God's Banker

by Rupert Cornwell

  For both, however, the advantages of alliance were plain. Calvi would gain expert guidance in the use of the opportunities offered by the system, and a host of precious introductions. Truly, Sindona appeared ten years ahead. But he also took a liking to Calvi, recognizing a kindred spirit and a financier of undoubted skill. Nothing he controlled could match Ambrosiano for resources, nor its standing in Milan. The "priests' bank", moreover, was a natural complement to the relationship he was developing with the Vatican. Best of all it had no dominant shareholder, so that those who ran it had an unfettered hand. Thus far these unusual advantages had not been put to proper use, Sindona reasoned, but Calvi might be the man to do so. So why not give him a nudge towards the top?

  For the next four years Sindona displayed to Calvi the repertoire of his skills. He lured potent foreign allies to his banner—Hambro's, the London merchant bank with ties to Italy dating back to Queen Victoria's reign, and Continental Illinois, one of the biggest US banks, whose chairman, David Kennedy, was later to serve as Treasury Secretary under President Richard Nixon. Ever more fre­quently, his practice was midwife to many of the dealings which were then transforming the face of Italian finance. Some of the established families which had hitherto dominated Italian industry were unable to put up the new capital required to keep pace with changing times, and were selling off their holdings. In their place, a new breed of entrepreneur was emerging. Technically its members represented State enterprise and the public sector; but in practice they moved like financial barracuda, acting sometimes on their own behalf, some­times for their political patrons, but unfailingly with money from the public purse. Sindona, to his fingertips a political animal, fitted easily into this process.

  The fiercest of the barracuda was Eugenio Cefis, chairman of ENI the state oil group. And his hand was behind the most dramatic example of this "politicization" of industry in 1968, when ENI secretly built up a controlling shareholding in Montedison, Italy's biggest, and hitherto privately owned, chemicals concern. But among those with goods for sale the most distinguished of all, by far, was the Vatican.

  Pope Paul VI and his advisors had good reason for wanting to withdraw from Italian industry. Too visible an involvement with capitalism discomforted the Church, while the Rome Government's decision in 1968 to remove the Holy See's exemption from withhold­ing tax on dividends made international investments look more attractive. Not least, its investments in Italy, even the huge interna­tional property group Societa Generale Immobiliare of which the Vatican owned 33 per cent, was not faring well. Later SGI was to earn a tiny niche in history by putting up the Watergate building in Washington, the starting point of America's most notorious political scandal. But SGI had above all grown fat on the Roman postwar property boom, during which it had endowed the capital, to the dismay of the environmentalists, with a brand new Hilton Hotel on a wooded hill overlooking the old city centre. But those days were now gone.

  The holding in SGI, and those in other Vatican companies, were in the portfolio of the APS A, the institution set up under the Lateran Pacts of 1929 to administer the compensation at last paid over by Italy for its annexation of the Papal territories. And if APSA wanted to dispose of SGI, whom more natural for it to approach for help than the keen-eyed Sindona, by now firmly in the Vatican's trust? Among those to have recommended him, moreover, was an energetic Amer­ican bishop in the Curia called Paul Marcinkus, whose managerial talents had already caught the attention of the Pope. Indeed Paul VI would soon name him first secretary, and then chairman of the IOR.

  Nor did Sindona let the Vatican down. Not only did he arrange to sell the interest in SGI, he actually bought it from the Vatican himself; and at double the going market price. Just why, only became clear long afterwards. Sindona had also secured the option to buy from the Vatican its choicest bank holding, the Banca Cattolica del Veneto. Later, in 1972, Sindona was to sell on this option at a usurer's price to Roberto Calvi.

  Hardly had Sindona acquired the SGI holding in late 1968 than he embarked on a still more audacious project. He would attempt to capture the empire of Carlo Pesenti, a Catholic financier whose connections with the Vatican pre-dated even his own. On the face of it the venture seemed preposterous; for Pesenti's master company, Italcementi, could, after all, draw on the resources of three banks and two insurance companies.

