The two fronts in the movement toward a free democratic-communist society
When the Vatican bank scandal was first conceived, communism had already achieved electoral progress through free elections and the will of the people in Italy. In Central America, the poor were in the midst of a struggle against ruthless dictators to achieve free elections and a redistribution of wealth society—communism.
The Vatican Bank Scandal
Sensationalism and speculation in books and the press have left a smokescreen as to just what one is talking about when one speaks of The Vatican Bank Scandal. In a nutshell, the scandal involved the swindling of thousands of European investors out of $1.3 billion.
The money was raised by Banco Ambrosiano 1978-1981 on the guise the investments were guaranteed by the Vatican. Ambrosiano transferred the funds to its Nicaragua and Lima branches which, in turn, deposited it to the credit of the account of the IOR in APSA—the central bank of the Vatican—which, in turn, transferred it under the guise of loans to banks of Panamanian ghost companies and European offshore banks where it disappeared. In the end, the Latin America branches held $1.3 billion in worthless notes.
That most of the funds ended up in Panama suggests it was never intended to be returned to investors. Panama did not join the World Trade Organization until 1998. Monies flowing out of Panama were subject to restrictions its central bank would now and then place on them. Delays of weeks to months to up to a year were not unusual.
The playing field
The Patrimony of the Holy See (APSA), as it still is today, was recognized by the International Monetary Fund as the central bank of the Vatican.2 All monies passing in and out of the Vatican had to pass through APSA. APSA—not the IOR as wrongly publicized—was the ‘bank’ which enabled Ambrosiano branches in Nicaragua and Peru to deposit funds in the IOR without going through the central bank of Italy. Likewise, APSA served as the vehicle for the IOR to get funds out of Italy to the Panamanian and European ghost conglomerates without going through the central bank of Italy.
The Patrimony and some of its representative accounts in 1978:
The Patrimony of the Holy See
The Vatican Central Bank
Giuseppe Caprio, Secretary/Treasurer
SGI - Society General Immobiliare – controlled Vatican real property including properties outside the Vatican acquired under the Lateran Treaty including the Castle Gandolfo, Gregorian University in Rome and seventy embassies and other property in as many countries. Value considered upwards of $5.4 billion in 1978. The Church’s field assets are owed by dioceses and are not owned by the Vatican.
IRI - Institute of Industrial Reconstruction - controlled Vatican interests in private companies reported to be upwards of $3.2 billion in 1978. For example, the Vatican was once the largest shareholder in Alfa Romero and Italian utilities.
SA – Special Administration - controlled Vatican interests in public companies through stock exchanges, reported to be upwards of $2.4 billion in 1978.
ITA - Italmobiliare – controlled its interests in banks. In addition to its substantial interest in Ambrosiano and many other banks, the Vatican had controlling interest in Provinciale Lombarda, Piccolo Credito Bergamasco, Credito Romagnolo, San Germiniano, San Prospero and San Paolo. 1978 value estimated at $3.8 billion.
COC - Vatican Museum – control of inventory/acquisition of Vatican treasures.
MED – control of media interests radio/tv and newspapers. Value prox $.9 billion. Controlling interest in Il Gazzettino, Corriere delle Alpi & scores of other papers.
IOR – Institute of Religious Works – funds would be deposited by orders and dioceses in foreign currencies and converted to Vatican lira which at the time traded at par with the Italian lira. It was that it had been set up as a clearing house for international transactions that positioned it to handle the mechanisms of the scandal transactions. Yet, as merely a depository and not a bank per se, it could not function as a bank outside the Vatican. It was that the IOR was the ‘business’ involved in the scandal transactions that it became known as the ‘Vatican Bank.’ The legitimate press often refers to it as the ‘so-called Vatican bank’ recognizing the Patrimony—APSA—as the bank which actually enacted the transactions.
The Institute of Religious Works (IOR), a depository for funds collected by Mother Teresa and other religious orders and ‘Peter’s Pence’ and tourist revenues collected to support the lavish lifestyle of the papacy. Its residue—usually a deficit—was its deposits vs. the cost of maintaining Vatican City and its Rome properties.3
Bank of Italy, the central bank of Italy. With the exception of transfers in and out of the Vatican which was within Italy, all funds flowing into or out of Italy had to pass through this bank. It was this loophole in Italian monetary law which led to the bank scandal—the APSA/IOR functioning as an offshore bank in the center of Rome.
