by David Yallop
In June 1964, with Aldo Moro yet again in power, the Church of the poor threatened to bring down the entire Italian economy. During negotiations Vatican officals told the Italian Government that if they did not get their way they would throw on to the market every single share they held in Italy. They picked their moment well. The Italian Stock Market was going through a particularly bad period, with shares dropping daily. Suddenly to place on the market the enormous shareholdings of the Vatican would have destroyed the entire Italian economy. The Italian Government, faced with this reality, capitulated. In October 1964 a draft Bill was prepared which would ratify the illegal agreement.
The draft Bill was never put before Parliament, mainly because Governments were collapsing quicker than various Finance Ministers could discover what was in their pending trays. Meanwhile the Vatican continued to enjoy tax exemption. It had not paid tax on its shares since April 1963. In 1967 the Italian Press, specifically the left-wing Press, went on to the attack. They wanted to know why. They also wanted to know how much. They also wanted to know how many shares the Vatican held in their country. Figures began to fly. They ranged from estimates that put the worth of the Vatican investment on the Italian Stock Exchange at 160 million dollars to others that put it at 2.4 billion dollars.
In March 1967, the then Italian Finance Minister, Luigi Preti, in response to questions in the Italian Senate, threw some official light on the Vatican’s shareholdings in Italy. His breakdown showed that by far the biggest Vatican investor was the IOR, followed by The Special Administration. Various other Vatican Departments with high-sounding names such as The Fabric of St Peter’s, The Pontifical Society for St Peter Apostle, the Administration of the Holy See Patrimony, and Propaganda Fide were also revealed as players of the Stock Market. Finance Minister Preti stated that the Vatican owned shares worth approximately 100 billion lire, 104.4 million dollars, at the then rate of exchange. The actual total figure was undoubtedly much higher. Preti’s figures did not take account of the large Vatican investment in State Bonds and Debentures which are completely exempt from any form of taxation. He was dealing only with shares that were liable for the tax levy.
Neither did the Finance Minister concern himself with the fact that under Italian Stock Exchange regulations, the holder of shares is allowed to leave the dividends uncollected for five years. Evidence indicates that the Vatican investments covered by these two aspects were, at the very least, as great as those that had come under the Minister’s province. The real value, therefore, of the Vatican investment in 1968 in Italian shares alone is at the very minimum 202.2 million dollars. Added to that should be the value of the Vatican’s real estate holdings, particularly in Rome and the surrounding districts, and also all non-Italian investments.
Eventually Italy decided to call the Vatican’s bluff: the Roman Catholic Church should, at least in Italy, render unto Caesar what was Caesar’s. In January 1968 yet another transitory Government led by Giovanni Leone declared that at the end of the year the Vatican would have to pay up. With considerable ill grace and comments about its investments being a wonderful stimulus for the Italian economy, the Vatican agreed – but in typical Vatican fashion. Like the prisoner in the dock found guilty, it asked for time to pay in easy instalments.
The whole affair had a number of unfortunate results for the Vatican. Whatever the actual total, everyone in Italy was now aware that the Church of the poor had very large investments producing millions of dollars of annual profit. Further, the six-year-old argument had resulted in many companies being identified as Vatican owned or controlled. The wide portfolio might indicate shrewd capitalism, but it was bad public relations to let the man who complained that his phone/water/electricity/gas were not working, know that he had the Church to thank for it. Then, most important of all, if the Vatican maintained its heavy investment in Italy it was going to face very large tax bills. Pope Paul VI had a problem. The men he turned to for the solution were The Gorilla and The Shark.
If Sigmund Freud’s conclusion that a man’s entire personality is formed in the first five years of life is correct, then Paul Marcinkus merits particularly close study by the experts. Even if one disputes Freud’s opinion few would argue with the view that environment is certainly a major influence in the formative years.