  In the event, however, Sindona's ambush came within an ace of success, and was thwarted only by the opposition of the Bank of Italy. As for Pesenti, he never entirely recovered from the experience. Obliged to borrow money from his own banks in order to buy Sindona out, Pesenti was in subsequent years to be forced to sell off those banks, one by one, to settle his debts. Truly, at the end of the 1960s, Sindona's pyrotechnics were the virtuosity of the master, from whom the pupil Calvi could only learn. And Calvi, ever the assiduous student, realized two things.

  In the first place, Sindona appeared to have found the perfect means of getting round Italian legislation, framed to prevent a repetition of the financial disasters of the late 1930s, which forbade banks buying non-banking interests. The answer, Sindona was show­ing, lay in establishing foreign front companies—preferably in tax havens where local scrutiny was lax—to make those investments for him. Secondly, ownership of a bank offered the perfect means of doing this. For Sindona's basic ploy was to use the money of his banks to further his own ambitions. Through the technique of "fiduciary" or trustee accounts, he spirited huge sums out of Italy into foreign shell companies, owned either by himself or compliant associates. In turn, these might pass the money on to offshore "investment" companies, again either owned by himself or for which Sindona held the proxy of another. This money would then be used to carry out the purchase of the day back in Italy, or elsewhere. For the Italian authorities, the initial deposits from Italy to abroad were unexceptionable. If there were suspicions, who was to prove that, far from being employed for the declared purpose of, say, financing exports, the funds were being channelled back for speculation at home?

  An asset, once bought, might then be shunted around Sindona's companies at ever higher prices, liberating still more "profits" for further speculation. If the price seemed excessive, then Sindona's banks would step in again, pushing up the value of the shares in question, by buying on the tiny Milan market. And this would in turn bring further advantage. The public would be convinced that Sindona did indeed have the Midas touch; and the financier would be more easily able to pass on shares to ingenuous third parties at yet more outrageous prices. He himself would always retain majority control, usually concealed in an offshore labyrinth. On such fragile founda­tions was Sindona's pyramid erected. By these methods, he, Calvi, and a few others would rule the Milan market of that time.

  The Pesenti setback seemed barely to trouble Sindona. By now he was bent on even greater things. His goal was no less than to create the largest financial group, not just in Italy, but in all Europe. Sindona planned to secure first La Centrale, a dormant but cash-rich holding company; to La Centrale would then be added Bastogi, the so-called "drawing room" of Italian finance, another holding com­pany with strategic interests throughout the country's industry and a point of encounter for the Agnellis, the Pirellis and the rest of Italy's traditional industrial elite. And, finally, from this springboard he intended to launch an assault on Banca Nazionale dell'Agricoltura, Italy's largest privately owned bank. It was, with hindsight, a hope­less venture. But Sindona thought he had the weapons to succeed. With the Vatican's assistance, he had already acquired a second bank in Milan, Banca Unione, to set alongside Banca Privata Finanziaria. Then there was Hambro's, a partner by now in Banca Privata Finanziaria and which had been involved in the SGI deal. There was the Continental Illinois, and, of course, the Banco Ambrosiano of Roberto Calvi.

  Early in 1971, Hambro's made the offer for a controlling block of La Centrale shares, then in the hands of Pirelli and other leading industrial groups. The price was pitched temptingly, and it was a period when industry at large was f
inding the going hard. No longer could it easily afford the luxury of resources tied unprofitably up in ventures like La Centrale. The deal went through, and on August 5, 1971 the 51-year-old Calvi joined the board of the holding company, alongside such eminent names as Evelyn de Rothschild and Jocelyn Hambro. The first phase of Sindona's scheme had been carried out.

  Bastogi, however, was a very different story. Once again, Ham- bro's and Ambrosiano were at Sindona's side. On September 10, after heavy prior buying of Bastogi shares on the Milan market, a consortium organized by Sindona launched Italy's first ever contested takeover bid; it offered 2,800 lire per share for a minimum of 33 per cent of Bastogi, 1,000 lire more than the going market price. Milanese finance was electrified, and the moment made history. But Sindona had grievously miscalculated. The authorities, already uneasy at his methods and motives, had been alarmed by the La Centrale affair. Now the "lay" financial establishment of Italy made common cause against him. In the vanguard of the opposition were the Bank of Italy, and a shadowy, elusive figure called Enrico Cuccia.

