God's Bankers: A History of Money and Power at the Vatican

by Gerald Posner

  Even in Italy, where one might have expected that the Padalino Report was a flashing yellow light, Calvi was as aggressive as ever with the Ambrosiano. Some of his decisions were terrible, as when he approved a large loan to a P2 colleague, Mario Genghini, whose business empire was in serious trouble. The Ambrosiano lost more that $42 million when Genghini’s businesses collapsed.22 But as fast as he lost money, Calvi used his Vatican connections to bail out the Ambrosiano. Marcinkus persuaded some big Vatican customers to loan Calvi money, including Italy’s largest nationalized financial institution, Banca Nazionale del Lavoro, as well as Ente Nazionale Idrocarburi, the country’s state-owned energy holding company, in which the Vatican had investments.23

  • • •

  As Calvi expanded the Ambrosiano network, Sindona fended off an increasingly aggressive legal assault in the United States. His problems had expanded far beyond Italy’s extradition efforts. In January, the same month the Calvi criminal investigation went public in Italy, U.S. prosecutors leaked to The New York Times that a grand jury was investigating former Nixon Secretary of the Treasury David Kennedy over a $200,000 personal loan from Sindona.24 The day after that story, a federal jury in New York capped an eight-week trial by returning guilty verdicts against Franklin National’s former chairman, president, and senior vice president.25 The three were convicted of falsifying the bank’s records to cover up the extent of its losses. Sindona, one of several unindicted co-conspirators, had been subpoenaed to testify during the trial. He avoided answering any questions by invoking his Fifth Amendment rights.

  The long-awaited U.S. criminal move against Sindona came less than two months later, on March 19, when a grand jury returned a sweeping ninety-nine-count indictment against him and his former top aide, Carlo Bordoni.26 The charges included fraud, conspiracy, and misappropriation of $45 million from Franklin.27 The detailed indictment was strong proof that two and a half years after the collapse of Franklin National, federal prosecutors had seemingly solved the riddle of how Sindona shuffled millions between his Italian banks and offshore shells, all intended to boost the paper value of his companies while running Franklin into the ground.28

  Sindona promptly issued a statement: “I am innocent of any wrongdoing. I will plead not guilty to the charges and expect to be vindicated at trial. In any case, according to my understanding, all charges rest on false documents and information originating from Italian sources.” He added: “I was the principal victim of [Franklin’s] collapse.”29

  Sindona’s indictment dominated the news in Italy. Marcinkus was not surprised that because of the American criminal charges most of Sindona’s Italian friends had further distanced themselves from him. “Everybody was calling Sindona a very close friend [during his zenith at] the Banco d’Italia,” a sarcastic Marcinkus later told author John Cornwell. “But it’s strange, that now I’m the only one who has ever known Sindona in Italy. It’s like they said right after the war, ‘There’s not a Fascist in Italy.’ Where did they all go?”30

  Marcinkus was not able to rewrite history, as had many of Sindona’s less high profile friends. Sindona’s close affiliation with Pope Paul VI and the IOR was too well documented. Instead, the bishop hoped that Sindona would not try to deflect attention from his own problems by creating headaches for the church.

  More bad news came a couple of weeks after the Sindona indictment. Giorgio Ambrosoli, the attorney who had been appointed by the Bank of Italy to liquidate Sindona’s $200 million bankrupt Banca Privata Italiana, released a ten-pound, two thousand–page report based on his five-year probe.31 Although Ambrosoli recycled some unfounded conjecture about Mafia connections, much of his report was a compelling indictment of the shady ways Sindona had run his business empire.32 Ambrosoli had overcome significant hurdles to gain rare access to the records of two Swiss banks Sindona controlled.33 And he demonstrated that Sindona had violated Italian laws when he used money from Banca Privata’s depositors to purchase Franklin National.34 The report exposed how Sindona looted seven banks in Italy, Switzerland, West Germany, and the United States. Two hundred and seventy million dollars had disappeared through dubious loans, vanishing interbank deposits, and questionable fiduciary contracts (the 2014 equivalent of $854 million).35

  But the most explosive charge—and the worst for the Vatican—centered on Sindona’s role in Calvi’s purchase of the Banca Cattolica del Veneto. Ambrosoli had uncovered that in August 1972, Sindona had transferred $6,557,377.04 into Radowal, one of Calvi’s offshore shells. That $6.5 million, charged Ambrosoli, was “probably paid as a commission to an American bishop and a Milanese banker.”36 The unnamed American bishop was clearly Marcinkus and the Milanese banker was Calvi.37 Due to the sensitivity of naming the sitting head of a sovereign central bank—Marcinkus—as the recipient of a multimillion-dollar payoff, Ambrosoli had deferred to the wishes of others in the Italian judiciary and the Bank of Italy who thought his public report should only identify Marcinkus by his position, not name. At the time the report was released, Marcinkus did not say a word publicly.