The Vatican Bank, in the ‘Vatican Bank Scandal,’ the ‘Vatican Bank’ refers to the joint activities of IOR and APSA. The IOR—Marcinkus—negotiated, contracted and guaranteed the transactions. APSA—Caprio—handled the money. The IOR was the business and the APSA—the Patrimony—was the bank involved in the scandal. The money flow and those involved in raising the money and those handling the technicalities of the banking transactions:
The Catholic Bank of Italy, Italy’s largest bank had branches operating in every parish. Although they operated under the auspices of the Vatican, they were owned by the respective archdioceses.
Banco Ambrosiano, one of Italy’s largest banks and Central America’s largest foreign bank. ‘Banco’ in Italian = ‘bench.’ ‘Banca’ in Italian = ‘bank.’ ‘Banco’ in Spanish/Portuguese = ‘bank.’ Except for Ambrosiano, Italian banks are prefixed ‘Banca.’ It was founded as an international bank to service the huge Catholic Latin American population making it the natural partner of the Vatican.
Ambrosiano Group Banco Comercial, Ambrosiano Nicaragua based branch. Ambrosiano would raise money from unsuspecting investors and transfer it to this branch which in turn would deposit it in APSA/IOR which would transfer it—under the guise of loans—to Panamanian and European ghost companies where it disappeared.
Banco Ambrosiano Andino, in 1979, left wing Sandinistas took over Nicaragua and seized the Ambrosiano branch there forcing it to establish Ambrosiano Andino in Lima to handle future bank scandal transactions—deposits to the Vatican bank.
Players inside the Vatican
Giovanni Benelli, Florence Archbishop, As Nunciature Auditor to Latin America (1960-64) and as Substitute for General Affairs (1960-77) under Paul VI he had been involved in offshore Vatican banking activities for many years. 4 With Cardinal Vagnozzi he headed up the audit of the Vatican bank ordered by John Paul I.
Giuseppe Caprio, Substitute for General Affairs (1977-1981).4 As Secretary/Treasurer of the Patrimony (APSA),4 the central bank of the Vatican, he handled the technicalities of the transfers from the IOR account to the ghost companies where it disappeared.
Agostino Casaroli, Vatican Foreign Minister. The first ‘bank scandal’ deposit in the IOR account in APSA took place a week after he became Secretary of State. During the period of the bank scandal transactions, both the IOR and APSA operated under the office of the Secretary of State. After the scandal broke in the courts in 1981, the reporting status of IOR was changed directly to the Pope.4
Pericle Felici, Prefect of the Tribunal of the Apostolic Signatura and legal counsel to the papacy.4 That he had served as legal counsel for banking activities under Paul VI and had been removed as legal counsel for banking activities under John Paul II made this astute lawyer suspicious which caused him to launch his own investigation of goings on in the Patrimony—the central bank of the Vatican.
Paul Marcinkus, President of the Institute of Religious Works. 4
Jean Villot, He held the dual positions of Secretary of State and President of the Patrimony of the Holy See under Paul VI.4
Players outside the Vatican
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Giulio Andreotti, political ally of Wojtyla, Casaroli, Caprio, Calvi, Gelli and Portillo. He was Italian prime minister when the ideology which resulted in the bank scandal was conceived.
Roberto Calvi, President of Banco Ambrosiano a major investor in Central America which had in the 1970s funneled huge amounts to its dictators to suppress the revolution of the poor.
Graziella Corrocher, private secretary and bookkeeper of the scandal transactions and close confidant of Roberto Calvi.
Giuseppe Dellacha, Banco Ambrosiano executive who handled the technicalities of the transactions from Ambrosiano through its Nicaraguan and Lima Ambrosiano branches to the IOR/APSA.
Licio Gelli, Grand Master of P2. He was a major investor in Latin America, and had funneled tens of millions to its dictators to suppress the revolution of the poor to protect his interests there.