  Ecclesiastical imagery runs strong in Italy, whether Catholic or "lay". Cuccia could not be more strongly identified with the latter camp. But as managing director of Mediobanca, the publicly-owned investment bank, Cuccia had earned the nickname of the "high priest" of Italian finance, dispensing blessing or disfavour on every major mooted project. In the case of Bastogi, his disfavour was icy, and the big "lay" banks like Banca Commerciale followed Cuccia's lead.

  Hostile buying steadily forced Bastogi's share price up and above the level offered by Sindona's consortium, and the bid was doomed. Hambro's were called sternly to heel by the central bank. Within a year, and further alarmed by a central bank report on Sindona's Banca Privata Finanziaria, the London merchant bank had severed every link with the Sicilian.

  The failure of the Bastogi bid was a turning point for Sindona. His interest in Italy dwindled, and increasingly he directed his charm and plausibility further afield, to the United States. Many of his interests passed to Roberto Calvi. Sindona will crop up again frequently in this tale. It is instead now time to examine another formative influence on the rising Roberto Calvi, that strange brand of freemasonry practised by Licio Gelli.

  CHAPTER FOUR Freemasonry

  Calvi and the P-2 were made for each other. Exactly when his liaison began with Licio Gelli and Umberto Ortolani, those two master illusionists of a nation peerless in the art, is open to question. Some trace it to a supper at the end of either 1969 or 1970 held in Rome, at which a co-operation pact was sealed among the four guests said to have been present: Sindona and his protege Calvi, Gelli and Ortolani. Sindona himself claims, however, that he did not introduce Calvi to Gelli until three or four years later. Another version main­tains that Ambrosiano's chairman was initiated into the P-2 at a ceremony in Zurich in August 1975, and yet another that the deed was done in Italy, in the back seat of a Mercedes, for a fee of 500,000 lire. The membership lists made public later showed only that Calvi had paid his dues since the start of 1977.

  Such obscurity is in any case entirely fitting. Throughout his life Calvi was convinced that unofficial, hidden centres of power were those which mattered. The devious was always preferable to the clear-cut, and later in his career he would strenuously recommend to friends the reading of Mario Puzo's novel, The Godfather, if they really wished to understand the ways of the world. Calvi's world was one where clandestine protection and promotion were desirable, if not essential. Sindona's own history proved the usefulness of such as Gelli and Ortolani, expert at picking their way along the treacherous paths of the sottobosco, or undergrowth of Italian political life, where determining alliances and decisions were often made and taken.

  Gelli's vehicle was a freemasons' lodge called Propaganda-2, or P-2 for short, a perverse and malign variant of an already mysterious growth. For non-practitioners, freemasonry everywhere conveys a vaguely sinister odour, but Italian history has seen to it that there the movement has a peculiarly underground character. When free­masonry originated in Italy, some 250 years ago, the temporal power of the Church in Rome perceived it as a potential focal point for insurrection by nationalists and anti-clericals. As early as 1738 Pope Clement XII described freemasonry as "Satan's synagogue". The fears, moreover, were well-grounded; prominent masons like Gari­baldi and Carducci played an essential part in the unification of Italy and the overthrow of the Papal states. The movement attracted people determined to modernize and liberalize the State, and cut back the influence of the Church. In the wake of his settlement with the Vatican in 1929, Mussolini outlawed anti-Catholic lodges. But after the war Catholic and non-Catholic lodges alike were un­molested, subject of course to the constraints of the 1948 constitution of Italy, which forbade secret societies. However a secret society was exactly what Gelli was fostering.