Marcinkus was born into a city ruled by the Mafia, where gangland murder was an everyday event; where corruption reached from the Mayor to the pre-pubescent youth. It was a city riddled with every conceivable type of crime, in which, between 1919 and 1960, 976 gangland murders were committed and only two of the murderers convicted. It was a city where in the autumn of 1928 the President of the Crime Commission appealed to one man to ensure that the forthcoming November elections were conducted in an honest, democratic manner. The man in question was Al Capone; the city, Chicago. Capone boasted, ‘I own the police’. A more accurate statement would have been, ‘I own the city’. Capone responded to the plea for fair elections. He told the police of America’s second largest city what to do and the police obeyed. The President of the Crime Commission later observed: ‘It turned out to be the squarest and the most successful election day in forty years. There was not one complaint, not one election fraud and no threat of trouble all day.’
Paul Marcinkus was born in the suburb of Cicero, Illinois on January 15th, 1922. The following year Al Capone, confronted with the extraordinary spectacle of an honest Mayor and an equally honest Chief of Police in Chicago, moved his headquarters to Cicero. The population of some 60,000, mainly first and second generation Poles, Bohemians and Lithuanians, became accustomed to the sight of the Mafia in their midst. Capone set up headquarters at the Hawthorne Inn at 4833 Twenty-second Street. Along with Capone came such gentlemen as Jake ‘Greasy Thumb’ Guzik, Tony ‘Mops’ Volpi, Frank ‘The Enforcer’ Nitti, Frankie ‘The Millionaire Newsboy’ Pope.
This was the Cicero in which Paul Casimir Marcinkus grew up. His parents were Lithuanian immigrants. His father earned a living cleaning those windows that were not being smashed by machine gun bullets, and his mother worked in a bakery. Their grasp of the English language was poor. In the classic manner of many of the poor immigrants who sought a better life in the land of the free, they determined that their children through honest endeavour and hard work should have better lives. Marcinkus, the youngest of their five children, succeeded beyond their wildest dreams. His is the story of local boy makes God’s banker.
Guided by his parish priest, Marcinkus developed a vocation for the priesthood. He was ordained in 1947, the year Al Capone died of syphilis. The Catholic burial of America’s all-time Public Enemy Number One in Chicago was officiated by Monsignor William Gorman, who explained to reporters: ‘The Church never condones evil, nor the evil in any man’s life. This very brief ceremony is to recognize his (Capone’s) penitence and the fact that he died fortified by the Sacraments of the Church.’
Marcinkus went to Rome and studied at the same Catholic University, the Gregorian, at which Albino Luciani had obtained his degree. Marcinkus was equally successful and obtained his doctorate in Canon Law. During his seminarian days, he had used his 6 ft 3 ins of height and his 16-stone of brawn with considerable success on the playing fields. When he went in for the ball during a football match, he usually came out with it. His physical strength was to prove a decided asset in his rise to the top. Clearly some of the lessons learned on the streets of Cicero paid off.
Returning to Chicago he worked as a parish priest, then became a member of the Ecclesiastical Court of the Diocese. One of the first to be impressed with Marcinkus was the then Head of the Archdiocese of Chicago, Cardinal Samuel Stritch. After a recommendation from the Cardinal, Marcinkus was transferred to the English section of the Vatican Secretary of State’s office in 1952. Tours of duty attached to the Papal Nuncios of Bolivia and Canada followed, then in 1959 he returned to Rome and the Secretary of State’s Department. His fluency in Spanish and Italian ensured his constant employment as an interpreter.
In 1963 the Cardinal of New York, Francis Spellman, advised Pope Paul during one of his frequent trips to Rome that Marcinkus was a priest with an excellent potential. In view of the fact that Spellman headed the wealthiest diocese in the world at that time, and was frequently referred to as ‘Cardinal Moneybags’ – a tribute to his financial genius – the Pope began quietly to monitor Paul Marcinkus.
In 1964, during a visit to down-town Rome, the over-enthusiastic crowds were in danger of trampling the Vicar of Christ underfoot. Suddenly Marcinkus appeared. Using shoulders, elbows and hands he physically clove a path through the crowds for the frightened Pope. The following day the Pope summoned him for personal thanks. From then on he became the unofficial bodyguard to the Pope and his nickname, The Gorilla, was born.
