God's Banker

by Rupert Cornwell

  News of the sanction inevitably appeared quickly in the Italian press, and shares in Ambrosiano and its affiliates came under severe pressure on the Milan stock market. Under distinctly suspicious circumstances, Calvi did recover his passport, just in time to attend the Fund meeting that autumn. But other reminders followed, of just how thin was the ice upon which Catholic finance trod. The next eminent figure to be arrested that summer was Massimo Spada, once of the IOR and now chairman of Ambrosiano's own Banca Cattolica del Veneto, charged with involvement in Sindona's fraudulent bank­ruptcy in 1974. Worse still, the same fate would befall Luigi Mennini, the successor of Spada at the Vatican bank, on similar accusation.

  For the Holy See, which had been trying with limited success to forget its imprudences in the Sindona affair, Mennini's arrest was a particular embarrassment. Despite his 71 years, his were the financial skills indispensable to the IOR. Calvi's discomfort was even greater. For he now began to doubt in earnest whether the Vatican's conceal­ment of his own dubious dealings could continue.

  The moment had come to seek a new source of support, if not of escape from the predicament into which he had built himself. The support had to be substantial, and beyond the control of the Italian authorities. And who met these two conditions better than the Arabs?

  Calvi had long been fascinated by the thought of linking Ambrosiano with the oil wealth of the Middle East. In the mid-1970s he had vainly tried to set up an "Arab Mediterranean Bank", only to be deceived by a spurious Saudi Arabian intermediary who left Milan without even paying his hotel bill. But Calvi, with his love of the complicated and contorted, was not dismayed, nor his faith in Arab promise much damaged. As Leemans put it long afterwards: "If you offered him something straightforward, he'd dismiss it. But he'd be fascinated by something really far-fetched; like a child believing in a fairy story." Exactly what fairy stories he was told by the brash British financier Peter de Savary, we do not know. But by late 1980 Calvi was deep in plans for Banco Ambrosiano Overseas (as Cisalpine was now called) to buy twenty per cent of de Savary's Artoc Bank and Trust, also based in Nassau.

  That winter Calvi went to Lyford Cay for what was to be the last time in his life. There was much to attend to in the Bahamas: not least progress in the construction of a new headquarters for Ambrosiano Overseas, a garish four-storey edifice far on East Bay Street, beyond the bridge to Paradise Island and the Nassau Casino. It was gran­diosely called Ambrosiano House, and at a cost of $8 million was the biggest ever fixed investment by a bank in the Bahamas. On the top there would be a penthouse apartment, where the Calvis would stay on future visits. But most important was Artoc.

  Coopers and Lybrand, the accountants which audited both Artoc and Ambrosiano Overseas, were the first to moot the idea of a link. De Savary had set up Artoc to cap his success as an oil trader in the Middle East. At the time it was equally owned by Arab and European interests. There were incentives for both sides. A deal with Ambro­siano might redress the previous financial dominance of the Arabs in Artoc; at the same time it could help open banking doors for Calvi in the Middle East, where Ambrosiano was still weak.

  But the main attraction for Calvi was the prospect of rich new contacts in the Arab financial world. For an outlay of just $4 million, he gained not only twenty per cent of Artoc but also two seats on the board, alongside such figures as Abdullah Saudi, formerly Libya's representative on the board of Fiat (in which Colonel Gaddafi had bought ten per cent in 1976) and later to run the Bahrain-based Arab Banking Corporation. And there were others, Kuwaitis and Saudi Arabians, who could conceivably organize the sum—maybe $700 million by then—required to get Calvi off his foreign hook.

  The agreement with Artoc was signed in February. Calvi was in London for the occasion with his wife and a retinue of officials from Ambrosiano's foreign side. They stayed at the private St James' Club which de Savary owned, in relaxed good humour. There was a dinner one night at an Artoc director's home in a Chelsea square. It was a friendly occasion; the deal had been concluded, and in his own way Calvi opened up a little. Small talk, of course, was never for him. But Calvi expounded with conviction on the need for freedom, and to contain the Communists. It all sounded rather like Gelli and Sindona. As usual his subordinates around the table listened respectfully, acknowledging the Tightness of the chairman's views.

