‘I’ve Been Poisoned,’ Stricken Financier Sindona Told Jailers,” Chicago Tribune, March 22, 1986, 6.

  68 “Italian Bank Swindler Rushed to Hospital in Coma,” United Press International, International News, Voghera, Italy, P.M. cycle, March 20, 1986; “Jailed Italian Financier Dies of Cyanide Poisoning,” The Washington Post, March 23, 1986, A18.

  69 E. J. Dionne Jr., “Italy Says It Found Cyanide in Sindona,” The New York Times, March 22, 1986, 3; “Cyanide Was in Sindona’s Coffee, Investigators Say,” Associated Press, International News, Milan, A.M. cycle, April 1, 1986.

  70 Uli Schmetzer, “Jailed Italian Financier in Coma After Poisoning,” Chicago Tribune, March 21, 1986, 6; “Poisoning Baffles Jail Officials,” The Globe and Mail (Canada), March 22, 1986, A15.

  71 “Magistrate Rules Financier Killed Himself,” United Press International, International News, Milan, A.M. cycle, November 3, 1986.

  72 Author interview with Ivan Fisher, June 19, 2013.

  73 Piero Valsecchi, “Arrest Warrant Reportedly Issued for American Archbishop,” Associated Press International News, Milan, BC cycle, February 25, 1987; “Arrest Warrant Issued for Marcinkus in Bank Collapse,” Associated Press, International News, Milan, A.M. cycle, February 25, 1987.

  74 Uli Schmetzer, “Vatican Bank Official Can Be Arrested, Italy Says,” Chicago Tribune, March 1, 1987, 27.

  75 Valsecchi, “Arrest Warrant for American Prelate in Bank Scandal.”

  76 See for example Uli Schmetzer, “Italy Trying to Arrest Bishop,” Chicago Tribune, February 26, 1987, 5. U.S. government officials, in classified cables, had long referred to Marcinkus as “the Pope’s Banker.” See generally cable from U.S. Embassy, Rome, to Secretary of State, Washington, DC, Secret, Section 01, October 1, 1980, part of the Department of State Freedom of Information request by the Author, August 15, 2007, 15 of 162.

  77 Uli Schmetzer, “Marcinkus Among 23 Sought by Italy,” Chicago Tribune, February 27, 1987, 14.

  78 St. Martha Hospice was built in 1891 because of fear that a deadly cholera epidemic might reach Rome. It served mostly as a hospital for pilgrims before it was converted into residential housing for clerics inside the city-state. In 1996, a new structure was built at the site, Casa Santa Marta. It is not only a guesthouse for clergy, but it is where Pope Francis moved his residence in 2013, a much simpler affair than the grander Papal apartment in the Apostolic Palace.

  79 Frances D’Emilio, “Independence of Holy See Complicates Scandal Probe,” Associated Press, International News, Vatican City, A.M. cycle, February 28, 1987.

  80 John Tagliabue, “Vatican Prelate Said to Face Arrest in Milan Bank Collapse,” The New York Times, February 26, 1987, A1; John Tagliabue, “Warrants for Vatican Bankers Raise Legal Problem for Italy,” The New York Times, February 27, 1987, A6.

  81 Schmetzer, “Marcinkus Among 23 Sought by Italy.”

  82 Cornwell, God’s Banker, 226; Hoffman, Anatomy of the Vatican, 203.

  83 “ ‘Astonished’ by Warrants for 3 Bank Officials: Vatican,” Los Angeles Times, February 27, 1987, 2.

  84 D’Emilio, “Independence of Holy See Complicates Scandal Probe,” Associated Press.

  85 John Tagliabue, “Vatican Denounces Attempt by Italy to Arrest Bank Chief,” The New York Times, February 28, 1987, 2.

  86 Loren Jenkins, “Vatican Issues Defense of Top Bank Officials; American, 2 Aides Charged in Fraud Case,” The Washington Post, February 28, 1987, A17; see also Lai, Finanze vaticane, 72–73, 139.

  87 Author interview with Peter K. Murphy, Deputy Chief of Mission at the U.S. Embassy, 1984–89, Janu
ary 31, 2014.

  88 Uli Schmetzer, “Vatican Bank Official Can Be Arrested, Italy Says,” Chicago Tribune, March 1, 1987, 27.

  89 The original estimate for 1987 was a $63 million deficit, but it came in at $80 million. Ruth Gruber, “Vatican Faces ‘Radical Insufficiency’ of Funds; Appeal for Money Goes to Catholics Worldwide,” The Toronto Star, March 29, 1987, H5; William Scobie, “Secrets of the Holy See,” Sydney Morning Herald, May 20, 1987, 17; see also “Vatican Expects Record Deficit, Appeals to Local Churches,” Chicago Tribune, March 27, 1987, 1.

