In God's Name

by David Yallop

  Confronted with the problem of the evil of a wealthy Roman Catholic Church when he apparently desired a poor Church for the poor, the Pope and his advisers decided to liquidate a sizeable proportion of their Italian assets and re-invest in other countries. Thus they would avoid heavy taxation, and the yield on the investment would be better. When Pope Paul proclaimed the magnificent aspirations of Populorum Progressio in 1967, Vatican Incorporated had already for a number of years been a close working partner of Michele Sindona. Through the illegal flight of currency from Sindona’s Italian banks via the Vatican Bank to the Swiss Bank which they jointly owned, Sindona and the Vatican, if not making the goods of creation flow to the poor, were certainly making them flow out of Italy. By early 1968 another Vatican-controlled bank, the Banca Unione, was in trouble. The Vatican Bank owned approximately 20 per cent. It was represented on the Board of Directors by Massimo Spada and Luigi Mennini. By 1970, two years after Sindona bought control and with the Vatican still substantial part-owners, the bank in theory had become an astonishing success. Aiming at the small saver and offering superior rates of interest the bank’s deposits rose from 35 million dollars to over 150 million dollars – in theory.

  In practice during the same period, the bank was robbed of over 250 million dollars by Sindona and his associates. Most of this fortune was poured through yet another Sindona bank, the Amincor Bank of Zürich. Much was lost in wild speculation on the Silver Market. One of the men who was deeply impressed with Sindona at this time was David Kennedy, Chairman of Continental Illinois, soon to be appointed Treasury Secretary in the President Nixon Cabinet.

  In 1969 it was clear to Vatican Incorporated that it had lost the long battle with the Italian Government over taxation of its share dividends. Realizing that to unload its entire stock on the market would result in the possible collapse of the Italian economy, it occurred to the Vatican that such an action would be self-defeating. A collapse of that magnitude would result in Vatican losses.

  The Pope, in conjunction with Cardinal Guerri, Head of the Special Administration of the APSA, decided to unload from the Italian portfolio a major asset, the Vatican’s share in the giant Società Generale Immobiliare. With assets in excess of half a billion dollars scattered around the world, that was certainly highly visible wealth. They again sent for The Shark.

  The shares of Società Generale Immobiliare were selling at around 350 lire. The Vatican held directly and indirectly some 25 per cent of the 143 million shares. Would Sindona like to buy? The question was put by Cardinal Guerri. Sindona’s response was immediate and positive. He would take the lot – at double the market price. Guerri and Pope Paul were delighted. The agreement between Sindona and Guerri was signed at a secret midnight meeting in the Vatican, in the spring of 1969.

  For the Vatican this was a particularly good meeting. It also wished to unload its majority shares in Condotte d’Acqua, Rome’s Water Company, and its controlling share of Ceramica Pozzi, a chemical and porcelain company which was losing money. The Shark smiled, agreed a price, and snapped up both holdings.

  Precisely who had conceived this entire operation? Who was the man who collected a handsome commission from Sindona and high praise from Pope Paul VI and Cardinal Guerri? The answer is powerful evidence of not only how far P2 had penetrated the Vatican but also how the interests of P2, the Mafia and the Vatican were often identical. Licio Gelli’s number two, Umberto Ortolani, was the man responsible for arranging the mammoth transaction. All Sindona had to do now was to pay for it.

  It is easy to purchase massive companies if you are using other people’s money. Sindona’s initial payment was made entirely with money illegally converted from the deposits of Banca Privata Finanziaria. In the last week of May 1969 Sindona transferred 5 million dollars to a small Zürich bank, Privat Kredit Bank. The Zürich bank was instructed to send the money back to BPF for the account of Mabusi Beteiligung. Mabusi resided in a Post Office Box in the Liechtenstein capital of Vaduz, and was a company controlled by Sindona. From there it was transferred again to another Sindona-controlled company, Mabusi Italiana. From there the 5 million dollars were paid to the Vatican. Further money was raised to pay for the huge acquisitions by bringing in Hambros and the American giant Gulf and Western.

