While British police and Italian magistrates were .trying to piece together the truth of the last days and hours of Calvi's existence, other facts were coming to light at home, stretching the limits of credulity further. Far from being basically solid, Ambrosiano had buckled beneath the weight of $1,300 million of loans, extended by subsidiary banks in Latin America, and which now could not be recovered. The recipients of such largesse were a handful of Panamanian and Liechtenstein shell companies. And who owned them? The answer was none other than the Vatican itself.
As the unusually hot summer of 1982 wore on, the investigators tried to establish precisely how the money had been lost. In the process they began to uncover the history of a decade of inglorious partnership between Calvi's Ambrosiano and the Istituto per le Opere di Religione (IOR), literally "the Institute for Religious Works", but more prosaically, the Vatican bank. Half, maybe more, of the missing money had been used to buy shares in Ambrosiano and other companies controlled by Calvi. The destination of the rest constituted perhaps the greatest financial mystery of the early 1980s.
Some, it has been suggested, was channelled to Italian political parties, some went to finance the nefarious activities of the P-2, and much, in the closing stages, to buy help from any quarter to stave off gathering calamity. There is some evidence that towards the end Ambrosiano may have been linked with international arms trading; other rumours were that the bank's complex network could have served as a channel for financing Solidarity, the independent Polish trade union, close to the heart of a Polish Pope, and which was outlawed in December 1981.
What is clear is that for the last year of his life and more, Calvi, reputed to be one of Italy's most powerful men, was no longer master of his destiny. The predator had become a prey, fit only to be exploited, blackmailed, threatened and finally abandoned.
On June 7 his last redoubt fell, when the Ambrosiano board, previously accommodating of his every whim, voted him down for the first and only time. Then flight, death in London, and the discovery that only the Vatican, if it agreed to repay some at least of the money lent to companies that it had sponsored, could prevent complete ruin. But the Vatican refused, and on August 6 the old Ambrosiano, once known as the "priests' bank", was no more, ordered into compulsory liquidation by the Italian Government. A year later, the echo of the scandal was still reverberating both inside and outside Italy.
By the extravagant standards of the international banking crisis of the summer of 1982, the Ambrosiano affair was modest. A good part of the missing money was made good by the Bank of Italy, and creditors would recover some at least of the rest. In any case $1,300 million was of small account when measured against the $84,000 million on which the sovereign state of Mexico all but defaulted that August, and the huge debt repayment difficulties faced by countries like Poland, Brazil and Argentina. If the world's banking system found itself under unprecedented strain at that time, Banco Ambrosiano was only one of the smaller reasons.
But the fascinations of the story of Roberto Calvi are enormous. They lie in the length and method of his swindle, its geographical extent, and its backcloth of the enduring division between "lay" and
Catholic in Italian society. Then there is the cast of characters which peoples it. They range from a golfing archbishop in the Vatican to a jailed Sicilian financier, from eminent central bank governors to small-time hustlers and big-time criminals, from a dynasty of publishers to the venerable grandmaster of a secret freemasons' lodge.
If Italy is notoriously riddled with scandals, the Ambrosiano affair presents no few novelties. Above all, perhaps, the pattern was different. Italian scandals usually start with sensational disclosures, more often than not carefully orchestrated to further a cause in a given political or financial feud. Generally they move from the complicated to the virtually incomprehensible, and the outside world, and most Italians, give up even trying to understand. Banco Ambrosiano and Roberto Calvi are the reverse. Their scandal started with innuendo and rumour, persisting for a long period. Then the explosion, leading not to obscurity but greater clarity, allowing many apparently unrelated events of the past to be understood as part of a single plot.
In other respects, however, the disaster of Roberto Calvi is only too familiar. Ambrosiano is but the last of a series of banking scandals which have peppered the 123 years since the modern Italian state was founded. Back in 1922 a prominent newspaper began an editorial with the words that "Italy is a fertile breeding ground for bankruptcies and banking scandals".
That observation was in the immediate wake of the Banca di Sconto (literally "Discount Bank") affair, a contorted tale of how Government credits, originally intended for financing wartime production, were used for speculation and ill-judged expansion both in Italy and abroad. Some thirty years before that, Italy's political establishment had been agitated and discredited by an earlier crop of bank failures—most notably that of the Banca Romana.