  The visit to London coincided with other reassurance that what­ever his difficulties in Italy, the suspicions had not spread too far abroad, among potential lenders. Licia's and Angelica's furtive missions were still a secret of Avenue des Citronniers.

  In what was to prove the last big loan arranged by Ambrosiano Holding of Luxembourg, National Westminster, the second biggest bank in Britain, raised $75 million on its behalf. The five year credit's original amount was $50 million, but the enthusiasm of the market was such that the figure was increased to $75 million. Nor was the interest rate on the loan so high as to indicate an undue degree of risk. Quite clearly in February 1981 Ambrosiano did not appear a danger­ous proposition. Ambrosiano accepted the terms of the proposal on February 6, and on April 8 formal agreement was signed. The storm was then a month away.

  CHAPTER FOURTEEN Corriere

  Calvi must have had his forbodings as he returned to Italy in early 1981. The reason was not just replacement of the sub-tropical Baha­mas by Milan's foggy winter chill. In his heart he surely knew that even the Artoc venture then taking shape was unlikely to be a match for the difficulties which were piling up at home. From every side old foes and new were pressing in.

  After a two-year interval the Bank of Italy was again concentrating on Ambrosiano, albeit more circumspectly than in 1979, when the direct challenge of the inspection brought such rapid chastisement. But in late January 1981 the central bank finally won approval from the Government for new regulations governing foreign interests held by Italian banks. The regulations frowned upon foreign holding companies which were not themselves banks, and warned that such interests would only be permitted if a) they could be properly scrutinized by the Bank of Italy, and b) operated in countries with a proper system of supervision.

  No names were mentioned, but the reference to Ambrosiano could not have been clearer. The Government's directive was to be the basis for the central bank's relentless bombardment of Calvi from the summer onwards, for details of what went on in Luxembourg, the Bahamas, Nicaragua and Peru.

  Hardly less ominous, though it did not appear so at the time, was the appointment the previous October of a new Treasury Minister in Beniamino Andreatta. A Bolognese university professor of impul­sive and independent spirit, Andreatta was a devout Catholic and a Christian Democrat, but by temperament he was less caring than his colleagues for the political niceties. The impetuosity of his judgement could be questioned; but in his way Andreatta shared the "lay" desire for a greater openness in Italian society. "A most Protes­tant Catholic", he was once described: another explanation of why he was to be peculiarly upset by the behaviour of both the Vatican and a bank supposedly the guardian of old-fashioned Catholic virtues. When the end came, Andreatta was to be implacable.

  One of his early acts as Minister was to choose a new head for the decrepit Milan stock market supervisory commission, the Consob. When it was created in 1974, the Consob was portrayed as Italy's answer to the omnipotent Securities and Exchange Commission, which ruled over Wall Street. But these improbable expectations were never met, and in 1978 indignity was added to impotence when Giulio Andreotti, the Prime Minister, named a Rome theatrical impresario to its board. But the arrival of Guido Rossi in February 1981 was to jolt the Consob out of its lethargy.

  Like Baffi and Sarcinelli, Rossi came from modest origins. But he had become Milan's leading corporate lawyer, and holder of that chair at the university of nearby Pavia. Harvard-trained and widely travelled, Rossi was everything that Calvi was not: rationalist, tech­nocratic and above all a believer in clarity.

  At the Consob he saw his task as one of throwing open the windows o
f the fetid and ingrown Milan market to the daylight of consolidated balance sheets, disclosure of true shareholdings in quoted companies, and modern trading rules on a par with those elsewhere in Europe. Like Baffi and Sarcinelli, he was to be criticized for being unrealistically rigid in his approach. Indeed, from the outset Rossi found himself beset by subtle bureaucratic obstacles, such as funds allocated to Consob by Parliament but which never seemed to materialise. "You're a brave man to try and reform the stock market," a wise Milanese broker told him once. "It's like trying to bring morals to a whore-house."

  Inevitably such an approach brought him into confrontation with Calvi, the emblem of financial obscurantism, head of a bank whose ownership was a mystery, and long involved in share trafficking of the type that Rossi wanted to stamp out. Rossi moved in when the market was at last recovering from the disgrace and neglect which followed the ruin of Sindona. During 1980, share prices had on average doubled, and trading volume had multiplied tenfold. Rossi's ambi­tion of widening the market was welcomed by those who wanted to use the new public interest in stocks and shares to restore its proper role, as a source of capital in a modern market economy. Otherwise the improvement might prove yet another speculative bubble, caus­ing only disillusion when it burst. As far as Rossi was concerned, no more suitable candidate existed for admission to the market than Banco Ambrosiano.