Alvaro de Portillo, Primate of Opus Dei which was a substantial investor in Central America, and had in the 1970s funneled millions to its dictators to suppress the revolution of the poor.
Michele Sindona, His first break came in 1957 when he won the favor of the Mafia Gambino family and managed its offshore heroin revenues. He educated the Vatican in offshore banking. In alliance with Ambrosiano, he was a major investor in Central America, and had in the 1970s funneled tens of millions to its dictators to suppress the revolution of the poor to protect his interests there.
Shady deals under Paul VI
One could write a book about the shady deals under Paul VI—many have—but they have very little to do with what broke in the press as The Great Vatican Bank Scandal in 1982.
Although the shady transactions under Paul involved some of the same people and established the international monetary mechanisms involved in the rip off of European investors which took place under John Paul II, they had nothing to do with the scandal per se.
To believe any of the transactions involved in the bank scandal which broke in 1982 occurred under Paul VI (1963-78) is to believe it took four years for highly competent investment houses to realize they had been ripped off. This is just not how the real world works.
There were one hundred and forty plaintiffs representing tens of thousands of investors involved in the courts that tried the scandal. To believe not one of them sensed something was wrong for more than four years does not pass the lowest hurdle of common sense.
To see this more clearly one must define precisely what one is talking about when one speaks of The Great Vatican Bank Scandal.
The scandal involved a rip off of $1.3 billion ($15 billion in today’s dollars) from European investors in the period 1978-1982. Though it was the straw that broke the camel’s back, the Vatican bank scandal was only a part of a much larger $3.5 billion ‘black hole’ in Banco Ambrosiano which brought it under in 1982.
Except for the $1.3 billion, most of the $3.5 billion shortfall had been built up in the 1970s when Roberto Calvi overvalued shares in his banks and acquired unsecured investments. Yet, there were some events under Paul VI that set the stage for the Vatican bank scandal—$1.3 billion—which took place under the reign of John Paul II.
For example, in 1969, Michele Sindona was recommended by the Gambino family to Giuseppe Caprio—a cousin in the family who had just been named Secretary/Treasurer of the Patrimony—APSA. Caprio hired Sindona to school the Vatican in offshore transactions. Because of the link of these two to the most powerful Mafia family in Italy, it was rumored the Vatican was laundering drug money.5
Dirty money would flow from eastern sources to the Vatican and then to Bellatrix and be returned as clean money from the Vatican to the account of the Gambino family in Ambrosiano in Italy. Yet, that the Vatican laundered drug money was rumor and never proved.
Another shady incident occurred in August 1971. Ambrosiano acquired a controlling interest in the Banca Cattolica del Veneto, the Catholic Bank of Venice, for $46.5 million—the price considered low as the Venice bank had assets of $700 million at the time.6
During the 1970s, Banco Ambrosiano acquired interests in other branches of the Catholic Bank of Italy at what were arguably low prices. Yet, these involved share-for-share exchanges in which the Vatican became the largest stockholder in Ambrosiano.
In 1972, Sindona, through the intercession of President Nixon, acquired controlling interest in the Franklin National Bank on Long Island. Two years later it collapsed. The courts determined Sindona siphoned off large sums of the bank’s money to Somoza and other dictators in Central America to suppress the revolution of the poor there—the reason for Nixon’s involvement. The Patrimony of the Holy See took a $40 million hit when the Franklin Bank went under to the extent IOR had guaranteed the transactions.7
In 1975, Paul Marcinkus became a board member of Ambrosiano Overseas Limited—a Nassau branch of Ambrosiano which began to route transactions through IOR/APSA to get them out of Italy.8
Courts determined, in a single transaction in 1978, $184 million was transferred from Gelli’s account in Ambrosiano through Panama based Bellatrix earmarked for political purposes in Central America.9
In another transaction, Ambrosiano transferred funds from Gelli’s account to Bellatrix which bought shares in a Rothschild bank. Calvi manipulated the value of the shares which resulted in a $142 million swell in Ambrosiano and an offsetting deflation in Rothschild.10
Courts determined Calvi siphoned off the Ambrosiano ‘swell’ to the dictator Somoza in Nicaragua and ruling regimes in El Salvador and Guatemala to suppress the revolution of the poor. It was this deal among others that caused some to believe Rothschild directors had been involved in the Calvi murder—never proved in the courts.10
Courts many times demonstrated that Opus Dei members Roberto Calvi, Licio Gelli, Alvaro de Portillo and Michele Sindona poured millions through shrouded activities into suppression of revolution of the poor in Central America in the 1970s. Being among its largest investors, stability of the region was vital to their interests.