  Sindona obviously has a highly developed sense of humour. One company owned by Gulf and Western was Paramount and one of its most successful films of the period was the adaptation of Mario Puzo’s book The Godfather. Thus a film taking a highly glamorous and amoral look at the world of the Mafia produced enormous profits, some of which went to sustain Michele Sindona, financial adviser to the Mafia families Gambino and Inzerillo. They in turn were channelling the multi-million profits acquired largely from heroin dealing into Sindona’s banks. The circle was complete. Life was imitating Art.

  By the early 1970s the massive illegal flight of money from Italy was having a serious effect upon the economy. Sindona and Marcinkus might be making significant profits through their efforts at diverting this money out of Italy, but the effect on the lira was devastating. Unemployment rose. The cost of living increased. Uncaring, Sindona and his associates continued to play the markets. By pushing up share prices to a much inflated level, the Sindona banks went through millions of dollars of other people’s money.

  Sindona and his close friend Roberto Calvi of Banco Ambrosiano openly boasted that they controlled the Milan Stock Market at this time. It was a control which they criminally exploited again and again. Shares went up and down like yoyos. Games were played with companies for the amusement and financial benefit of Sindona and his associates. The manipulation of a company called Pacchetti gives an example of the everyday activities of these men.

  Pacchetti began as a small, insignificant, leather-tanning company. Sindona acquired it in 1969 and decided to transform it into a conglomerate. He took as his model the Gulf and Western, an American giant with a wide spread of interests ranging from Paramount studios through publishing to airlines. Sindona’s acquisitions for Pacchetti were more modest. In fact it became a commercial dustbin containing interests in unprofitable steelworks and commercially unsuccessful household cleaners. There was, however, one jewel in it: he had acquired from Bishop Marcinkus an option to purchase Banca Cattolica del Veneto. Doubtless the fact that the Administrative Secretary of the Vatican Bank, Massimo Spada, was also the President of Pacchetti and President of Banca Cattolica helped Marcinkus forget the prior claims of the Veneto clergy and Patriarch Luciani.

  Roberto Calvi, who was a party to these negotiations, agreed to buy on a specified date a Sindona company called Zitropo. The scenario was now ready to manipulate the Milan Stock Market illegally yet again.

  The book value of the Pacchetti shares was about 250 lire per share. Sindona instructed the Stock Exchange department of the Banca Unione to purchase Pacchetti shares. By using nominees the shares were then illegally parked in Sindona-owned companies. The price of the shares began to surge dramatically, eventually reaching 1,600 lire on the Exchange. In March 1972 the day for Calvi’s purchase of Zitropo duly arrived. Simultaneously all the parking companies dumped their Pacchetti shares into Zitropo. The effect was to inflate artificially the value of Zitropo. Calvi paid an astronomically higher price than the company was worth. Sindona, having funded the entire operation with fictitious guarantees, made a huge illegal profit. An indication of just how much profit he made on this one operation can be appreciated from the fact that in 1978 a Government-appointed liquidator, Giorgio Ambrosoli, discovered incontrovertible evidence that Sindona had paid an illegal kick-back to Calvi of 6.5 million dollars, and that Calvi shared this criminal payment fifty-fifty with Bishop Paul Marcinkus.

  Why would Calvi pay so much over the odds for Zitropo? There are three reasons. Firstly, he used money belonging to others to effect the purchase. Secondly, there was a 3.25 million dollars profit for him. Thirdly, at the conclusion of the Pachetti/Zitropo deal he acquired an option to buy Banca Cattolica del Veneto. Sindona
had acquired the option from Marcinkus earlier. The fact that no one had consulted Albino Luciani, the Patriarch of Venice, or the members of his diocese who had lodged their shares with the Vatican Bank, was considered an irrelevance by Bishop Marcinkus.

  Sindona and Calvi became very adept at this form of robbery. Never in the history of banking has so much been paid for so little. In 1972 Calvi pocketed a further 5 million dollars from Sindona when Bastogi shares changed hands, and an additional 450 million Swiss francs when Sindona sold him 7,200 shares in Finabank. Each time Sindona paid the kick-back to Calvi through his MANI account in Finabank. These huge amounts were paid into Calvi’s secret Swiss accounts which he held jointly with his wife. At the Union de Banques Suisses and Credit Bank of Zürich the Calvis held four secret accounts: Account number 618934; Account number 619112; Account number Ralrov/G21; and Account number Ehrenkranz. The very minimum that Sindona himself would have made on each deal was equivalent to the amount he was kicking back to Calvi.

