Operation Gladio
Page 9
The sole explanation for the bizarre partnership resides in the long-standing ties of Hambro to the intelligence community. He was one of the founders of the OSS, and his presence on the board of the World Commerce Company (WCC) smacks of complicity in the heroin trade.14
ANOTHER ODD COUPLE
David M. Kennedy's partnership with Sindona appears equally puzzling. Raised on a ranch in Utah, Kennedy was a devout Mormon whose grandparents (John Kennedy and Peter Johnson) formed the Bank of Randolph. In 1951, he became president of Continental Illinois after serving sixteen years as the debt manager for the Federal Reserve.
Based in Chicago, Continental Illinois was the seventh-largest bank in the country, with billions in assets, including shares in an Opus Dei bank in Barcelona. In 1955, Kennedy became a “conspicuous friend” of the conservative Catholic religious order.15 This friendship resulted in Kennedy's bank becoming the main channel for the Vatican's real estate and corporate investments, an arrangement that brought him in close contact to Prince Massimo Spada, the lay delegato of the IOR, and Michele Sindona, Spada's dutiful assistant. Through this connection, Kennedy emerged as one of Gladio's key agents, and Continental Illinois came to serve as a major conduit for the flow of covert CIA funds into the newly created BPF. In this way, the Sindona bank served as the principal means of launching the 1967 coup d’état in Greece, a Gladio undertaking spearheaded by a group of right-wing army officers.16
THE GORILLA
Through Kennedy, Sindona developed a close friendship with Monsignor Paul Marcinkus, an up-and-coming cleric from Cicero, Illinois, the hometown of Al Capone. Known as “the Gorilla,” Marcinkus stood six feet four inches in his stocking feet. He was a scratch golfer, a gifted street fighter, and a lover of good bourbon, fine cigars, and young women. Marcinkus had worked closely with Kennedy in overseeing the Vatican's American investments through Continental Illinois and became a director of the bank's branch in Nassau.
Within the effete and rarified environment of the Vatican, Marcinkus was singled out to serve as Paul VI's protector. On one occasion, the Gorilla picked up the tiny pope and carried him through an overly enthusiastic crowd that threatened to trample him to death.17 On another, he saved the Holy Father from an attack by a knife-wielding Bolivian artist by breaking the would-be assailant's arm.18
Sindona was instrumental in getting the Gorilla the position as head of the Vatican Bank. This position made Marcinkus a bishop, a prelate d'onore, and he was assigned as a special assistant to Cardinal Alberto di Jorio. The gruff cleric from Cicero was now responsible for more than ten thousand accounts belonging to religious orders and to private Catholic dignitaries, including the Pope.19 Sindona's ties to the new bishop were tightened by the fact that Marcinkus, in defiance of Canon 2335 (the papal ban on Freemasonry), was a fellow Mason who had submitted to initiation on July 2, 1963. The Gorilla's Masonic code name was “Marpa.”20
A NEW BANK
Sindona next acquired the Banca di Messina, which gave the Gambino, Inzerillo, and Spatola crime clan unlimited access to a financial firm in Sicily. The Sicilian financier went on to buy a third bank—the Banque de Financement (Finabank)—in Geneva, which was largely owned by the IOR and, like the BPF, used as a conduit to move money out of Italy.21 After Sindona's purchase of majority interest, the Vatican retained a 29 percent share based on its awareness of the benefits of owning a Swiss bank for the transfer of laundered funds.22 Hambro and Kennedy, on behalf of their financial firms, gobbled up the remaining shares.