In December 1964 he accompanied Pope Paul to India; the following year to the United Nations. By now Marcinkus had taken over the duties of security adviser on such trips. Personal bodyguard. Personal security adviser. Personal translator. The boy from Cicero had come far. He was by now a close friend of the Pope’s personal secretary, Father Pasquale Macchi. Macchi was a key member of the Papal entourage, which the Roman Curia referred to as ‘The Milan Mafia’. When the Archbishop of Milan, Montini, was elected Pope in 1963 he had brought with him a whole train of advisers, financiers, clerics. Macchi was one of the entourage. All roads may lead to Rome; a number go via Milan. The dependence that the Pope placed upon men like Macchi was out of all proportion to their official positions. Macchi would berate the Pope when he considered him morbid or depressed. He would tell him when to go to bed, who should be promoted, who should be punished with an uncomfortable transfer. Having tucked His Holiness up at nights Macchi could invariably be found in an excellent restaurant just off the Piazza Gregono Settimo. His usual companion for dinner was Marcinkus.
Further trips abroad with ‘The Pilgrim Pope’ to Portugal in May 1967 and to Turkey in July of the same year cemented the friendship of Pope Paul and Marcinkus. Later that year Pope Paul VI created a Department called the Prefecture of the Economic Affairs of the Holy See. A more comprehensible title would have been Chancellor of the Exchequer or Auditor General. What the Pope sought was a department that would be able to produce an annual summary of the exact state of Vatican wealth and the progress of all assets and liabilities of every Administration of the Holy See, with a view to obtaining figures in black and white which would give a final balance or estimate for each year. From its creation the Department has struggled under two very serious handicaps. Firstly, on Pope Paul’s express instructions the Vatican Bank was specifically excluded from the economic exercise. Secondly, there was Vatican paranoia.
After the Department had been established by a trio of cardinals, the man subsequently appointed to run it was Cardinal Egidio Vagnozzi. In theory he should have been able after a maximum of one year in the job to provide the Pope with the exact state of Vatican finances. In practice Vagnozzi found that the manic desire for financial secrecy which the various Vatican departments frequently demonstrate to enquiring journalists, was extended to him. The Congregation of the Clergy wanted to keep its figures to itself. So did the APSA. So did they all. In 1969 Cardinal Vagnozzi observed to a colleague: ‘It would take a combination of the KGB, the CIA and Interpol to obtain just an inkling of how much and where the monies are.’
To assist Bernardino Nogara’s aging colleague, the 84-year-old Cardinal Alberto di Jono, who was still functioning as Head of the Vatican Bank, Pope Paul consecrated as bishop, Paul Marcinkus. The morning after Marcinkus had prostrated himself at the feet of the Pope he took over as the Vatican Bank’s Secretary. For all practical purposes he was now running the Bank. Interpreting for President Johnson when he talked to the Pope had been relatively easy but, as Marcinkus freely admitted, ‘I have no banking experience’. The virgin banker had arrived. From being an obscure priest in Cicero, Paul Marcinkus had risen higher and further in terms of real power than any American before him.
One of the men who had assisted the rise of Paul Marcinkus was Giovanni Benelli. His initial assessment to Pope Paul of the golf-playing, cigar-chewing, extrovert from Cicero was that Marcinkus would be a valuable asset to the Vatican Bank. Within two years Benelli concluded that he had made a disastrous misjudgement and that Marcinkus should be removed immediately. He discovered that in that brief period Marcinkus had built himself a power base stronger than his own. When the final showdown came in 1977 it was Benelli who left the Vatican.
The extraordinary promotion of Marcinkus was part of a carefully planned change of Vatican policy. Paying large amounts of tax on share profits and having a high profile as an owner of countless Italian companies was now decidedly passé for Vatican Incorporated, particularly when those companies made embarrassing little items such as the contraceptive pill, on which Pope Paul had just invoked the wrath of God. The Pope and his advisers had taken the decision to reduce their commitments in the Italian money markets and transfer the bulk of Vatican wealth to the foreign markets, particularly the USA. They also wished to move into the highly lucrative world of Eurodollar blue chips and off-shore profits.
Marcinkus was selected as an essential component in this strategy. The Pope used another part of his ‘Milan Mafia’ to complete the team. He chose a man who actually was Mafia, not from Milan, which was merely his adopted city. ‘The Shark’ was born in Patti near Messina, Sicily. His name – Michele Sindona.