  Roberto Calvi developed an insatiable appetite for this particular game and on occasions played it as a solo performer. Hence he obliged one of his own banks, Centrale, to buy a large block of Toro Assicurazioni shares in 1976 for 25 billion lire more than they were worth. The 25 billion ended up in one of the Swiss accounts previously noted. So did a further 20 billion lire after Calvi played the game again with over one million shares in Centrale. These huge sums of money were not just items on a balance sheet. The money physically moved from a variety of shareholders’ pockets directly into the pockets of the Calvis and Sindona. What Bishop Marcinkus did with his 3,250,000 dollar kick-back from the Pacchetti swindle has yet to be established.

  The shares in the Banca Cattolica were also subjected to this treatment. Sindona was aware that Calvi was negotiating with Marcinkus to acquire control of the bank – hence the share push. At the end of that exercise everyone except the Veneto Diocese was immeasurably richer.

  Calvi had been introduced to Marcinkus by Sindona in 1971. Thus Bishop Marcinkus, the man who on his own admission ‘knew nothing about banking’, had two excellent tutors. Meanwhile Marcinkus had been promoted by Pope Paul and was now President of the Vatican Bank.

  The various Vatican departments continued to unload a wide variety of companies on Sindona and then on Calvi. In 1970, for example, they finally sold Serono, a pharmaceutical works which featured among its more successful lines an oral contraceptive pill.

  An additional source of profit for the Sindona/Vatican-owned Finabank was another part of the cause of Italy’s faltering economy: double invoicing. As Bordoni observed: ‘It was less succulent than the kick-backs earned through the illegal exportation of black money but it still reached a high figure.’

  Exports would be invoiced at costs that were much lower than the real ones. Thus the bent invoice would be officially paid via the Bank of Italy which, of course, would pass the information on to the Taxation Department. The exporter would be taxed on this low figure.

  The balance was paid by the receiver of the goods abroad direct to Finabank. In many instances Italian exporters actually showed a loss which was converted into tax credits by the Government.

  The large number of Sindona-owned exporting companies showed such losses. Sindona would bribe various Government politicians to allow this situation to continue. He would also argue that by doing so the Government was helping to keep down unemployment.

  A similar crime was worked on imports. Then the invoice would be for a much higher figure than the actual cost of the goods. When the goods passed through customs, payment of the artificially high figure would be made by the company to the foreign supplier. The foreign supplier in turn would assign the balance to a numbered account at Finabank or occasionally one of the other Swiss banks.

  Pope Paul’s poor Church for the poor grew instead immeasurably richer. The Vatican divestment of Italian wealth had resulted in men like Sindona and Calvi robbing the world to pay St Peter and Pope Paul.

  Finabank was also a part of the giant laundry for Mafia/P2/criminal money. With the Vatican retaining a 5 per cent of Società General Immobiliare it owned part of that laundry. With the further use by the Mafia of the Vatican Bank to move money both into and out of Italy, the Vatican ultimately owned the entire laundry. Use by Sindona and his staff of the Vatican Bank’s accounts at BPF has already been explained. That was one of the methods of getting dirty money out of the country and cleaning it at Finabank, but this was a two-way operation. Dirty money from the Mafia operating in Mexico and Canada and the USA was also being cleaned as it flowed into Italy. The operation was very simple. To quote again from Carlo Bordoni:

  These companies in Canada and Mexico were used to bring into the USA over the Canadian and Mexican borders dollars from the Mafia, from the Freemasons and from numerous illegal and criminal operations; the money arrived in suitcases and was then invested in US State Bonds. These were then sent to Finabank. Clean and easily negotiable.

  The USA Mafia obviously had no problems with borders. Their money was converted to State Bonds directly by Edilcentro of Washington, a subsidiary of SGI; then the Bonds also found their way to Finabank. If the Mafia wished to bring some of their clean money into Italy they used Vatican Bank channels.

  In the early 1970s Sindona extolled his own virtues to Bordoni. ‘My operating philosophy is based on my personality which is unique in the world, on well-told lies and on the efficient weapon of blackmail.’