  Calvi's bank had long been heavily traded, but only on the informal mercato ristretto, or over-the-counter market. The anomaly stemmed from Ambrosiano's origins, and the right of choice that Ambro­siano's board still technically exercised over its shareholders. For Calvi, the arrangement was ideal. The mercato ristretto was subject to even fewer controls than its larger brother. Consolidated accounts were not obligatory, and trading took place only one day a week. This, in turn, allowed Ambrosiano to control its own share price easily and cheaply. The consideration was vital. The last thing Calvi could afford, after borrowing so much to buy effective control of his bank, was to see the price of its shares, the main collateral for those debts, plunge.

  Hardly had Rossi taken over at Consob, than he informed Calvi of his wish. Ambrosiano was after all, he argued, the most important private banking group in the country, with over 30,000 shareholders. But Calvi was appalled. Such a step would oblige Ambrosiano to publish detailed accounts, consolidated to include the secret foreign operations. More important, it would become far harder, and more expensive, to prop up the bank's share price. Worst of all, Calvi suspected that Rossi would simply order the full market quotation, whether he liked it or not.

  At their first meetings, in that early spring of 1981, Calvi attempted to dissuade Rossi. Ambrosiano's image would suffer, he implied, giving no reasons. Rossi was distinctly bemused and pointed out that, surely, to be traded on the major Milan market ought to enhance the bank's prestige. But Calvi still opposed the idea. He would alternate the same arguments with long moments of silence, always his defence when under pressure. Rossi, who previously had never met Calvi, was no less astonished by his mechanical capacity to tell one lie after another, by his very ordinariness. How could so unimpressive a figure be where he was, Rossi wondered. His curiosity was further aroused by the capital increase Calvi had just announced at Ambrosiano's annual meeting, to the ever-admiring shareholders. Their apparently unshakeable faith in Calvi was as well. For they were being asked to provide in all 240 billion lire of fresh funds, a large sum by any standards. What the shareholders did not know, of course, was that those Panamanian and Liechtenstein companies, whose existence only a few were aware of, would be borrowing still more money to subscribe to their quota of shares. Calvi was to present the capital increase as a seal on Ambrosiano's expansion and success under his guidance.

  In fact the new money was urgently required to offset losses the bank had incurred after Genghini's collapse, and might incur over the struggling Rizzoli. There was a smaller loss around then in Spain also, when Banco Occidental, in which Ambrosiano held a ten per cent interest, collapsed with $100 million of debts. For Rossi however, the sheer size of the sum that Calvi was seeking was just another excellent reason to force him on to the main market.

  But for Calvi, fencing with the chairman of Consob rapidly became a secondary consideration. For April and May of 1981 brought a sequence of overlapping disasters, dispelling the almost mystical aura upon which his reputation rested. The mysteries were crudely re­vealed for what they were: membership of a sinister freemasons' lodge, improper entanglement with Italy's biggest newspaper and publishing group, and total disregard of Italian currency regulations. Those New Year forebodings in Nassau were to prove only too well grounded.

  The weakest link in the chain was Rizzoli. By the autumn of 1980, the publishing group was in a wretched state. Tassan Din's reckless expansion of the previous three years, encouraged by Gelli and Ortolani with Calvi's acquiescence, had proved a calamity. Tassan Din, never short of ideas, had drawn up a new three-year plan; but this time the emphasis was on cutbacks and closures. Equally neces­sary, however, was a substantial injection of new capital, to reduce debts now costing Rizzoli 60 billion lire a year in interest payments alone.

  The obvious options were two: either the sale of the group, with its tempting bait of the Corriere della Sera, to a third party; or a capital increase; which would have to be paid for by Ambrosiano. Tassan Din presented Calvi with the unpleasant choice, for both solutions had drawbacks. The advent of a major outside shareholder could lead to effective surrender of the Corriere, among the most potent weapons of the P-2. On the other hand, a direct shareholding by Ambrosiano would expose Calvi's involvement with the paper, and run foul of a regulation which banned such investments. In any case he already surreptitiously controlled 80 per cent of Rizzoli, following its pre­vious capital increase in 1977. But with Gelli's and Ortolani's help, Tassan Din came up with an ingenious answer.

