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

by Gerald Posner

  Take them back, the Vatican duo offered.141

  Rebuffed by the Vatican Bank, Rosone returned the following day to Milan and convened an emergency meeting of the bank’s board. Nearly a year after Calvi’s conviction for fraud, the directors finally passed a resolution removing him as chairman and appointing Rosone as his replacement. The stock price was getting hammered. Nervous depositors might make a run on the bank. During the middle of the meeting, Rosone returned to his private office to take a telephone call. It was Leemans who had managed to get a meeting with Marcinkus soon after the archbishop had returned to Rome. Leemans had again insisted that the IOR live up to the promises in its patronage letters and guarantee the repayment of the ghost companies’ debt. Again he had floated the idea of a one-billion-dollar bailout loan. Marcinkus proved no more receptive than Mennini and de Strobel. The IOR would not consider any deal in which the church accepted responsibility for even a dime of the ghost company loans.

  “You realize what this means?” asked Leemans. “When I leave this room I go straight to the telephone, and let the Ambrosiano board know there’s nothing else for it; they’ll have to call in the Bank of Italy. That means everything about the letters of patronage will have to come out.”

  “I realize I’m going to have to pay a high price for that, personally,” replied Marcinkus.142

  Rosone and Leemans agreed that without any help from the Vatican they had no alternative but to ask the Bank of Italy to take control of the Ambrosiano. By six that night, Bank of Italy regulators swarmed into the bank’s headquarters. Rosone stayed in his office to give some press interviews over the phone, trying to spin the day’s developments and to calm the nerves of 39,000 depositors and 4,200 employees. He repeatedly told reporters that it was only a temporary arrangement to help the bank stabilize itself amid a torrent of contradictory rumors. Around 7:15 p.m., while Rosone talked to a journalist from the weekly L’Espresso, someone ran in yelling, “Oh my God, she’s killed herself!” The “she” was fifty-five-year-old Graziella Teresa Corrocher, Calvi’s personal secretary, and an Ambrosiano employee for thirty years. She had evidently leapt out a fourth-floor window.143 A handwritten note scribbled in a red felt marker was found on her desk. In it, she apologized for any “disturbance I give,” but she also castigated Calvi, saying about him, “What a disgrace to run away. May he be cursed a thousand times for the harm he has done to everyone at the bank.”144 Milan’s coroner ruled her death a suicide.

  That same night, Roberto Calvi died in London. His body hanged from Blackfriars Bridge until its discovery the next morning. The news of his death sent the Ambrosiano’s shares tumbling 18 percent before regulators suspended the stock (it never traded again).145 And the news was barely public when Father Lorenzo Zorza, the priest who had met Carlo Calvi in New York with the Vatican’s U.N. envoy, called the Calvi family to offer his services. “I thought maybe they needed my help,” Zorza recalled. “I might be able to assist them in some way. We knew a lot of the same people.”146 They refused.147

  * * *

  I. Italian criminal prosecutors later investigated Pazienza as the “mastermind” of an intelligence plot to coach the Pope’s would-be assassin into incriminating the Bulgarian secret service (no charges were ever filed). He was subsequently charged with fraud over Calvi’s Ambrosiano and extradited in 1986 from the United States, where he had been arrested in 1984 (Pazienza told the author he had helped the U.S. Marshals and FBI on key cases and considered the extradition “a complete betrayal by the Americans”). Although he was acquitted of the Ambrosiano charge, he was convicted in a subsequent case of trying to derail the massive investigation into the 1980 terrorist train bombing in Bologna that had killed eighty-five. Prosecutors said Pazienza had laid a trail of false evidence putting the blame on foreign extremists. Licio Gelli was convicted in absentia. Both men received ten-year sentences. An appeals court overturned the convictions in 1990, but Pazienza’s conviction was reinstated four years later. He was paroled in 2009. This author located him through an Italian priest, Father Lorenzo Zorza.19

  II. The following March, the forty-two-year-old Zorza was arrested on federal charges of smuggling stolen Italian Renaissance paintings into the United States. An informant testified at the trial that Zorza carried a two-foot-square diplomatic pouch, and told his customers he preferred that when it came to stolen canvasses, “It’s better if it can fold.” He pled guilty and got three years probation. Five years later, New York City detectives arrested Zorza for trying to sell $40,000 in stolen Broadway tickets. The case never went to trial.