One of six regional issuing banks then authorized in the country, the Banca Romana lavishly financed not only the construction boom which accompanied the choice of Rome as Italy's permanent capital, but politicians and their parties as well. The misbehaviour extended to the printing of false banknotes, and led to the trial of Bernardo Tanlongo, the Banca Romana's Governor. The scandal even contributed to the resignation of the Government headed by Giovanni Giolitti, the dominant Liberal politician of his time. But an inquiry afterwards cleared him of any suggestion of personal enrichment; as with most politicians brushed by later bank scandals, including Ambrosiano, Giolitti lived to fight another day.
Recent decades have witnessed no let-up in the pace. The sequence has varied relatively little; the unscrupulous financier who helps meet the need for funds of the political parties, in exchange for protection, which at a certain point can be extended no longer. The most striking recent example, at least until Calvi's own contribution to Western financial history, was Michele Sindona, a Sicilian tax lawyer who in the 1960s and early 1970s constructed from Milan an empire which spanned the Atlantic. He had the unusual distinction of seeing his Italian and American banks go under virtually simultaneously. Sindona, as we shall discover, plays no small part in the history of Calvi, first as teacher, then partner, and finally as avenging tormentor.
The similarities with the Banca Romana scandal are glaring, but should not be surprising. For the ground rules of the system which provides such periodic abuses have remained much the same, for all the changes that have overtaken Italy in more than a century. The country has passed from liberal monarchy through two decades under Fascism to democratic parliamentary republic, from a heavy dependence on agriculture, to emergence as the world's seventh industrial power and a founder member of the Common Market. But for all the depth and breadth of the transformation, Italy has not acquired an efficient and transparent financial market of comparable depth and breadth.
The stock market where Calvi and Sindona flourished remains tiny, the natural home of speculators and insider trading, despite all recent efforts to improve its appeal. The banks remain the pivot of Italy's financial system. Risk capital, normally provided by the share market, is conspicuous mainly by its absence; to raise money in Italy is to secure a loan from a bank. The banks, however, can in turn be heavily conditioned by the politicians. Even before the Ambrosiano affair, some three-quarters of the Italian banking system were owned by the State. And in many cases the senior posts are politically conditioned appointments, the accepted spoils of power.
In the early postwar years, matters were comparatively simple, as the electoral domination of the Christian Democrat party, much influenced by the Vatican, was assured. On the left, the Socialists and Communists were weakened by the ripples of the cold war beyond Italy's frontiers, and their own differences within them. But from the mid-1950s on a subtle change took place. Although the Communists, despite a gradual climb in their vote, remained disqualified from power, pressures for a change in the formula by which the country was
governed steadily grew. For the first time the Christian Democrats began to feel that their hitherto complete sway was threatened. The party moved to increase its control of the banking system and of the constellation of public sector corporations which had contributed much to Italy's postwar "economic miracle". Inevitably, temptations multiplied to use bank funds for mistaken industrial ventures, conceived in good part for reasons of patronage or vote winning.
By the early 1960s, Italy was moving leftward unmistakably. The trend was reflected both in the birth of the "centre-left" formula of government, bringing the Socialists into the arena of power—and in the intensifying struggle for top public sector jobs. The process, as might be expected, reduced the capacity of the State to act as an independent ringmaster. Sometimes it would seem little more than the sum of the various interest groups as they jostled for position. The same jostling also produced the succession of short-lived Governments and frequent "crises", for which Italian politics is best known abroad.
And yet, despite this illusion of instability, the system was, and remains, largely static. The Communists rarely strayed from the sidelines of national power, apart from the three years up to 1979 when, on the strength of their 34 per cent vote in the 1976 general election, they could not be denied a place in the ruling majority, if not in Government itself. Those were the years of "national solidarity", to be brought to an end by a decline in the Communist vote and an increase in East-West tensions abroad.
The governance of Italy returned to a series of brittle alliances between Christian Democrats and Socialists, condemned to the role of freres ennemis; obliged to co-operate, yet the keenest of rivals. Genuine political alternation, as in Britain and now France, where today's opposition may be tomorrow's Government, still requires that the Communists, the largest party of the Left, be recognized as an acceptable partner in Government.