  Starting in December 1978, unidentified men with Sicilian accents began calling Ambrosoli, sometimes offering bribes and other times threatening to kill him for his “lies.”38 He taped a call on January 12 in which a muffled voice said, Devi morire come un cano (You should die like a dog).39 Ambrosoli did not take the threats lightly. In one of his diary entries he wrote, “I will pay a very high price for this job. I knew this before I took it on, and I am not complaining at all because this is a unique chance for me to do something for my country.”40

  Ambrosoli visited New York that June. He shared his findings with American prosecutors, including the evidence about the $6.5 million payoff split between Calvi and Marcinkus.41 A few weeks later Ambrosoli visited Boris Giuliano, the superintendent of Palermo’s noted Flying Squad, an elite anti-racketeering police unit with a storied record of success against the Mafia. They compared notes on mobsters who might have banked with Sindona as well as those who could have links to Calvi.42 Giuliano also confided he was pursuing credible leads about tens of millions laundered by Sicilian heroin traffickers and disguised as legal transfers through Sindona-owned banks in Italy and Switzerland.43

  Sindona was in a fury when he learned about Ambrosoli’s cooperation with the American prosecutors and Italian racketeering squad. For five years Ambrosoli had been chasing Sindona. And it was Ambrosoli who had repeatedly blocked Gelli’s efforts to convince the Bank of Italy to bail out Sindona’s banks and give the Sicilian a second chance. Now, with his damning report, Ambrosoli was in the spotlight as the man not only capable of finishing off Sindona but also exposing the full extent of the Sicilian financier’s ties to the Vatican Bank and Roberto Calvi.

  That the young prosecutor could not be bought or scared off frustrated Sindona. According to banker Enrico Cuccia, a fierce business competitor, he overheard Sindona at a meeting in New York supposedly threatening that “he wanted everyone who had done him harm killed, in particular Giorgio Ambrosoli.”44

  On the evening of July 11, after a long day of depositions Ambrosoli left his office and drove to his Milan apartment.45 After parking his car in its normal spot, he crossed the dark street. Three men came around the corner and ran toward him.

  “Are you Doctor Ambrosoli?”

  “Yes.”

  “Excuse me,” one stranger said. He pulled out a .357 Magnum and fired five bullets into Ambrosoli’s chest.46 Ambrosoli’s wife ran outside and stayed with her husband until paramedics arrived. Notwithstanding their frantic efforts, he died on the way to the hospital, but not before he managed to say that the men who killed him spoke with Italian American accents.47

  The FBI and Italian police were immediately suspicious that Sindona had played a role. He certainly had the motive. Italy, however, was racked by violence against judicial officials. Since leftists and mobsters had killed eight judges, police officials, and prosecuting magistrates over several years, it was possible that someone
else wanted the incorruptible Ambrosoli dead.48 When asked by reporters if he had anything to do with the murder, Sindona was outraged at the suggestion.49

  Two days later, police Lieutenant Colonel Antonio Varisco, who was responsible for investigating P2 and its money laundering, was killed during the morning rush hour in central Rome. And ten days after Ambrosoli was gunned down, a hit man went after Boris Giuliano, the chief of the Flying Squad, who had just finished breakfast at his regular Palermo café. As he went to pay the cashier, a man ran up and emptied his pistol, hitting Giuliano twice in the back of the head. He died instantly.50

  One result of the triple killings was that the official investigation into Sindona’s looting of Banca Privata Italiana, and the charge about the $6.5 million commission that Calvi and Marcinkus might have split, downshifted to slow motion. It was impossible for any Ambrosoli replacement to quickly master five years of files about a complex case.51 And probable suspects for the murders such as mobsters or the Red Brigades spooked some investigators. A team of five financial forensics police inspectors abandoned plans to trace lost funds transferred abroad by Banca Privata. At least one of them received death threats. Giuliano’s successor, Emanuele Basile, was killed the following year, shot repeatedly in the back while walking with his four-year-old daughter, who was not harmed.

  On August 2, 1979, just three weeks after Ambrosoli’s murder, Sindona’s family reported the startling news that the Sicilian financier was missing. Eyewitnesses last spotted him wearing a light beige suit, blue shirt, and a club tie walking south along Fifth Avenue around 7:15 p.m.52 A few hours after he failed to show up for a business meeting the following morning, a man who refused to identify himself called Sindona’s secretary. In heavily accented English, he said, “We now have Michele Sindona as our prisoner. You will be hearing from us.”53

  Because it was only five weeks before the start of his criminal trial, the FBI and police suspected Sindona had fled. But his family feared he was the victim of foul play.54

  One of Sindona’s lead attorneys, former federal judge Marvin Frankel, received a letter from an unidentified group claiming it had Sindona and would subject him to “proletarian justice.”55 The New York bureau of ANSA, the Italian news agency, got a call from a man who spoke Italian with an American accent: “Here is proletarian justice. Michele Sindona will be executed by firing squad at dawn tomorrow.”56 A few days later Sindona’s family received a handwritten letter from him, assuring his wife, Katerina, that he was “not afraid” although the kidnappers were “interrogating me at length every day.”57 Another packet, postmarked from New York, arrived the following week. It contained short notes from Sindona mostly trying to calm his family.58

  The FBI resisted changing the case from a missing person to a kidnapping. But it placed the prosecution’s key witness, codefendant Carlo Bordoni, into protective custody and issued calls for public assistance.59 By that time—two weeks after the disappearance—Interpol, and dozens of detectives and FBI agents, were working leads.60

  Three weeks passed. No one knew if Sindona was alive or dead.61 His trial, scheduled to start on Monday, September 10, was adjourned indefinitely. The next day Sindona’s son-in-law, Pier Sandro Magnoni, received a letter asking for details about Sindona’s businesses, and warning, “If you value his life, you will provide all the facts in your possession.” Sindona’s Rome attorney, Rodolfo Guzzi, got an envelope postmarked from Brooklyn. It included ten handwritten questions about senior Italian politicians, prominent businessmen including Fiat’s Agnelli family, and even the Vatican. A notation after the last one said, “All written by me on precise orders, Sindona.”62 An enclosed photo showed Sindona thin and haggard and sporting an unkempt beard. Around his neck hung a sign with the hand-scrawled words, Il giusto processo lo faremo noi (The fair trial will be done by us). The note was signed by the Cornitato Proletario di Eversione per una Giutizia Migliore (the Proletarian Committee of Subversion for Better Justice).63

  A few days later the first letter asking for money arrived. The kidnappers boasted that Sindona had given up incriminating information about some noted Italians and the Vatican.64 But this time the Italian police got lucky and arrested the messenger who delivered the letter. He was Vincenzo Spatola, a thirty-one-year-old Palermo contractor with solid ties to New York’s Gambino family (the Gambinos were one of New York’s original five Mafia families).65

  Just a few days after Spatola’s arrest, on October 16, 1979, Sindona’s attorney, Marvin Frankel, picked up the telephone at his office. Sindona was on the other end. He sounded exhausted, his voice barely audible: “I was kidnapped but I am free now.” He was at a pay phone in Manhattan at 42nd Street and Tenth Avenue. It had been seventy-six days since his disappearance.

  When his son-in-law and psychiatrist picked him up, Sindona seemed almost hallucinatory. He was recovering from a poorly stitched-up bullet wound on the back of his left thigh.66,I They checked him into Manhattan’s Doctors Hospital with two federal marshals posted outside his private room.68

  Eight days after his return, a still weak Sindona appeared before Judge Thomas Griesa. Claiming his memory was poor as the kidnappers had kept him drugged, he gave a brief and vague account of what had happened, “Leftists” took him at gunpoint from midtown Manhattan. They demanded information they could use against the rich and threatened to try him for “economic crimes” against the people.69 His captors wore masks so he could not identify them, and they all spoke perfect Italian.70 He was blindfolded and moved four times, each trip taking at least an hour. His wound came when a guard shot him during a failed escape. And, Sindona said—speaking in a voice so low that the judge often had to ask him to speak up—he was shocked when the kidnappers set him free in Manhattan.