  In April 1988, Zorza was charged in the U.S. for using a New Jersey home for runaway girls as a cover for shipping millions of dollars in Sicilian heroin to the U.S. The New York press dubbed Zorza the “Pizza Priest.” Italian police arrested him in Bologna and charged him with “associating with organized crime, criminal association for drug trafficking, importation of drugs, counterfeiting and illegal exportation of art works.” The U.S. charges were dismissed—his lawyer was high-priced, Miami-based criminal defense attorney Frank Rubino, who later represented Panama’s strongman Manuel Noriega. In Italy, Zorza was ultimately convicted and served eighteen months. As the only inmate-priest, he was treated very well, enjoying his spare time refereeing prison soccer matches. When the author located Zorza in 2013, he was traveling between Europe, America, and Brazil. He still boasted solid Curial connections, some of which the author confirmed. The man who asked me to call him Father Larry was promoting an Amazon-based herb company as well as seeking investors for a mammoth rainforest shrine to Popes Benedict and Francis. “I have made some mistakes in my past,” he admitted. “They have made me a better server to God.”36

  III. Pazienza told the author that he was not surprised at Calvi’s flight from Italy. A few months earlier Pazienza had made initial preparations for an elaborate escape plan involving a Calvi double, a Hollywood makeup artist, a speedboat with a champion powerboat driver, and stops in Corsica and a military airfield in Morocco before a final destination in Panama. The plan was a contingency in case Calvi had no other way to get out of Italy.

  25

  “Protect the Source”

  The Calvis braced for what they expected would be the complete unraveling of the Ambrosiano and its role with the Vatican. They had enough problems without getting involved further with Father Zorza.

  The man on the spot, however, after Calvi’s death, was Archbishop Marcinkus. Even the Chicago Tribune, normally friendly to the hometown boy, reported, “The plot would do credit to a paperback thriller, but it is less than entertaining to key men in the Vatican who are deeply worried by Archbishop Marcinkus’s latest brush with the shadier side of Italy’s financial world.”1

  There was little doubt that Marcinkus’s long list of Curial enemies, as well as those who resented the IOR’s unmatched autonomy, would demand full answers and real reforms.

  Il Mondo, a financial weekly, broke the story that Marcinkus and the IOR had given Calvi “guarantees of some of its dealings in South America” (the patronage letters).2 When the Italian Bankers’ Association held its annual meeting in Rome on June 22, 1982, it seemed that everyone was trading gossip about the rumored comfort letters. That same day the parliamentary committee investigating the P2 scandal expanded its probe to encompass Calvi and his businesses (a second committee would soon focus solely on the Ambrosiano). The Calvi family added to the drama by announcing they believed that Roberto Calvi had been murdered.3

  On Friday, July 2, Beniamino Andreatta, Italy’s Treasury Minister, told parliament that he expected no less than “a clear assumption of responsibility on the part of IOR, which appears to have played the part of a de facto partner in certain operations with Banco Ambrosiano.”4 Andreatta, a committed leftist, was not about to allow the church to shirk its responsibilities, as he believed it had done when the Sindona affair had unraveled.5 He realized there was “practically no way to confront the IOR because of the autonomy it enjo
ys.”6 So he instead urged the Pope to voluntarily acknowledge the church’s responsibility for the $1.2 billion in debt that had led to the Ambrosiano’s collapse.

  That same day, two Bank of Italy investigators met informally with Marcinkus at the Vatican.7 The issue was again the patronage letters. Marcinkus repeatedly refused to answer direct questions.8 But he repeated what Mennini and de Strobel had told the Ambrosiano’s Rosone: the secret letter from Calvi absolved the Vatican of any responsibility for the debts listed in those letters. As far as the investigators were concerned, that counter-letter meant that Marcinkus and Calvi had conspired to pull off the scam. Calvi had written his indemnity while serving as the chairman of Ambrosiano Overseas in Nassau, the very company on which Marcinkus sat on the board.9

  To assuage their obvious irritation, Marcinkus suggested that the Vatican Bank might accept responsibility for a single loan—for an undetermined amount—to the Banco Andino branch in Peru.10 That was an offer he soon might have wanted back. The following day, a senator, Franco Calamandrei, announced from the floor of Italy’s parliament, “A traffic in sophisticated arms to Argentina through the Banco Andino seems to be the last link in the chain of events that led to Mr. Calvi’s death beneath Blackfriars Bridge.”11