  Angelo Rizzoli, who in theory still owned 90 per cent of the company his family had founded, would retain 40 per cent. The remaining 50 per cent would be held through an unspecified "institu­tion", whose identity Calvi and Gelli refused to disclose. Was it the P-2 they were referring to, or could they have meant the Vatican bank? After all, 80 per cent of the publishing group's capital had been lodged with first Calvi and then the IOR in 1977; and if the IOR had acted as a front for Calvi so often before, why should it not do so in the case of Rizzoli? To preserve the illusion that the Rizzolis still ruled the group which bore their name, a controlling syndicate would be created, containing the 40 per cent of Angelo Rizzoli, plus 10.2 per cent supplied by the "institution". The money for the capital in­crease—150 billion lire—would, of course, come from Banco Ambrosiano, and Calvi would be the real owner of Rizzoli.

  The scheme was elegant, but never materialized. For in mid-March 1981 Gelli, the self-proclaimed puppet-master, suddenly became a fugitive, his occult realm of the P-2 a matter for the magistrates and the police. Fittingly enough, the indirect cause of this disaster, which would have fatal repercussions later for both Rizzoli and Ambro­siano, was none other than Michele Sindona.

  The decisive breakthrough was made neither in Milan nor Rome, but in Palermo, where Joseph Miceli Crimi, an Italo-American surgeon suspected of involvement in the huge drugs trade between Sicily and the US, was being questioned. Among his interrogators were Giuliano Turone and Gherardo Colombo, two magistrates from Milan who had long been probing the Sindona bankruptcy and its implications.

  Turone and Colombo were less concerned with uncovering the "Sicilian Connection" than establishing Crimi's exact role in Sin­dona's erratic voyage around Europe during his "kidnapping" in the summer of 1979. Crimi, an admitted freemason, had helped organize Sindona's hideaway in Palermo. But the magistrates also knew he had made a strange trip to Arezzo, and wanted to know why. At first Crimi stonewalled, claiming he was visiting his Italian dentist there for a check-up. Then on March 14, 1981, he unexpectedly gave way. He had been to Arezzo, he said, to see a fellow mason, Licio Gelli, about
arrangements for Sindona.

  The magistrates quickly followed up this new lead. Three days later a Guardia di Finanza detachment went to Gelli's villa in Arezzo, but Gelli was away and they found nothing of particular interest. The next stop was Gelli's office at the Gio-Le textile factory. And there, in an ordinary wall safe and a brown leather suitcase alongside it, were the secrets of the P-2. In the safe the Guardia di Finanza discovered the list of the 962 names of members of the lodge, together with bundles of payments slips and receipts. In the suitcase they found 32 dossiers, and the headings of another 400-odd. The magistrates could hardly believe it.

  The membership lists amounted to little short of a parallel state. The names included those of two current cabinet ministers, large segments of Italy's military and secret service hierarchy ranging from the chief of the general staff to the past and present heads of the Guardia di Finanza itself. No less than 50 generals and admirals, serving or retired, featured on the lists. There were industrialists, financiers, diplomats, top civil servants, police officers. The journal­ists numbered 24, the parliamentarians (including two ministers) were 38—drawn from every major party except the left-wing Radicals and the Communists. Calvi was there, of course, as were Sindona, Angelo Rizzoli, Tassan Din, the Corriere's editor Franco Di Bella, and Mario Genghini, that other notable beneficiary of Ambrosiano's generosity.

  If the importance of the members was not enough, any doubts as to Gelli's penetration of the machinery of the Italian state were banished by the documents in the various dossiers, not a few of them highly confidential Government papers. Quite evidently Gelli had constructed a breathtaking mechanism for advancement, manipula­tion, and if he wanted, blackmail and extortion. He himself had vanished to the safety of South America, along, presumably, with many of the dossiers, whose contents would tantalize for many months afterwards. But enough was left behind to compromise Calvi further.