Thus the threat of a spring-clean by one's political opponent, that most potent of checks and balances, does not obtain in Italy. The system has grown in upon itself, with little prospect that abuses will be rooted out. The Christian Democrats and Socialists, safe in the knowledge that their position in Government will be undisturbed, have split into factions competing as much against each other as against the theoretical Communist opposition. These factions and cliques, the natural descendants of the city states, communes, duchies and kingdoms which fought through much of Italy's earlier history, have found their new battleground in the banks and other appendages of the State.
Ambrosiano was the ultimate example of what could go wrong with the system at large. It was a mutant child of an imperfect financial structure, of the political parties' unquenchable thirst for money, of the secret ramifications and connivances of a distorted state, of the unresolved relations between Italy and the tiny sovereign state of the Vatican, planted in the heart of its capital.
But the Ambrosiano affair was more than a monumental swindle. In its way, and for at least two reasons, it was a tragedy. The first consists of the remorselessness with which events unfolded, and the powerlessness of those in authority to prevent, or even mitigate, final disaster. The second element of tragedy is the central character himself. The Roberto Calvi who emerges from these pages is not the conventional stereotype of the financial rogue; urbane, sophisticated and charming. True, Calvi was a skilled and unprincipled manipulator, able to exert a spell over many who should have known better. But if his fraud was on an epic scale, he himself appears to have been in many respects a most ordinary and unimpressive man.
It is in some ways a secondary consideration whether Calvi was murdered or whether he committed suicide. The gods had been satisfied, and vengeance was complete. One of those with whom the author spoke argued that the full truth would never come out—or that if it were to, at least half a dozen trained investigators, with money and time without limit, should be assigned to the task. That, obviously, has been impossible. But what follows is an imperfect attempt to tell this remarkable, but happily far from representative, Italian tale.
CHAPTER TWO The Beginning
It all started, as it would end 86 years afterwards, with the priests. Or rather a priest. Little is known of Monsignor Giuseppe Tovini other than the considerable imprint he has left on the Italian banking system. But whatever his spiritual qualities, he was surely a most resourceful and enterprising figure.
In the late 1880s he led a group of Catholics to set up Banca San Paolo in Brescia, the industrial city today just an hour's drive east by motorway from Milan. Indeed, to this day Brescia remains the strongest "provincial" rival of Milan within the prosperous region of Lombardy, the heart of industrial and commercial Northern Italy. Then, in 1896, Tovini transferred his financial ambitions westward to the metropolis itself.
There, on August 27 of that year, and with the blessing of Cardinal Andrea Ferrari, archbishop of Milan since 1894, he founded Banco Ambrosiano. Tovini persuaded more than 150 devout Catholics of the city to put up the 1 million lire which constituted the initial capital of Ambrosiano. He himself would be its first chairman. Curiously— yet with deliberate point—the man chosen in another August 86 years later to be the first chairman of the Nuovo Banco Ambrosiano was to be the deputy head of San Paolo di Brescia. The province had had its revenge at last. But that, of course, is to put the end of the story almost before its beginning.
Tovini's reason for founding both banks was the same, to provide a counter-weight to the great "lay", or non-Catholic, banks which had emerged along with the Italian nation three decades earlier. Such distinctions and antagonisms may seem odd to the non-Italian. But they are a constant of the country's history, of a land over much of which for centuries the Church was the State, and a dominant temporal power in the peninsula. Guelf had fought Ghibelline, the Reformation ran into the Counter-Reformation. The divide, though less evident, still exists today, 113 years after Italian troops had burst through Rome's walls at the Porta Pia to annex the citadel of Catholicism for the country's capital. But in Tovini's time, feelings ran much stronger.
For their part, the "lay" banks were held to be strongholds of freemasonry, the movement which contributed greatly to the unification of Italy. Chief among them was the Banca Commerciale Italiana, whose newly scrubbed headquarters stand in Piazza della Scala barely a stone's throw away from Ambrosiano, nestling in the shadow of the great opera house.
Tovini had named his new bank after Saint Ambrose, the patron saint of Milan and its archbishop in the fourth century, who had fought throughout his life for the freedom of his church from secular interference. And a guiding purpose of Banco Ambrosiano was "to provide credit without offending the ethical principles of Christian teaching", an explicit rebuke to the aggressive "lay" banks. To ward off the unwanted attentions of outsiders, Ambrosiano's original statute prevented any individual from owning more than five per cent of its capital. