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

by Gerald Posner

(11) In 1929, Pius XI was the first Pope since the 1870 loss of the Papal States to recognize the Italian state. The Februrary 24, 1929, cover of La Domenica del Corriere shows Benito Mussolini (far right ) signing the treaty with Papal Secretary of State Cardinal Pietro Gasparri. It recognized the Vatican as a sovereign nation and gave the church its greatest power in centuries.

  (12) As part of the 1929 pact, Italy paid the Vatican for confiscating the Papal States. The Pope hired Bernardino Nogara (left), a well-connected businessman and banker, to invest the windfall. Giuseppe Volpi (right), a business tycoon, was Nogara’s close friend and mentor.

  (13) Despite Wall Street’s 1929 stock market crash, Pius XI embarked on the “Imperial Papacy,” Vatican City’s largest modern-day construction boom. He approved a telegraph office, train station, power plant, an industrial quarter, and a printing facility. Here, Cardinal Pacelli (left) and Pius XI attend the opening of Vatican Radio in 1931.

  (14) Secretary of State Cardinal Pacelli (seated, center), signing an agreement with German Vice Chancellor Franz von Papen (far left). In a historic 1933 accord, the Vatican was the first sovereign state to sign a bilateral treaty with Adolf Hitler’s Third Reich. The Nazis promised to protect Catholics inside Germany in return for the church endorsing Hitler’s government.

  (15) In October 1935, 100,000 Italian troops invaded Ethiopia, part of Mussolini’s vision for a vast East African empire. The Vatican had investments in manufacturers of wartime munitions and weapons. At left, a priest celebrates mass on the front line. Mussolini was so pleased that he told Nazi officials, “Why they [Vatican officials] even declared the Abyssinian war a Holy War!”

  (16) By 1938, Pius XI picked an American Jesuit, John LaFarge, to lead a small team in drafting a Papal Encyclical—Humani Generis Unitas (The Unity of the Human Race)—condemning anti-Semitism and racism. Pius died the following year before the decree was finished. His successor, Pius XII, buried the encyclical in the Vatican’s Secret Archives. LaFarge is far right, during a 1963 presentation of the St. Francis Peace Medal to the Rev. Martin Luther King Jr.

  (17) Cardinal Pacelli, who became Pope in March 1939, took the name Pius XII. He was an acknowledged Teutonophile. In 1931, the number two Nazi, Field Marshall Hermann Göring—who had instituted so-called morality trials intended to embarrass Catholic priests and nuns—visited the Vatican. Here, Göring (second from left) is with Angelo Giuseppe Roncalli, the Papal Nuncio to Bulgaria, and later Pope John XXIII. Göring sent a wire to Hitler: “Mission accomplished. Pope unfrocked. Tiara and pontifical vestments are a perfect fit.”

  (18) Three days after Pacelli became Pope, Germany invaded Czechoslovakia. High-ranking Nazis and church officials met frequently despite the aggression. At a Berlin reception, Papal Nuncio Cesare Orsenigo (left) greets Hitler and his foreign minister Joachim von Ribbentrop. In 1942, Orsenigo turned away an SS officer who wanted to confess a firsthand account of the massacre of Jews.

  (19) The war presented the church with great business risks and opportunities. A central figure was Giuseppe Volpi, a former finance minister for Mussolini, and one of Italy’s most successful businessmen. With Volpi often acting as a proxy, the Vatican invested money in profitable ventures, many of which were in the killing fields of Eastern Europe.

  (20) SS-Brigadeführer Walther Schellenberg directed Nazi foreign intelligence operations from July 1944. After the war he told U.S. interrogators that the Nazis “had many men in the Vatican.” Another German intelligence officer, Reinhard Karl Wilhelm Reme, disclosed the network of Third Reich agents he had recruited in Italy. That list included the name Nogara. That revelation, reported in this book for the first time, raises the question of whether the Vatican’s chief moneyman was a Nazi wartime spy.

  (21) A Croatian priest based in Rome, Krunoslav Draganović, was a member of the Ustaša, an anti-Semitic, anti-Serb, and anti-communist party in power in wartime Croatia. Draganović ran one of several postwar escape networks—sanctioned by high-ranking Vatican clerics and ultimately U.S. and British intelligence—through which hundreds of criminals found safe haven in South America and the Middle East.

  (22) The Vatican used gold as its chief hard asset. Since the Nazis looted the gold reserves of the countries they conquered, the church’s accumulation of the metal proved as morally problematic as did many of its business stakes. Here, an American soldier holds wedding rings from Holocaust victims. The Vatican later denied that it was the repository for the rings and gold coins from 28,000 gypsies murdered in Croatia.

  (23) New York’s Cardinal Francis Spellman had been a friend of Pius XII since the 1920s, when the Pope was a Nuncio to Germany and Spellman was an ambitious monsignor. Spellman was a great asset as the Vatican’s chief American fundraiser. He was also a vehement anticommunist who ensured that the church and the CIA worked together to elect a conservative government in Italy’s first postwar election (1948). In October 1960, a month before they faced off in a presidential election, Spellman hosted Senator John Kennedy and Vice President Richard Nixon at New York’s Alfred E. Smith memorial dinner.

  (24) The death of Pius XII in 1958 was a watershed moment for the Vatican. French Cardinal Eugène Tisserant (center) is blessing the Pope’s corpse. For more than nineteen years Pius had wielded the power of the Papacy as a divine monarch, a throwback to the boldest Popes from early centuries.

  (25) It took three days and eleven ballots in 1958 before the divided cardinals settled on a compromise, Venetian Patriarch Angelo Roncalli. One month shy of his seventy-seventh birthday, he was the first Pope over seventy in more than two hundred years. His choice of John as his Papal name was a surprise: no Pope had taken it for five hundred years because the last John was a divisive anti-Pope. Although some colleagues questioned his capability, he proved wildly popular with ordinary Catholics. During his five years as Pope, John XXIII stripped away much of the pomp his predecessors had carefully guarded. In 1958 he visited Rome’s largest prison at Christmas.

  (26) Paul VI (1963–1978) oversaw a revolution in how the church managed its money and investments. He relied on so-called men of confidence, lay Catholic financiers who not only advised the Pontiff about how to invest the church’s money, but also became partners with the Vatican on many speculative ventures. American Monsignor Paul Marcinkus (left) coordinated the logistics and security for the Pontiff’s foreign trips, and served as translator for U.S. dignitaries. In this 1964 audience, the Pope met with civil rights leaders Dr. Martin Luther King Jr. and the Rev. Ralph Abernathy.

  27. and 28. In the late 1950s, Michele Sindona (left), an aggressive tax attorney in Milan, started doing some legal work for the Vatican Bank. His influence grew exponentially but ended in 1974 with the then record $2 billion failure of his Franklin National Bank. For the next twelve years he battled criminal charges in Italy and the United States. In 1986, Sindona was convicted in the assassination of Giorgio Ambrosoli (right), the court-appointed liquidator of his banking empire. Two days later Sindona died in his high-security Italian jail cell after drinking cyanide-laced espresso. The coroner ruled it suicide.

  (29) Many people who met the six-foot-three Chicago-area native Paul Marcinkus thought he seemed more likely to be a football lineman than a Catholic priest. His rise in the church started in 1971, when Pope Paul VI promoted him to bishop and appointed him as the chief cleric at the Vatican Bank. Marcinkus had a healthy appetite for risk, one that eventually put the Vatican Bank at the center of half a dozen international criminal and government investigations.

  (30) Roberto Calvi was an ambitious banker who replaced Sindona as the leading Italian financier working with the Vatican Bank. When his overextended empire collapsed, it almost took the Vatican Bank with it. In 1982, while on the run from Italian police, Calvi turned up dead, hanging from Blackfriars Bridge in London. Ruled at first a suicide, it took the Calvi family twenty-five years to convince authorities that he was murdered. In 2010, five men were tried and acquitted in Italy. Calvi’s murder remai
ns unsolved.

  31. and 32. Luigi Mennini (left ), the father of fourteen children, was a savvy private banker who started working in a Vatican financial department in 1930. Massimo Spada (above, center left ) was a stockbroker who began working there in 1929. Over several decades they became the most powerful lay executives at the Vatican Bank and were key advisors to Marcinkus. Italian prosecutors unsuccessfully tried bringing both men to trial—with Marcinkus—for fraud.

  (33) Licio Gelli was a wealthy businessman with a reputation as a fixer. He also led a secret, underground Masonic lodge, Propagande Due (P2). By the time police disbanded it in 1981 over suspicions it was plotting a coup, its 953 members were such a stunning collection of “who’s who” that Italian journalists dubbed P2 a “parallel state within a state.” Sindona and Calvi were members, and Gelli did business with Marcinkus and the Vatican Bank.

  (34) Albino Luciani, the Patriarch of Venice, was elected Pope in 1978. He took the Papal name John Paul I. Three days later a nun found the sixty-five-year-old John Paul dead in his bed. The cardinals voted not to conduct an autopsy (at left, his body on display). Unfounded but popular conspiracy theories that the Pope was murdered to prevent him from reforming the Vatican Bank have since flourished.

  (35) It took three days for the cardinals to select Kraków’s Karol Jósef Wojtyla. At fifty-eight, he was the youngest Pope since 1846 and the first non-Italian selected in more than four centuries. He took the name John Paul II. His fierce anticommunism made him a natural ally of Ronald Reagan, shown here with Nancy Reagan meeting John Paul for the first time in 1982.

  (36) CIA director William Casey met with John Paul II frequently, and the Vatican and the United States shared intelligence about the Eastern Bloc. With the Pope’s approval, millions of dollars of covert U.S. aid passed through the Vatican Bank to Solidarity, the Polish trade union at the heart of resistance to the Communist government. On May 13, 1981, at St. Peter’s Square (right), a Turkish gunman shot and almost killed John Paul. To this day, many believe that the anticommunist Pope was the target of a plot hatched by Bulgarian intelligence.

  (37) In 1994, President Bill Clinton signed an executive order declassifying wartime files from eleven key government agencies, including the CIA, NSA, and State Department. One 1946 memo from a Treasury agent reported that about $225 million in stolen gold had ended up at the Vatican. Edgar Bronfman Sr., the influential head of the World Jewish Congress (right), spearheaded an international restitution effort that relied in part on lawsuits from survivors, as well as pressure from Western governments. Only the Vatican refused to open its files or make any contribution to a Holocaust compensation fund.

  (38) In 2006 John Paul visited the Nazi death camp Auschwitz.

  (39) The last decade of John Paul’s Papacy was defined in part by his personal battle with Parkinson’s disease. Upon his 2005 death, many Vatican observers expected the cardinals to select a younger Pontiff. But their choice was seventy-eight-year-old Cardinal Joseph Aloisius Ratzinger. A hardline conservative, Ratzinger was the first German elected Pope in a thousand years. His Papal name was Benedict XVI. His selection sparked controversy in part because he had served as a teen in the Hitler Youth (at sixteen, in 1943, drafted into a German antiaircraft unit).

  (40) Benedict selected Genoa’s Cardinal Tarcisio Bertone (center) in June 2005 as his Secretary of State. Bertone stocked the Vatican’s bureaucracy with loyalists and resisted financial reforms. Benedict’s unprecedented resignation in 2013 stunned insiders and ordinary Catholics alike. On the far left is German Monsignor Georg Gänswein, Benedict’s personal secretary.

  (41) When Gänswein appeared on the cover of the Italian edition of Vanity Fair in 2013, it kicked off a firestorm of backbiting and jealousy about him inside the Vatican.

  (42) In 2009, Benedict appointed Ettore Gotti Tedeschi, a conservative economist and chief of Italian operations for Spain’s Banco Santander, as the president of the Vatican Bank. The outspoken Gotti Tedeschi irritated many senior clerics. What little headway he made in reforming the Vatican Bank was stopped cold by a 2012 Italian criminal investigation into money laundering. Gotti Tedeschi was dismissed after a “no confidence” vote by the Vatican Bank’s directors.

  (43) At the conclave of cardinals in March 2013 that selected Benedict’s replacement, most church observers wrote off Buenos Aires’ Cardinal Jorge Bergoglio (above, in 1966, as a seminarian). Although he had finished second in the 2005 vote, at seventy-six he was thought too old. But it took only five votes to put him over the top. Pope Francis emerged from the conclave as a likable and humble populist who was instantly popular with both Catholics and non-Catholics.

  (44) Pope Francis as “Man of the Year” for 2013 on the cover of Time magazine.