The peasant from Patti now emerged as one of the most influential figures within international financial circles. Working with the important Banque de Paris et des Pays-Bas, Sindona bought controlling interest in Libby, McNeill and Libby, Inc., the massive American food processing chain with over thirteen hundred workers in the Chicago area.23
THE CHICAGO CONNECTION
“Family Jewels,” a set of CIA reports recently released under the Freedom of Information Act, shows that Sam Giancana, a Mafia capo from Chicago, became one of the Agency's underworld agents in the 1960s and one of the pivotal figures in the money-laundering process.24 Members of the Giancana family made deposits in Continental Illinois that were transferred to Sindona's banks and enterprises in Liechtenstein and Milan. More money was transported by Giancana's men to Washington, DC, where it was converted into bonds and forwarded to Finabank in Geneva. Still more money was transported from Chicago to Mexico in suitcases carried by thugs dressed as Catholic priests. The money was then sent to a string of shell companies in Panama before arriving at the Vatican Bank. Throughout this process, the CIA, with the cooperation of Harry “Hank” Anslinger of the Federal Bureau of Narcotics (FBN), worked closely with Archbishop Marcinkus.25 According to Tullius “Tully” Acampora, a former CIA operative, “Hank was so close to Marcinkus that he could get Anslinger's friends an audience with the Pope.”26
BANKING ON LOSSES
Sindona's banking enterprise flourished as billions of dollars from the narcotics trade flowed from Sicily to Switzerland. At the same time, he was learning one of the cardinal rules of theft: The best way to rob a bank is to buy it. Much of the stolen money, however, did not end up in Sindona's wallet or a safe within an Italian-American club in Brooklyn. Used to mount Gladio's strategy of tension—and other covert ventures that would erupt in the coming decade—the $22 billion eventually lost by Sindona and his compatriots in their banking ventures seemed to vanish into thin air. Financial analysts, to this date, remain mystified by the missing money.27
Few have come to realize that the purpose of acquisition of banks by CIA operatives, including Paul Helliwell, William Colby, Donald Beazley, David Kennedy, and Sindona, was not to produce dividends for shareholders but rather to chalk up losses in a bewildering array of bogus ventures.28 Other bankers who shared Gladio's vision of a New World Order created through the dissolution of political ideologies hostile to American capitalism were willing to have their institutions undergo financial hemorrhages for the cause. David Rockefeller, chairman of the Council on Foreign Relations, appears to fall into this category as suggested by the hundreds of millions of dollars in losses that came from Chase Manhattan's investments in South America at the behest of the CIA.29 As Gladio emerged into an international operation, the billions from the drug trade proved insufficient to provide for the mounting expenses.
While Sindona was purchasing banks with funding from the Mafia, the Vatican, and the CIA, Paul E. Helliwell and Meyer Lansky were setting up Castle Bank & Trust in Miami and the Bahamas.30 Unlike Sindona's banks, which were used to mount attacks in Italy, Turkey, and Western Europe, Castle Bank & Trust became “the conduit for millions of dollars earmarked by the CIA for the funding of clandestine operations directed at countries in Latin America and the Far East.”
SPREAD OF THE PLAGUE
The appearance of these firms testifies not only to the expanding covert activities of the CIA but also the enormous growth of the heroin industry. In 1967, the Haight-Ashbury Medical Clinic in San Francisco opened a special section for heroin addicts. Of the addicts served by the clinic, about 25 percent (classed as “old-style junkies”) had first used heroin before January 1964; about 20 percent (classed as “transitional junkies”) first used heroin between then and January 1967; and the remaining 55 percent or so were “new junkies,” who began to use heroin after January 1967.31 Heroin was also the drug at the heart of the problem that President Nixon cited in 1969, when he laid out a ten-point plan for reducing illegal drug use—an effort for which New York was the proving ground. “New York City alone has records of some 40,000 heroin addicts, and the number rises between 7,000 and 9,000 a year,” Nixon wrote in his July 14, 1969, message to Congress. “These official statistics are only the tip of an iceberg whose dimensions we can only surmise.”32
INSIDE SINDONA'S BANK
Sindona was more than a CIA operative and Vatican financial advisor. He was also a thief. In 1966, Carlo Bordoni, a financier with Mafia con
nections and years of experience in making multimillion-dollar foreign exchange deals, examined the activities at the BPF and was overwhelmed by his discoveries. Twelve years later, Bordoni related these discoveries to authorities in Milan from a prison hospital in Caracas. In a sworn affidavit, he wrote: “When I started to go to the BPF during the summer of 1966, I was deeply affected by the chaos that reigned in the various sectors. It was a tiny bank that was able to survive only thanks to the margins that emanated, duly masked, of course, from a myriad of ‘black operations’ which BPF effected on behalf of Credito Italiano, Banca Commerciale Italiana, and other important national banks. These foreign currency black operations, a vast illegal export of capital, took place daily and large figures were involved. The technique was really the most coarse and criminal which can be imagined.”33
Bordoni found a vast number of overdrawn accounts without any real guarantees and for amounts far in excess of the legal limit of a fifth of the capital and reserves. He also found massive incidents of theft. The staff at the BPF was transferring large amounts of money from the accounts of depositors without their awareness. These sums were funneled into an account held by the Vatican Bank. The Vatican Bank, in turn, transferred the amounts, minus a 15 percent commission, to Sindona's private account at Finabank in Geneva, which was named MANI for his two sons: MA stood for Marco, NI for Nino.34
If a client at the BPF complained that a check had bounced or that his account should contain more than was listed, he was told to take his business elsewhere. If he continued to complain, a manager would appear and say, “It's simply an accounting error that we shall rectify.” If he threatened to contact the authorities, he would spend his last moments “swimming with the fishes.”