  The Italian press was in a feeding frenzy, mixing solid reporting with a hodgepodge of anonymously sourced rumors. Milan’s Corriere della Sera and Turin’s daily, La Stampa, reported that Secretary of State Casaroli had prevailed on John Paul to convince Marcinkus to resign.12 According to Milan’s Il Giornale Nuovo “the pope would appoint Marcinkus as archbishop of Chicago to fill the position left empty since Cardinal John Cody died last April.”13 A Rome tabloid claimed Italian prosecutors were weighing fraud charges against the IOR chief.14

  “Every day there were more bad headlines in the Italian press,” recalled former U.S. Deputy Chief of Mission Michael Hornblow, who was stationed at the Vatican from 1980 to 1983.15 “It was such a big deal. It was hard to know what was true or not, but there’s no doubt that a lot people blamed Marcinkus for the scandal. And there were plenty who were asking why the Pope did not get rid of him.”16

  Marcinkus was not aware that Italy’s Treasury Ministry was lobbying hard behind the scenes to get him booted. The Bank of Italy officials who had interviewed him just days earlier had sent John Paul a blunt memo, contending that in order “to avert further embarrassment. . . . It is in the best interests of the Holy See that the Archbishop not remain in a position of suspicion.”17 The recommendation was unofficial since Italy could not advise the Pope, a sovereign head of state, to fire Marcinkus.

  On July 7, Marcinkus gave his first public statement since Calvi’s death, a few sentences to his hometown newspaper, the Chicago Tribune: “I don’t resign under these circumstances. I have not been involved in anything that could be considered fraud . . . I am completely unaware of any move by the Holy Father to get rid of me.”18

  A few days later, on July 11, the Vatican announced the appointment of Cincinnati’s Archbishop Joseph Bernardin as the acting head of the Chicago diocese (the Pope would give Bernardin a red hat the following year). Church officials hoped that made it clear “that Marcinkus would remain at the Vatican.”19 But it was too subtle a message to slow the media speculation. For the rest of the year there was a steady stream of press stories that Marcinkus was either about to resign or be fired. In November, he again dismissed the rumors as “unfounded,” and said, “I don’t intend to tender a resignation. I intend to see this thing through to the end.”20

  Secretary of State Casaroli wanted to demonstrate the Vatican was doing more than just being reactive.21 So his office announced that the church had taken the unusual step of calling in three outside financial experts to examine the Vatican Bank–Ambrosiano dealings.22 The three laymen were Joseph Brennan, former chairman of New York’s Emigrant Savings Bank; Carlo Cerutti, the vice chairman of STET, the communications subsidiary of a large Italian conglomerate; and Philippe de Weck, the former chairman of Union des Banques Suisses.23 Soon, Hermann Josef Abs, Deutsche Bank’s ex-chairman, came on. Their assignment, according to the Vatican’s press release, was to “examine the situation” and then to provide “suggestions and advice.”

  All members of the independent committee were devout Catholics. Vaticanologists had little expectation they might be given adequate investigating powers or that their final report might be made public.24 Italy’s Treasury noted that the committee was “a positive thing.”25 Even those words had been intensely debated, some wanting instead to push openly for Marcinkus to be relieved of his duties.

  The first in a series of defaults began in mid-July on a Midland Bank $40 million loan to Luxembourg’s Banco Ambrosiano Holdings.26 That caused a chain reaction of cross-defaults with dozens of other banks.27 Later that same day the Bahamian government suspended the banking license of the Ambrosiano Overseas and began an official investigation.28 Eventually, the so-called Gang of 88, the creditor banks to Banco Ambrosiano Holdings, demanded payments of upward of $500 million in bad loans just from that single Calvi offshore subsidiary.29 The Bank of Italy resisted calls to bail out the Ambrosiano’s foreign subsidiaries, even though there were fears it might devolve into an international banking crisis. Instead, on August 6, the Treasury Minister shuttered the Ambrosiano, making the $1.4 billion dollar failure the largest in the country’s history.30

  As Marcinkus and the IOR prepared for what they knew would be intense scrutiny, pressure built about P2 and Sindona. After executing another search warrant, prosecutors found evidence the Masons had been planning a coup.31 Was it possible that Marcinkus, so closely involved with top P2 members, knew nothing about it? Carlo Calvi told the press that Poland’s Solidarity had received money through his father and P2. Marcinkus knew it was only a matter of time until the IOR got dragged into “the money to Solidarity” story.I