  90 Benny Lai interview with Cardinal Giuseppe Caprio, December 11, 1988, reflecting that donations had dropped from a high of 30 billion lire to “around 6 billion,” in Lai, Finanze vaticane, 143.

  91 Shawn Tully and Marta F. Dorion, “The Vatican’s Finances,” Fortune, December 21, 1987, 28–40.

  92 Ibid.

  93 Ibid.

  94 As of 2014, funding pensions was still one of the biggest problems confronting the church. Long-time workers, with forty years or more of service, retire with 80 percent of their salaries for life. And many employees start young in the city-state and stay through full retirement. Although the Vatican has moved to a smaller “fixed benefit” plan going forward, it is obligated to fund about 1,800 retirees for decades to come. An unnamed “Vatican insider” told Fortune that the church’s pension fund is short by a “few hundred million dollars.” Quoted in Shawn Tully, “This Pope Means Business,” Fortune, September 1, 2014.

  95 “The global image of the Church has suffered,” Cardinal Giuseppe Caprio, head of the budget office, told Fortune: ibid.; Lai, Finanze vaticane, 70.

  96 “Cardinals Tackle Vatican’s $56M Budget Shortfall,” The Telegraph, March 25, 1987.

  97 Unidentified cleric quoted in Alan Riding, “U.S. Prelate Not Indicted in Italy Bank Scandal,” The New York Times, April 30, 1989, 22. Toronto’s Cardinal Gerald Emmett Carter told Fortune that “We [the cardinals] fought for five years for more open accounting”: Tully and Dorion, “The Vatican’s Finances.”

  98 Rocco Palmo, “God’s Bankers: Not Afraid,” Whispers in the Loggia, October 14, 2008, online at http://whispersintheloggia.blogspot.com/2008/10/gods-bankers-not-afraid.html; see also Tully and Dorion, “The Vatican’s Finances.”

  99 “Italy Asks Vatican Extradition,” The New York Times, March 29, 1987, 13; Bill Scott, “Law Closes In on Wanted Vatican Bank Boss,” The Advertiser, March 27, 1987.

  100 “Marcinkus Treated Brutally, Pope Says,” Chicago Tribune, April 2, 1987, 5; Tana De Zuleta, “Vatican Stands Firm over Calls to Extradite Marcinkus: Pope Fights to Defend His Banker in Scandal,” The Sunday Times (London), April 5, 1987.

  101 Gianluigi Nuzzi, Ratzinger Was Afraid: The Secret Documents, the Money and the Scandals that Overwhelmed the Pope (Rome: Adagio, 2013), Google edition, 27.

  102 Recounted by Bishop Lynch at Marcinkus’s funeral, reported by Margaret Ramirez, “A Final Farewell for ‘God’s Banker’; Family, Friends Share Their Memories of Cicero Native Who Became Archbishop,” Chicago Tribune, March 3, 2006, 1. In 1981, Italy’s public prosecutors notified Mother Teresa and seventy-four clerics and lay bankers that they were under investigation for violating the country’s tough currency exchange statutes. The suspicion was that wealthy Italians had used the IOR and some foreign Catholic charities to smuggle cash out of Italy. No formal charges were ultimately filed. Robert McCartney, “Vatican Bank, Charity Groups Face Currency Probe,” Associated Press, International, Rome, A.M. cycle, November 17, 1981.

  103 Author interview with Peter K. Murphy, Deputy Chief of Mission at the U.S. Embassy, 1984–89, January 31, 2014. By “sharks” Murphy is referring not to other prelates but to Sindona, Calvi, P2, and Gelli, and some of the lay businesspeople with whom Marcinkus dealt with at the IOR.

  104 Ibid.

  105 Piero Valsecchi, “Court Upholds Arrest Warrant for Marcinkus,” Associated Press, International, Milan, P.M. cycle, April 14, 1987. Some clerics were disappointed since they wanted the legal standoff over before the June feasts of St. Peter and St. Paul, traditionally a time when the faithful gave large donations. They feared that otherwise generous Catholics would be put off by the daily headlines speculating about whether Italian prosecutors or the Pope would first capitulate. Clare Pedrick, “Storm Clouds at Vatican Bank: Officials Urge Sacking of Notorious President as Donation Day Looms,” The Financial Post (Toronto), May 4, 1987, 11. For general effect of how the scandals caused a drop-off in contributions, see “Poor Image Depletes Vatican Coffers,” Chicago Tribune, March 18, 1986, 5.

  106 Piero Valsecchi, “More Warrants Issued in Collapse of Banco Ambrosiano,” Associated Press, International, Milan, A.M. cycle, May 6, 1987.

  107 Lai, Finanze vaticane, 73.

  108 “Vatican Court Reportedly Rejects Extradition of Marcinkus,” Associated Press, International, Turin, P.M. cycle, June 19, 1987.

  109 George Armstrong, “The Vatican Gives Haven to a Fugitive,” Los Angeles Times, July 19, 1987, Part 5, 2.

  110 Nuzzi, Vaticano S.p.A., 22.

  111 Ibid., 37.

  112 “Vatican Backs 3 in Bank Case,” The New York Times, July 14, 1987, D21.

  113 “Vatican Official: Marcinkus ‘Victim’ of Bank Scandal,” Associated Press, International, Vatican City, P.M. cycle, July 13, 1987.

  114 Ibid.

  115 Prosecutors had argued in vain that the IOR was not a “central entity” since it was so heavily involved with secular investments and businesses. See “3 Won’t Face Charges in Vatican Bank Case,” Chicago Tribune, June 9, 1988, 23.

  116 “Italy Can’t Charge Vatican Bank Archbishop—Court,” Los Angeles Times, July 17, 1987, 2.

  117 Benny Lai interview with De Bonis, July 28, 1987, in Lai, Vaticane finanze, 140.

  118 Marcinkus quoted in Samuel Koo, “Top Court Upholds Vatican, Rejects Arrest Warrants for Marcinkus,” Associated Press, International News, Rome, P.M. cycle, July 17, 1987; Roberto Suro, “Top Italy Court Annuls Warrants Against 3 Vatican Bank Officials,” The New York Times, July 18, 1987, 2. When author Benny Lai, Finanze vaticane, reached Marcinkus, the IOR chief told him, “I am happy with this judgment, because it gave me the proof that justice exists. I’ve always had faith in justice and I was right” (interview by Lai of Marcinkus, July 28, 1987).

  119 Uli Schmetzer, “Court Bars Arrest of Marcinkus,” Chicago Tribune, July 18, 1987, C1.

  120 See generally George Armstrong, “Bank Officials Free to Leave Vatican,” The Guardian, July 18, 1987.

  121 Paul Marcinkus v. Nal Publishing Inc., 138 Misc.2d 256 (1987), Supreme Court, New York County, December 3, 1987, available online at http://scholar.google.com/scholar_case?case=8865799868810149066&q=138+Misc.+2d+256&hl=en&as_sdt=4,33.

  122 Roberto Suro, “Italy Presses Case Against Vatican Bank Officials,” The New York Times, December 11, 1987, A8.

  123 “Laywer Asking Court to Rule on Marcinkus Prosecution,” Associated Press, International, Milan, December 11, 1987. In 2008, Minister of Justice Angelino Alfano in essence copied the language of the high court in issuing a decree, the Lodo Alfano (Alfano Law). It granted immunity from prosecution to the four highest government offices, the President, two Speakers of the Houses of Parliament, and the Prime Minister. The Lodo Alfano, which was intended to end any investigations of Italy’s Prime Minister, Silvio Berlusconi, was voided by the country’s Constitutional Court in October 2009.

  124 Uli Schmetzer, “Bishop Gets Immunity in Bank Case,” Chicago Tribune, May 18, 1988, C6; “High Court Rules Italian Courts Can’t Prosecute American Archbishop,” Associated Press, International, Rome, June 8, 1988.

  125 Tully and Dorion, “The Vatican’s Finances.”

  126 The IOR had for decades never exceeded a dozen employees. Not a single employee had an MBA. By 2012, the IOR counted 100 employees, the result of a major growth spurt after the millennium. Ibid.

  127 Victor L. Simpson, “Vatican Forecasts Record Deficit; Announces Bank Overhaul,” A
ssociated Press, International, Vatican City, P.M. cycle, March 9, 1989. John Cornwell, “The Dues of the Fisherman; Burdened by Scandal and Bureaucracy, the Vatican Is Living Beyond Its Means, and the Crisis Is Undermining Its Mission. A Miracle is Needed to End the Shortage of Peter’s Pence,” The Independent (London), April 15, 1990, 10; see also Raw, The Moneychangers, 38.

  128 Roberto Suro, “Vatican Expects Record ’88 Deficit,” The New York Times, March 6, 1988; “Nippon TV and the Vatican,” The New York Times, May 29, 1990. As for more specifics about the 1985 budget figures, Jason Berry obtained a General Final Balance Sheet and Profit and Loss Account from someone he described as a “background source.” See Berry, Render Unto Rome, 37, 367 n. 5.

  129 Tully and Dorion, “The Vatican’s Finances.”

  130 For years, the Vatican had subsidized the Roman diocese—for which it felt responsible—because that diocese had trouble covering its expenses. See Berry, Render Unto Rome, 39–40.

  131 In the case of the German tax, for instance, large dioceses such as Cologne had 75 percent of their expenses covered by the tax. See Tully and Dorion, “The Vatican’s Finances.” Desmond O’Grady, “Vatican Plan for Tax on Catholics,” Sydney Morning Herald, August 28, 1987, 10. One cardinal, Joseph Höffner, sent chills through most Catholics when he suggested a worldwide tax on the faithful.