  The P-2 originated in the late nineteenth century, so named to distinguish it from the existing (and by masonic standards) open Propaganda lodge, based in Turin. From the outset it was an anomaly, conceived as a special lodge for masons in particularly delicate or important positions. Accordingly, it dispensed with elabo­rate initiation ceremonies, and handed exceptional discretionary powers to its Venerable Master. He could decide who would be enrolled, and he alone would know the full list of members. Not surprisingly, when the P-2 scandal washed over Italy in the spring of 1981, many of those whose names featured on the lists of 962 members claimed, with likely justification, that they had no idea of who else was in the lodge, and indeed that they were unaware of having joined it at all.

  For those very reasons, it was the perfect instrument for Gelli; an organization nominally affiliated to Italy's Grand Orient rite with its 20,000 members, but in practice ripe to be diverted to any end. For many decades the P-2 had languished. But under Gelli, who seems to have become organizing secretary in 1971, and Maestro Venerabile in May 1975, it revived with a vengeance.

  Italy, it must be recorded with honesty, albeit bemusement, has produced few more remarkable individuals this century than Licio

  Gelli. He was not even twenty when he took part in Mussolini's "volunteer" expedition to help Franco win the Spanish Civil War. In the War, he saw action in the Albanian campaign before fighting the Allies as they advanced up Italy from 1943 onwards. But having fought with the Fascists he deftly changed sides to help the Commu­nist partisans rid his native Pistoia province, just west of Florence, of the grip of Mussolini's short-lived Repubblica Sociale Italiana. In the process, of course, he saved his own skin.

  Thereafter he was to spend much of his life abroad, notably in Latin America, where he became a personal friend of Juan Peron, the Argentine dictator. But all the while he was developing his business interests in Italy, accumulating a considerable fortune. For a while he was a senior executive of the Permaflex mattress company, before leaving to help set up a textile company, Gio-Le, which thrived, thanks in particular to a lucrative import contract from Rumania. Much more important, however, were the contacts and friends he was cultivating on both sides of the Atlantic, and his lifelong passion for the garnering of other people's secrets.

  One friend in particular was to become important. He was a Roman lawyer called Umberto Ortolani, with extensive business interests in Latin America, including his own bank, Banco Financeiro, in the Uruguayan capital of Montevideo. Ortolani, who was to become Gelli's most trusted lieutenant in the P-2, was as wise as anyone in the ways of political Rome, and especially where those ways crossed those of the Vatican in its midst. His connections there were excellent, and included the Holy See's new financial adviser, Michele Sindona. They also extended to Uruguay, where Ortolani held the quaint, but not entirely empty, title of honorary ambassador of the Order of the Knights of Malta, not to be underestimated as an agent serving world-wide Catholicism.

  What the ultimate goal of the P-2 was, perhaps only Gelli knew. He would describe himself as "part Garibaldi, part Cagliostro", the latter a reference to the Italian adventurer-cum-charlat
an who charmed half Europe in the late eighteenth century, founding at every stop a Masonic lodge of his own "Egyptian order", said to possess undreamt of secret powers. Nor do we know whom Gelli was serving; the CIA, the KGB and the Italian secret services have been variously identified as his employers. Ultimately, perhaps, he was only working for himself, cajoling or intimidating others into accept­ing his nostrums. And many believed him.

  At the end the P-2's membership lists read like a state within the state, full of top officials from Italy's discredited former secret services, senior army officers, naval admirals and commanders of the country's several police forces; as well as some leading public sector industrialists, bankers like Calvi, journalists, publishers and a hand­ful of politicians. Gelli would hold court three days a week in rooms 127, 128 and 129 of the Excelsior Hotel on the Via Veneto. The hotel's staff were trained to see that visitors' paths did not cross; to make doubly sure the suite had two separate entrances, so that a caller arriving would not see a visitor departing.

  Aspiring members of P-2 would be told to present themselves for initiation in a dark suit. Gelli would wear a blue apron trimmed in red; a masonic triangle would be around his neck, and he would wear a black cloak. For the ceremony itself, the initiate would take off his jacket, roll up his trousers to the knees. Then he would kneel for Gelli to lay the ritual sword on his shoulder.