STANDARD OPERATING PROCEDURE
For Bordoni, the activities at Banque de Financement in Geneva were equally hair-raising. Mario Olivero, the general manager, and other bank managers and IOR officials, spent all day playing the stock, commodity, and currency markets. If they lost, the losses were transferred to the accounts of the clients. If they won, they transferred the earnings to their personal accounts.35
The Vatican Bank, in addition to owning 29 percent of the bank, maintained several accounts at the Banque de Financement. Upon investigation, Bordoni discovered that these accounts “reflected exclusively gigantic speculative operations that resulted in colossal losses.”36 A shell company called Liberfinco (Liberian Financial Company) had financed these losses, along with the losses of other major speculative investors. In 1966, at the time of Bordoni's inspection, Liberfinco was displaying a loss of $30 million. In 1973, when Swiss banking officials appeared on the scene, the losses of the shell company had climbed to $45 million. When the Swiss informed Sindona, the Vatican, Continental Illinois, and Hambros that they had forty-eight hours to close Liberfinco or they would declare Banque de Financement bankrupt, Sindona closed Liberfinco only to set up Aran Investment of Panama, another shell company, which displayed an instant deficit of $45 million.37
After uncovering such shenanigans in Sindona's banks, Bordoni tried to distance himself from his employer. Sindona responded by a tried and true business technique of P2 and the Mafia: blackmail. Bordoni had broken the law in his own foreign speculations. Sindona threatened not only to report these transgressions to the bank of Italy, but also to use his powerful friends to wreak financial destruction upon his colleague's family. “You will never be a real banker,” Sindona said, “because not only are you unable to lie, you are also a man with principles.” Duly humbled, Bordoni stayed and assisted Sindona in the formation and operation of a massive international brokerage company called Moneyrex.38 He had no other choice. To report Sindona's crimes would constitute an exercise in futility. Sindona was much more than a made man. He was wired to the Italy's most powerful business and political officials.39
THE MONEY KING
Created in 1964, Moneyrex established relations with 850 client banks throughout the world and conducted business in excess of $200 billion a year.40 Through this brokerage firm, Italy's richest and most powerful individuals could squirrel away enormous fortunes illegally and safely in foreign banks. Sindona performed this service for a commission that fluctuated between 15 to 20 percent. He also kept a private ledger that incriminated his “confidential clients.”41 This list would serve as his lifesaver when his bloated corporate vessel sank.
In June 1967, Internal Revenue Service agents became aware that Sindona was involved in the drug trafficking of the Gambino-Inzerillo-Spatola clan. The case came to center not on heroin but “the illicit movement of depressant, stimulant and hallucinogenic drugs between Italy, the United States and possibly other European countries.”42 But the investigation, thanks to the CIA's intervention, came to a dead end.
SINDONA AND SAIGON
Southeast Asia continued to remain of critical importance to the global narcotics market. Sindona developed a friendship with Chaing Kai-shek and members of the general's family.43 On several occasions, he traveled to Formosa to provide funds to Chaing and the remnants of the KMT, who continued to cultivate the poppy fields of Laos and Thailand with members of the Hmong people.