  On July 22, more bad news broke on a new front. A Milanese judge, Bruno Apicella, indicted Luigi Mennini and Pellegrino de Strobel and twenty-two other defendants for fraudulent bankruptcy and illegal currency trading related to the 1974 collapse of Sindona’s Banca Privata.33 Sindona was among those charged, as was Massimo Spada, the former IOR official and top Sindona aide.34 Before the month was finished, Luigi D’Osso, an investigating magistrate, sent comunicati giudiziari (judicial communiqués) to the Vatican informing Marcinkus, Mennini, and de Strobel that they were material witnesses in the criminal probe into the Ambrosiano’s collapse.35 The Vatican refused to accept that notice since the Italians had not sent it through diplomatic channels.36

  With all the bad press and flurry of charges and countercharges, even some of Marcinkus’s best friends sometimes worried about whether he might have crossed some legal line. One of them, William Wilson, then Ronald Reagan’s personal envoy to the Vatican, was a convert to Catholicism who was—according to his deputy, Michael Hornblow—“more Catholic than the Pope.”37 Wilson was one of Reagan’s closest friends, the head of his informal kitchen cabinet, and a co-trustee of Nancy and Ronald Reagan’s living trust.38 He had lobbied hard to get the Vatican assignment even though he could have chosen a far more prestigious foreign service posting. Although he was a businessman and not a politician or diplomat, Wilson’s instincts were good. He was convinced that with the first Pope ever from an Iron Curtain country, the Vatican might be a far more important ally to Cold Warrior Reagan than anyone imagined.39

  Wilson settled into Rome in February 1981. Before long he described Marcinkus as “a very good friend.”40 “We saw Marcinkus a lot,” Hornblow, the Deputy Chief of the U.S. Mission, recalled. “Marcinkus was number one on our list of people to whom we wanted to talk as much as possible. He saw the Pope the most often. He was a great gossip and storyteller.”41

  Disclosed here for the first time, soon after Wilson’s arrival in Rome, Marcinkus became a confidential source of information to the U.S. mission at the Vatican.II State Department files declassified to the author reveal that Marcinkus eve
n provided U.S. officials with personal details about the Pope. The documents lay out plans by Marcinkus—at the behest of embassy officials—to encourage John Paul to publicly endorse American positions on a broad range of political issues, including: the war on drugs; the guerrilla fighting in El Salvador; bigger defense budgets; the Soviet invasion of Afghanistan; and even Reagan’s ambitious missile defense shield.42

  Although Vatican finances dominated the public news, U.S. embassy officials did not ask the archbishop about that since Washington was not interested. The focus was only politics. Marcinkus discussed with them the Vatican’s take on Eastern Europe, Lebanon, the Philippines, and a territorial dispute between Argentina and Chile. And he shared his belief that America should encourage Italy’s socialists to break their alliance with the communists and move toward the political center. He warned Wilson and Hornblow that the Christian Democrats had lost “credibility with the people” and would only regain it if they got “rid of scandal and corruption.”43 Marcinkus even agreed on one occasion—the Pope’s major 1981 address at Hiroshima about the danger of a nuclear holocaust—to review the speech in advance and try to influence it in a way the Americans desired.44 When some of Marcinkus’s private information was passed along to ambassadors at other U.S. embassies, the cables admonished in bold letters: “Please be sure to protect the source.”45 “The bottom line is he trusted us and we had a good relationship with him,” recalls Hornblow.III

  The good relationship meant that Wilson widely shared with diplomats, politicians, and prominent Catholics his opinion “that both he [Marcinkus] and the Vatican Bank are innocent of any wrongdoing.”47 Their friendship also helps to explain why Wilson was prepared to make a remarkable intervention in mid-1982, on Marcinkus’s behalf, to the Justice Department (a move that would in a couple of years come back to haunt both men). In a three-page typewritten letter dated July 15, 1982, Wilson wrote to his good friend, William French Smith, Reagan’s Attorney General. New York publishers Holt Rinehart were about to release a book by Richard Hammer, a true crime author, with the first ever account of the 1973 fraud and counterfeit investigation that prompted the FBI to interview Marcinkus at the Vatican.48 Wilson told the Attorney General that Marcinkus was “very concerned about the book” since it “will contain large amounts of untrue material concerning him.”49 According to Wilson, Marcinkus was “thinking of filing a lawsuit,” but “it would be much better for the Vatican and everyone concerned if the book were not published at all if it does contain false information.” New York’s ex-Mayor Robert Wagner was Wilson’s predecessor at the Vatican. Wilson informed Smith that he had already urged Marcinkus to also discuss his options with Wagner.