  Although the prosecutors wanted Sindona remanded to jail, Judge Griesa allowed him to stay free on bail and ordered around-the-clock security for him and his family.71 The judge, concerned that speculation about Sindona’s disappearance might prejudice the jury pool, imposed a gag order on the lawyers.72

  Unknown to Sindona and his legal team, Italian police had detained John Gambino, a senior captain in the Brooklyn-based crime family, during a visit to Italy. Stopped for a passport irregularity, when they searched him they found a slip of paper containing the notation in Italian, “741, Saturday, Frankfurt.” It seemed unimportant. But the FBI discovered that a TWA flight with that number had left Frankfurt for New York’s Kennedy Airport on October 13, three days before Sindona turned up.73 Gambino was a cousin of Vincenzo Spatola, the man arrested in Rome on October 9 for delivering hostage letters.

  In a pre-9/11 era, airlines never maintained passenger lists after flights were completed. FBI agents had to examine every customs declaration filled out at JFK the day TWA 741 arrived. One bore the name Joseph Bonamico of Brooklyn. The street address did not exist, so the agents sent it to the bureau’s forensics lab. Near the same time, Luigi Cavallo, the provocateur who had blackmailed Calvi on Sindona’s behalf was detained by the FBI at JFK. He was traveling on a false passport. And in Italy, police arrested two brothers with ties to the Gambino family, suspects they thought might help answer what happened to Sindona during the ten weeks he was missing.74 Meanwhile, the FBI lab’s results were startling: not only did the handwriting belong to Sindona but his fingerprints were on the customs declaration card in the name Bonamico.

  What the FBI could not yet prove was whether Sindona had planned his “kidnapping.”75

  When FBI agents confronted Sindona about the TWA flight, he seemed nonplussed. Some in the U.S. Attorney’s office thought he had used his “kidnapping” to raise money in Sicily for his expensive legal defense. But they could not trace the money paid to his attorneys.76

  Sindona, meanwhile, was focused again on his upcoming criminal trial. He reached out through Guzzi, his Roman attorney, to the Vatican. Sindona needed strong witnesses willing to testify about his good character. None of his business colleagues were willing to come forward a
nd vouch for his honesty and integrity. What better character witnesses than bishops or cardinals from the Vatican? Guzzi telephoned Marcinkus.

  It is difficult to imagine that after all the terrible fallout from the Vatican’s relationship with Sindona, that Marcinkus—or any other ranking prelate for that matter—would consider doing anything publicly to help Sindona. At an extraordinary special congress, John Paul II called all of the church’s 123 cardinals to Rome a few months earlier. They addressed a series of important issues at the one-year point of his Papacy. And Vatican finances, which were in the red by $20 million, were a priority (the deficit marked the first time the church had ever announced a year-end profit or loss).77 News stories about how “the Vatican has been plagued by money worries” and “serious financial problems” often mentioned the still-undetermined losses from the Sindona affair.78 John Paul had closed the congress and “painted a gloomy picture.” The Associated Press reported, “No Pope has ever spoken so openly on the Vatican’s finances.”79 Some top prelates, including the Pope’s close friend, Warsaw Cardinal Stefan Wyszyński, suggested that the IOR’s profits be used to erase the Church’s deficit. That idea never gained any traction.80

  On December 5, 1979, Marcinkus met in his IOR office with Graham Garner, a partner of the accounting firm Coopers & Lybrand. For more than a year Calvi had foiled Garner’s inquiries about the Vatican Bank and the Nassau-based Cisalpine. Since Marcinkus was still a Cisalpine director, Garner had badgered him for a couple of months before getting the December meeting.81

  Marcinkus introduced Garner to Mennini and de Strobel, and then for an hour gave him a broad description of how the IOR functioned. He tried addressing Garner’s confusion over the Vatican Bank’s dual role as borrower and depositor at the Cisalpine. Every time Garner asked for specifics, Marcinkus either dodged the question or claimed that the IOR’s governing rules prevented him from providing details.82 Garner left that meeting still in the dark that some $228 million in transfers from the Cisalpine to the IOR were in fact back-to-back loans. Most of that money was ending up in a tiny Panamanian firm.83 It was the IOR that stood to lose more than $137 million if Cisalpine and the rest of Calvi’s network collapsed. So while it might be understandable as to why Marcinkus would cover for Calvi, doing so created tremendous liability that would haunt the church in a few years.II