Though these and other shady transactions that accounted for the lion’s share of the $3.5 billion ‘black hole’ in Ambrosiano in 1982 took place under Paul VI, the Vatican had not been involved in them other than to guarantee some of them in exchange for commissions.
By the time Paul VI went to meet his Maker in 1978, the Vatican had become an important player in ‘shady’ international markets—borrowing, lending and taking in rich commissions as it went along.
The apples from the oranges
Yet, to understand The Great Vatican Bank Scandal one must first separate the apples from the oranges.
Whereas it is true the international mechanisms set up by Sindona in the 1970s were the same ones which eventually handled the bank scandal transactions, buying shares in offshore banks like Franklin National Bank and shady dealings in the Bahamas had nothing to do with swindling European investors out of hundreds of millions of dollars which resulted in the Vatican bank scandal a decade later.
To the extent the exchange of shares between Ambrosiano and the Catholic Bank artificially overvalued shares in Ambrosiano this would have been a part of the overall $3.5 billion ‘black hole’ found in Ambrosiano in the bankruptcy proceedings of 1982. Yet, they had nothing to do with the $1.3 billion swindling of European investors one speaks of when one speaks of The Great Vatican Bank Scandal.
Keep in mind, there was nothing illegal or immoral guaranteeing transactions of Ambrosiano. It was a matter of good business. As the principal owner of Ambrosiano, the Vatican was protecting its own interests. What’s more, it earned rich commissions over the years which much more than outweighed the multi-million dollar hits it would take now and then when a deal went sour. As Paul Marcinkus once said, “You can’t run the Church on Hail Marys.”
Yet, after John Paul I was found dead, the Vatican would become involved in transactions so shady that all the king’s men and all the king’s horses have not been able to put them back together again.
The game
Thousands of books a
nd articles written on this subject have left the reader engulfed in mystery as to what it was all about and the writer the expert as to what it was all about. The details of the bank scandal presented in banker-mumbo-jumbo fashion all mixed up.
Yet, one doesn’t have to be a world-class banker to understand The Great Vatican Bank Scandal. One has to do not much more than view the events in the order in which they occurred.
Here for the first time, are all the events surrounding the bank scandal in the chronological order in which they occurred.
The scandal began and ended under the reign of John Paul II.11
It involved the raising of money from unsuspecting investors 1978-1981 on the promise their investments were guaranteed by the Vatican. By 1982, it culminated in a $1.285 billion shortfall which was part of a much larger $3.5 billion shortfall which brought down one of Europe’s biggest banks, Banco Ambrosiano. 11
The Vatican Banking Organization
Positions, incumbents and interrelationships4 of those involved in Vatican banking activities when the game began in the fall of 1978.4
Concerning the mechanics of the bank scandal transactions two of these officers would have been directly involved—Paul Marcinkus and Giuseppe Caprio. Though it was possible for Marcinkus to deposit money in the IOR account, only Caprio could get it into the international market through the Patrimony—the central bank of the Vatican. None of the transactions could have taken place without the joint concurrence of Marcinkus—the man who ran the business—and Caprio—the man who ran the bank. When we speak of the bank scandal transactions we are speaking of the actions of these two men and, of course, Roberto Calvi and Giuseppe Dellacha who handled the technicalities of the related transactions within Ambrosiano.
Chronology of events
On August 27, 1978 John Paul I rose to the papacy.
On September 5, 1978, Metropolitan Nikodim—a pawn of the KGB—was led into the Pope’s private study. A few minutes later he dropped dead after sipping coffee. Rumors of poison spread based on the supposition the CIA suspected the Pope was seeking Soviet arms for his revolution of the poor in El Salvador.
Murder in the Vatican Page 43