  Part of the blackmail technique was to bribe. A bribe in Sindona’s view was ‘merely an investment. It gave you a hold over the individual bribed’. Thus he unofficially ‘financed’ the ruling Italian political party, the Christian Democrats: 2 billion lire to ensure the promotion of party nominee Mario Barone to the position of Managing Director of Banco di Roma; 11 billion lire to finance the same party’s campaign against the divorce referendum. He arranged for the Christian Democrats to ‘earn’ billions of dollars. He opened an account for the party at Finabank, account no SIDC. Throughout the early 1970s three-quarters of a million dollars were transferred to this account. Sindona, the self-proclaimed hero of anti-communism, was also a man to hedge his bets. He opened another account at Finabank for the Italian Communist Party. Into this he also poured three-quarters of a million dollars per month, of other people’s money, account no SICO.

  He speculated against the lira, the dollar, the German Mark and the Swiss franc. With regard to his massive speculation against the lira (a 650 million dollar operation entirely created by Sindona), he told Italian Prime Minister Andreotti that he was aware of the existence of heavy speculation against the lira, and in order to learn more about the size of the operation and the source, he had instructed Bordoni through Moneyrex to join in in a ‘symbolic’ manner. Having reaped enormous profits by attacking the lira, he was hailed by Andreotti as ‘The Saviour of the Lira’. It was during this period that he received a citation presented by the American Ambassador to Rome. He was named ‘Man of the Year for 1973’.

  A year earlier, at a reception given to celebrate his purchase of the Rome Daily American, Sindona had announced that he intended to expand his interests and move a further 100 million dollars into the USA. Among those listening to his speech was his close friend Bishop Paul Marcinkus. In reality, by purchasing the Daily American Sindona was already expanding his USA interests. The paper had been backed by the CIA. American Congress was pressing the CIA to make precise disclosures of exactly what they did with the millions allocated to them. Like Pope Paul, they thought the moment seemed propitious to jettison a few embarrassing investments. Sindona insists that he bought the paper at the specific request of Ambassador Martin, who feared that it would ‘fall into the hands of the leftists’. Martin in decidedly undiplomatic language has denied this. He called Sindona ‘a liar’.

  Whoever asked him, there is no doubt that the paper had been previously subsidized by the CIA. There is equally no doubt that this was not the first favour Sindona did for The Compan
y. In 1970 the CIA had asked him to buy a 2 million bond issue from the National Bank of Yugoslavia. Sindona obliged. The CIA placed the bonds in Yugoslavia in what they considered ‘friendly hands’. Sindona also moved money on behalf of the CIA into the hands of right-wing groups in Greece and Italy.

  Thwarted in his attempt to take over Bastogi, the large Milan-based holding company, by the Italian Establishment, who were motivated partially by fear of an ever-increasingly powerful Sindona and partially by racialism towards a Sicilian, The Shark turned his attention to the USA. There this man, who already owned more banks than many men have shirts, bought another bank, the Franklin National Bank of New York.

  The Franklin was the twentieth largest bank in the country. Sindona paid 40 million dollars for one million shares in it, representing 21.6 interest. He paid 40 dollars per share at a time when the share price was 32 dollars. More important, this time he had bought a very sick bank. It was tottering on the edge of bankruptcy. The fact that he used 40 million dollars of other people’s money from his Italian banks without reference to the owners should not hide from us that, for once, a few people in New York saw the boy from Patti coming.

  The true megalomania of Sindona can be gauged from the fact that, having realized what he had acquired, he did not give a damn. To him dealing with tottering banks was an everyday event as long as huge deposits could be kept whirling around on paper – as long as the Telex machine was there to transfer A to B and then to C and then back to A again.

  Within twenty-four hours of his purchase and before he had even had an opportunity to try out the boardroom for size, the Franklin Bank announced its trading figures for the second quarter of 1972. They showed a 28 per cent drop from the same period for 1971. Sindona The Shark, the saviour of the lira and the man Marcinkus considered to ‘be well ahead of his time as far as banking matters are concerned’, took the news in typical Sindona manner. ‘I have important connections in all important financial centres. Those who do business with Michele Sindona will do business with Franklin National.’ The previous owners meanwhile were laughing all the way to another bank.