The Helliwell plan also required Vito Genovese's return to the United States for the creation of a system of heroin distribution to the nightclubs of Harlem. This posed a problem, since Genovese was a fugitive wanted for the murder of Ferdinand Boccia, a fellow mobster. Measures had to be taken to ensure Vito's freedom. On June 2, 1945, the day after his arrival in New York harbor, Genovese was arraigned in court and pled not guilty. One week later, Peter LaTempa, a key witness for the prosecution, took some medicine for his gall stones and was found dead in his solitary cell, where he had been placed for protection. An autopsy later revealed enough poison in his system “to kill eight horses.”43 On June 10, Jerry Esposito, the second witness, was found shot to death beside a road in Norwood, New Jersey. All charges against Genovese were dropped. In a memo dated June 30, 1945, Brigadier General Carter W. Clarke wrote that the records regarding Genovese from military intelligence were so “hot” that they should be “filed and no action taken.”
HOMECOMING AND HAVANA
In the summer of 1946, Luciano arrived in his hometown of Lercara Friddi in Sicily, where he received a hero's welcome. Hundreds of people lined the streets waving small American flags. A four-piece band played “The Stars and Stripes Forever” as the mayor, draped in a red sash, ushered the American mobster out of a police car.44 “Half the people I met in Sicily was in the Mafia,” Lucky later reflected, “and by half the people, I mean half the cops, too. Because in Sicily, it goes like this: the Mafia is first, then your own family, then your business, and then the Mafia again.”45
In October, at the request of US intelligence agents, Lucky traveled to Cuba where he met with Frank Costello, Vito Genovese, Albert Anastasia, and Meyer Lansky to discuss the Helliwell plan. Also in attendance were Mike Miranda, Joseph Magliocco, Joe Adonis, Tommy Lucchese, Joe Profaci, Willie Moretti, the Fischetti brothers (heirs to Al Capone), and Santo Trafficante—all important members of the American Mafia. The conference was held at the Hotel Nacional, where Frank Sinatra made his Havana singing debut in honor of Luciano.46 Several of the Mafiosi voiced their opposition to Lucky's plan by maintaining that dealing in junk was beneath them. But, at the end of the conference, all became convinced that providing heroin to blacks was simply giving them what they wanted and who cared what happened to “niggers.”47
THE CREATION OF THE CIA
On September 20, 1945, President Harry S. Truman abolished the OSS and placed its secret intelligence and counterespionage branches under the war department as the Strategic Services Unit (SSU). Within months, the SSU morphed into the National Intelligence Authority and the Central Intelligence Group (CIG), the precursor of the CIA. According to Richard Helms in his memoirs, General Vandenberg, the director of CIG, recruited Allen Dulles, who had returned to his law practice in New York, “to draft a proposal for the shape and organization of what would become the Central Intelligence Agency” from the outline Wild Bill Donovan had created.48 The proposal met with Truman's approval.
The Central Intelligence Agency (CIA) was created in 1947, under the National Security Act, to carry out covert operations “against hostile foreign states or groups or in support of friendly foreign states or groups but which are so planned and conducted that any US government responsibility for them is not evident to unauthorized persons.” True to Wild Bill's vision, the new agency was exempt from disclosure of its “organization, functions, officials, titles, salaries, or numbers of personnel employed.”49 Even its solicitation and distribution of funds was to be concealed from Congressional and Judicial scrutiny. As Tom Braden, a senior CIA operational official in the early 1950s, explained: “The Agency never had to account for the money it spent except to the President if…[he] wanted to know how much money it was spending…otherwise the funds were not only unaccountable, they were unvouchered, so there was really no means of checking them…Since it [the CIA] was unaccountable, could hire as many people as it wanted…. It could hire armies; it could buy banks.”50
AN ELITE AGENCY
President Truman authorized Dulles to supervise the organization of the new agency. In keeping with OSS protocol, Dulles recruited almost exclusively the nation's elite: millionaire businessmen, Wall Street bankers and lawyers, members of the national news media, and Ivy League scholars. The new recruits included Desmond Fitzgerald, Tracy Barnes, and Tommy “the Cork” Corcoran, three Harvard-trained Wall Street lawyers; Richard Bissell, a Yale economics professor; William F. Buckley, Jr., a Yale graduate and son of a prominent oil baron; Philip Graham, a Harvard graduate and future owner of the Washington Post; William Colby, a graduate of Princeton and the Columbia Law School; and Richard Mellon Scaife, the principal heir to the Mellon banking, oil, and aluminum fortune. Rear Admiral Roscoe H. Hillenkoetter of the ONI became the executive director of the CIA and former OSS official and Wall Street lawyer Frank Wisner was appointed head of covert operations. The first concern of the newly created Central Intelligence Agency was funding (since it had received no allocation in the federal budget), which would be solved with the implementation of the brilliant idea of Col. Paul E. Helliwell.51
THE HELLIWELL PLAN HITS HARLEM
During the summer of 1947, the terms of the working relationship between the CIA and the Mafia were ironed out by Frank Wisner and Angleton. Meyer Lansky and Helliwell would work in tandem to handle the financial aspect of the narcotics venture through General Development Corporation, a shell company in Miami.52 Angleton would handle any legal disputes between the mob and the CIA through New York lawyer Mario Brod.53 The two hundred kilos of heroin for the test run would come from Schiaparelli, one of Italy's most respected pharmaceutical companies.54 The product would be shipped by the Sicilian mob in crates of oranges. Half the oranges in the crates would be made of wax and stuffed with one hundred grams of pure heroin.55 Additional heroin would be packed in cans of sardines, wheels of caciocavallo cheese, and barrels of olive oil.56 The drugs would arrive in Cuba, where the heroin would be cut in laboratories controlled by the Trafficante clan. The drugs would then be shipped to New York for distribution in the jazz clubs of Harlem.
Operation X got underway at the close of the year and met with incredible success. The future of Gladio and other covert ventures was no longer in jeopardy. Helliwell's analysis had been correct. The jazz clubs were the perfect spots to peddle heroin. Soon some of the country's leading black musicians—Billie Holiday, Theodore “Fats” Navarro, and Charlie Parker—became hopeless junkies, some of whom would die by overdose. Regarding this development, Harry Anslinger, then head of the Bureau of Narcotics, said: “Jazz entertainers are neither fish nor fowl. They do not get the million-dollar protection Hollywood and Broadway can afford for their stars who have become addicted—and there are many more than will ever be revealed. Perhaps this is because jazz, once considered a decadent kind of music, has only token respectability. Jazz grew up next door to crime, so to speak. Clubs of dubious reputation were, for a long time, the only places where it could be heard.”57
POLICE PROTECTION
Col. Albert Carone, a New York City policeman, served the new drug network as “a bagman for the CIA,” paying law enforcement officials to “look the other way” when drugs were being distributed in Harlem and other black communities.58 A made man within the Genovese crime family, Carone also collected money for drug payments and, later, for money to be laundered by the Vatican from Mafia families in New York, New Jersey, and Pennsylvania. In recognition of his service, the cop/bagman became a Grand Knight of the Sovereign Military of Malta, which has been described as “the military arm of the Holy See.”59 Protection of the drug trade would become reflected in the fact that not one major drug bust was conducted by US officials from 1947 to 1967, despite the rise in heroin addicts from 20,000 to 150,000.60
The success of the drug venture heightened the CIA's concern with secrecy surrounding its ties to organized crime. At the insistence of Rear Admiral Hillenkoetter, the archivists at the Office of Naval Intelligence collected and bu
rned all records concerning Lucky Luciano, including the terms of his parole. ONI agents now insisted that Lucky provided nothing to the war effort. Anyone attempting to unearth the history of the heroin trade in America would be hard pressed to find facts. In 1954, when William Herlands, the New York Commissioner of Investigations, launched a probe into the matter, he was told that the ONI and the CIA would consent to cooperate under three conditions: no classified information would be turned over; ONI and CIA officials could monitor all interviews with former agents; and the final report could not be released to the public.61
RED ALERT
The overriding concern of the new intelligence agency was the situation in Italy, where the Italian Communist Party (Partito Comunista Italiano, or PCI) was poised to take control of the government. Between late 1943 and mid-1944, the PCI had doubled in size and, in the German-occupied northern half of the country, an extremely radical Marxist movement was gathering strength. In the winter of 1944, over five hundred thousand workers in Turin, waving the red flag, shut down the factories for eight days, despite brutal Gestapo repression. The Italian underground of Communist sympathizers grew to 150,000 armed men.62
Postwar Italy stood poised to become the first Communist country in Western Europe. Hundreds of thousands of northerners had either actively supported or actively fought for the partisan movement that had finally forced the German army out of Italy. It was the partisans who had captured Mussolini and who had hung him upside down with his mistress; it was the partisans who continued to assassinate Fascists after the war ended; and it was the partisans who constituted the PCI. By 1946, the division in the country had become acute, with the people in the north wanting a Communist republic and the people in the south wanting a Catholic monarchy.63
In Sicily, the rise of the PCI was even more disconcerting. Girolamo Li Causi, the island's leading Communist, stirred up the masses with his demands for the redistribution of the land's feudal holdings. His words, “we plan no Soviet rule here,” did not reassure the Mafia and the propertied classes, and they revitalized the longings of the landless poor for economic reform.64 In 1947, support for the Left, never previously strong in Sicily, skyrocketed out of nowhere. All of Italy was stunned by the provincial elections, which produced resounding victories for the Communists.
With national elections in Italy scheduled for 1948, US officials were faced with the specter of a coalition coming to power under Palmiro Togliatti, leader of the PCI. Togliatti had spent the war in exile in the Soviet Union.65 The first numbered document of the newly created CIA was a top secret report titled “The Position of the United States with Respect to Italy” (NSC 1/1). The report, which was issued on November 14, 1947, contained the following quote from a cable sent by George Kennan, director of the US State Department's Policy Planning Staff: “As far as Europe is concerned, Italy is obviously the key point. If communists were to win election there our whole position in the Mediterranean, and possibly Western Europe as well, would probably be undermined.”66
THE DIRTY MONEY
The heightened paranoia over the possibly of a PCI victory gave rise to the creation of the Office of Policy Coordination within the CIA. This office was authorized to engage in “paramilitary operations as well as political and economic warfare.”67 The authorization for such covert action, according to CIA director Frank Wisner, was included in a catch-all clause to the National Security Act of 1947 which granted the CIA the right to engage in “functions” related to “intelligence affecting the national security.” And nothing in 1947 seemed more of a threat to the peace and stability of America and the Western World than the threat of a Communist takeover in Italy. In the eyes of Wisner, Dulles, Donovan, and Angleton, the only individuals with the means to ward off this nightmare were Lucky Luciano and Don Calo; and the new intelligence agency, thanks to Helliwell, now had ample cash to pay them.
Of course, the money for the muscle could not be paid to Lucky and the Don Calo clan directly. It had to be channeled through a financial firm that would not be subjected to scrutiny by US treasury agents, Italian bank examiners, or international fiscal monitors. Only one institution possessed such immunity, and it was located in the heart of Vatican City.
The Institute for Works of Religion (IOR), commonly referred to as the Vatican Bank, is a privately held financial institution located inside Vatican City. Founded in 1942, the IOR's role is to safeguard and administer property intended for works of religion or charity. The bank accepts deposits only from top Church officials and entities, according to Italian legal scholar Settimio Caridi. It is run by a president but overseen by five cardinals who report directly to the Vatican and the Vatican's secretary of state. Because so little is known about the bank's daily operations and transactions, it has often been called “the most secret bank in the world.”