In 1967, CIA operatives Theodore Shackley and Thomas G. Clines were assigned to establish heroin refineries with the aid of the Corsican Mafia who permeated Saigon's underworld. In 1968, Shackley (known as the “Blond Ghost”) arranged for Santo Trafficante Jr. to visit Saigon and meet with drug lord Vang Pao in the Continental Palace Hotel.44 The meeting concerned Vang's ability to provide the supply for the ever-increasing demand. During his stay, Trafficante also met with prominent Corsican gangsters to assure them of increased shipments to their laboratories in Marseilles.45
When the old Bureau of Narcotics and Dangerous Drugs (BNDD) launched Operation Eagle in 1968, it found itself arresting scores of CIA employees—many of whom were working directly for Trafficante. But although it arrested several of his deputies, the BNDD could not get the Johnson or Nixon administrations to go after Trafficante directly.46
By 1971, Congress was getting so many complaints about GIs returning home addicted that the BNDD began to investigate. This investigation, too, went nowhere. The CIA insisted on loaning some of its select special agents to the BNDD as “investigators.” The agents turned out to be the same men who had assisted in setting up the Laotians and Thais in the heroin business in the first place.47
A PAPAL PROBLEM
1969 proved to be a banner year for Sindona. He stood as the most powerful financial figure in Italy. The “Gruppo Sindona” included six banks, the international CIGA hotel chain, and five hundred other companies. He controlled the stock market in Milan, where 40 percent of the shares traded on any given day were under his control. His ability to influence Italy's financial condition was so profound that former Prime Minister Giulio Andreotti, a former member of P2, proclaimed him “the savior of the lira.”48
In the spring of that year, Sindona was summoned late at night to the pope's private study on the fourth floor of the Apostolic Palace. The short, slender, and well-spoken Mafia don wore a meticulously tailored navy blue suit, a white shirt with gold cuff links, and a gray silk tie. He appeared fresh and confident. The pope was seated in one of his satin-covered chairs. His body was bent forward, and he appeared tired and ill. The Holy Father did not offer his ring for Michele to kiss; instead they greeted each other with the handshake of old friends.49
“There is a terrible problem,” Paul VI told Sindona. He was referring to the collapse of the “first republic” and the long reign of the Christian Democratic Party. The new government had moved to discard the Lateran Treaty of 1929 and the tax-exempt status of Catholic holdings throughout the country. The measure spelled financial destitution for the Church and an annual tax bill in excess of $250 million. Even worse, the measure could prompt other countries to follow suit, leaving the Holy Mother Church stripped naked of her vast wealth. “No matter,” the pope said, “is of greater importance.”50
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sp; Sindona replied by proposing a strategy to move Vatican resources out of Italy into the United States and the tax-free Eurodollar market through a network of offshore financial firms.51 This move would not only cloak the Vatican's holdings in omertà—a quality the Holy See valued as much as the Mafia—but it would also demonstrate to other countries that the Roman Catholic Church was financially powerful and that any interference with the Vatican's finances could produce dire consequences for national economies.52
THE PAPAL COMMISSION
Upon hearing the proposal, Pope Paul handed Sindona an agreement he already had prepared. The agreement was even more than the Mafiosi could hope for or dare to suggest. It named Sindona Mercator Senesis Romanam Curiam, “the leading banker of the Roman Curia,” and granted him complete control over the Vatican's foreign and domestic investment policy.53 In accordance with the agreement, Sindona would work closely with Bishop Marcinkus, who now became secretary of the IOR, and Cardinal Sergio Guerri, governor of Vatican City. However, both clerics remained merely his advisors. The agreement placed the Vatican's billions at Sindona's disposal.
When the Mafia chieftain turned to the last page, he looked up at the Holy Father and smiled. The pope already had signed and sealed the document. It was the highest display of trust anyone could hope to receive from the Vicar of Christ.54 Such trust, of course, was not blind. It was based on the pope's awareness that Sindona remained in almost sole control of the billions in black funds that were flowing into the Holy See.
THE VATICAN'S ASSETS