  (45) Pope Francis has backed the reformers when it comes to the finances of the Vatican. One of the key arrivals is René Brülhart. He is a forty-two-year-old Swiss anti-money-laundering expert who for eight years ran Liechtenstein’s Financial Intelligence Unit. At the Vatican, he has earned the full support of Pope Francis. When Brülhart complained that five directors on his regulatory authority were slowing his progress, Francis fired them all in May 2014. Two months later the Pope hired a trio from Wall Street to fix the Vatican’s wayward finances.

  Acknowledgments

  Writing about an institution that prizes its secrecy is no easy task. The research for this book began in 2005. The Vatican was resistant to cooperating, rejecting my application for access to its Secret Archives and also ignoring many requests for interviews. The story of power and money Rome preferred I not tell was instead found scattered in the archives of governments and private companies in more than a dozen countries on three continents. Litigation files and court records over the sex abuse scandal opened a door to understanding how the church protected its assets. Documents unearthed from World War II intelligence files answered some long-standing questions about whether the Vatican profited in the killing fields of Europe during the Holocaust. Buried inside the U.S. Securities and Exchange Commission were records that helped fill in some missing parts of the puzzle about how the Vatican Bank did business through proxies. More than 150 hours of interviews supplemented the information in the archives, and in some instances led to independent revelations about the church’s finances. A handful of clerics and lay officials in Rome—who, fearing retribution, spoke only on the condition of anonymity—gave me an extraordinary look into the cutthroat infighting that has often crippled the modern Papacy. Those interviews lay out clearly the challenge that faces Pope Francis when it comes to successfully reforming the finances of the Vatican.

  I am indebted to many people for assistance during this investigation. I am particularly grateful once again to the now retired Robert Wolfe, whose pioneering efforts at the Independent Working Group were critical in the declassification of some of the U.S. documents necessary to understand what the Vatican Bank did during World War II. Also many thanks to Rebecca L. Collier, William Cunliffe, Greg Bradsher, and Miriam Kleiman, National Archives at College Park, Maryland, and Washington, D.C.; David Clark, Harry S. Truman Library, Independence, Missouri; Renata Martano, Historical Archives of the Bank of Italy (ASBI), Rome; Dr. Robert K. O’Neill and Justine Sundaram of the John J. Birns Library, Boston College; Karen Beach, Boston Athenaeum, Boston; Sandra Garcia-Myers, Higham Collection, USC Cinematic Arts Library, Los Angeles; Lynn Conway and Scott Taylor, J. Graham Parsons and William A. Wilson Papers, Georgetown University Library, Special Collections Research Center, Washington, D.C.

  In the production of documents from Freedom of Information requests, I am indebted to Thomas McIntyre, William Stewart III, Martin Renkiewicz, Kevin Smith, GayLa D. Sessoms, Thomas Sylvia, David M. Hardy, David Mrozowski, and Katherine Myrick at various subsections of the Justice Department, most notably the National Drug Intelligence Center and the Drug Enforcement Administration; Anne Baker and Gaisha Cook at the State Department; Deborah Osinbajo and Gregory Smith at the Financial Crimes
Enforcement Network and Dale Underwood at the Department of the Treasury; Scott Koch at the Central Intelligence Agency; and Louis F. Giles at the National Security Agency.

  Many thanks to David Clohessy at SNAP (Survivors Network of Those Abused by Priests). My wife, Trisha, and I enjoyed the hospitality of Dr. Jonathan Levy. He was very generous with his time and provided his litigation files in his decade-long class action against the Vatican Bank. Marc Masurovsky, of the European Shoah Legacy Institute, has a remarkable knowledge of the Nazi ratlines and Allied intelligence. His groundbreaking work was a great assistance.

  Jason Berry is in a small club of successful journalists. Not only has his award-winning work on the church and the clerical sex abuse crisis set the standard for investigative work in this field, but he was always remarkably willing to help. Even when he was on deadline he would somehow find the time to point me to key sources and provide information from his own voluminous research. His help was beyond the call of duty, and for that I will always be obliged. Equally helpful was Professor Michael Phayer, the author of two acclaimed books about the Vatican and World War II, who guided me principally when it came to matters of Nazi gold and the church. Professors and authors John Cornwell and John F. Pollard also were generous in assisting me on my research requests. And in Italy, many thanks to authors Philip Willan and the late Benny Lai.