Ari Jorish, Forbes, June 26, 2012
Created by Pope Pius XII and Bernardino Nogara on June 27, 1942, the Istituto per le Opere di Religione (IOR), commonly known as the Vatican Bank, is located within the Bastion of Nicholas V, a round tower that had been constructed in 1452 to ward off the threat of a Saracen invasion. The bank remains a sovereign financial agency within a sovereign state. It is an entity unto itself, without corporate or ecclesiastical ties to any other agency of the Holy See. As such, it cannot be compelled to redress wrongs—not even the most egregious violations of international law. Nor can it be forced to release the source of any deposit. The bank resides under the direct jurisdiction of the pope. He owns it; he controls it.1 Swiss guards are stationed to guard the entrance to the bank, and the hermetically sealed bronze doors open only to select members of the Roman Curia—the governing body of the entire Roman Catholic Church.2
Nogara, who became the first president of the IOR, initiated a process of destroying all records of the bank's transactions, including deposits and investments, on a regular basis, so that its operations remain free and clear of public and private scrutiny. Anyone seeking information regarding the dealings of the bank, even its corporate organization, discovers little more than empty file folders within the Vatican archives. The trails of paper flow among three separate and distinct boards of directors. One board consists of high-ranking cardinals, the second of international bankers, and the third of Vatican financial officials. But even these records cannot be subpoenaed for inspection. They remain confidential documents of the sovereign state that can only be examined only by special permission from the pope.3
Of course, the Holy See dutifully publishes financial reports on a yearly basis. The reports, displaying gains and losses, appear to be exhaustive. They contain meticulous records of the incomes and expenditures of every agency within the Holy See—except the IOR. The name of this agency never appears on any balance sheet. From all published reports, this ecclesiastical entity is nonexistent and the Roman Catholic Church survives solely as a hand-to-mouth institution.4
Investigators following the paper trail inevitably come to a dead end. All internal documents and external reports contain statements exempting the Vatican Bank, or IOR, from any ruling or standard of protocol. They are punctuated by such phrases as “always leaving intact the special character of the IOR,” “not including the IOR,” or “with full respect for the juridical status of the IOR.”5
Because of its clandestine workings, millions can be deposited into the IOR on a continuous basis and channeled into numbered Swiss bank accounts without the possibility of detection. It was the perfect place for the CIA and the Sicilian Mafia to launder their ill-gotten gains of the narcotics trade and for the Roman Church to fund its political mission.6 And, according to Moneyval (the anti-money-laundering committee of the Council of Europe), it remains one of the world's leading laundries for dirty cash under Pope Francis.7
CONTRIBUTIONS FROM UNCLE SAM
In 1947, Pope Pius XII was more than willing to allow black money to flow through his bank. The Truman Administration already had funneled more than $350 million to the Holy See for e
conomic relief and political payments.8 The pope used these funds to reactivate the Christian Democratic Party (CDP), which had been dismantled under the reign of Mussolini, and to establish twenty thousand CDP cells throughout Italy.9 The Holy Father also obtained an additional $30 million from Truman's aid package to create Catholic Action, an organization to generate propaganda against the Communists.10
American cardinal Francis Spellman was now called upon to spearhead the Vatican-sponsored campaign to encourage Italian Americans to urge their relatives in the old country to vote against Togliatti and the other Communists. “The fate of Italy depends upon the forthcoming election and the conflict between Communism and Christianity, between slavery and freedom,” Spellman wrote in a pamphlet that was distributed in Catholic parishes throughout the United States.”11 The cardinal also arranged to bombard Italy with radio messages from American celebrities such as Frank Sinatra, Bing Crosby, and Gary Cooper, urging the people to rise up in support of the Christian Democrats in order to check the growth of Communism.12
WILD BILL'S KNIGHTHOOD
Pius XII soon realized he would need millions more in cash from Uncle Sam, since 50 percent of the Italian people were now aligned with the PCI. He was no stranger to US intelligence agents. At the close of the war, the pope, along with Monsignor Giovanni Battista Montini, his Undersecretary of State, had worked with Dulles and the OSS to create the ratlines used to help Nazis escape Europe, something he viewed as an essential means to address the threat of Communism.13 Several prominent Nazis, including Walter Rauff—who had led an extermination unit of the SS across Italy—still remained sheltered within Vatican City, ready to join in the struggle against the Red Menace.14
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