Like Albino Luciani, Michele Sindona knew poverty as a child and like Luciani he was deeply affected and influenced by that environment. While the former grew to manhood determined to relieve the poverty of others, the latter resolved to relieve others of their wealth.
Born on May 8th, 1920 and educated by the Jesuits, Sindona demonstrated early in life a marked proclivity for mathematics and economics. Having graduated from Messina University with an excellent Law degree, in 1942 he avoided conscription in Mussolini’s armed forces with the aid of a distant relation of his fiancée who worked in the Vatican Secretariat of State, one Monsignor Amleto Tondini.
During the last three years of the Second World War, Sindona put his Law degree to one side and earned a very lucrative living doing what he would ultimately become world famous for: buying and selling. He bought food on the Black Market in Palermo and smuggled it with the aid of the Mafia to Messina, where it was sold to the starving population.
After June 1943 and the Allied landings, Sindona turned to the American Forces for his supplies. As business expanded so did his Mafia connections. In 1946 he left Sicily for Milan, taking with him his young wife Rina, invaluable lessons in the law of supply and demand, and a number of even more invaluable letters of introduction from the Archbishop of Messina, whose friendship Sindona had carefully cultivated.
In Milan he lived in the suburbs at Affori, and worked for a business consultancy and accounting firm. Sindona’s speciality, as American capital began to flow into Italy, was to show would-be investors how to dance their way through Italy’s complex tax laws. His Mafia associates were suitably impressed with his progress. He was talented, ambitious, and, more important in the eyes of the Mafia, he was also ruthless, totally corruptible and one of their own. He knew the importance of Mafia traditions like ‘omertá’, the rule of silence. He was Sicilian.
The Mafia family Gambino were particularly taken with the young Sindona and his dexterity at placing dollar investments without reference to tiresome tax regulations. The Gambino family has global interests but its two main power centres are New York and Palermo. The former is controlled by the Gambinos, the latter by their Sicilian cousins the Inzerillos. On November 2nd, 1957 there was a ‘family’ reunion in the Grand Hotel des Palmes, Palermo. Also invited to enjoy the wine and food was Michele Sindona.
The Gambino family made Sindona an offer he accepted with enthusiasm. They wanted him to manage the family’s re-investment of the huge profits just beginning to accrue from the sales of heroin. They needed a laundryman. Sindona
, with his proven abilities at moving amounts of money in and out of Italy without disturbing the tranquillity of the Government’s taxation departments, was an ideal choice. Added to this ability was the fact that he was by the time of this Mafia summit conference already a director of an increasing number of companies. He frequently said to grateful clients, ‘No, I’ll take payment in some shares in your company’. He had also begun to perfect the technique of acquiring troubled companies, dividing them up, selling off pieces, merging other pieces, shuffling everything sideways and then selling at a large profit. It was dazzling to behold, particularly if you were not paying the conjuror.
Within seventeen months of the Mafia summit conference Sindona bought his first bank, aided by Mafia funding. Sindona had already discovered one of the cardinal rules of theft: the best way to steal from a bank is to buy one.
Sindona created a Liechtenstein holding company, Fasco AG. Shortly afterwards Fasco acquired the Milanese Banca Privata Finanziaria, usually called BPF. Founded in 1930 by a Fascist ideologist, the BPF was a small, very private, exclusive institution which served as a conduit for the illegal transfer of funds from Italy on behalf of a favoured few. It was doubtless this proud heritage that won Sindona’s heart. Though disdaining to fight for Mussolini Michele Sindona was a natural Fascist. It would have appealed to him to acquire such a bank.
In 1959, the same year in which he acquired BPF, Sindona made another very shrewd investment. The Archbishop of Milan was trying to raise money for an old people’s home. Sindona stepped in and raised the entire amount: 2.4 million dollars. When Cardinal Giovanni Battista Montini opened the Casa della Madonnina, Sindona was by his side. The two men became firm friends, with Montini relying more and more on Sindona’s advice on problems other than diocesan investments.
What Cardinal Montini may not have known is that the 2.4 million dollars were supplied to Sindona very largely from two sources: the Mafia and the CIA. Former CIA agent Victor Marchetti was later to reveal: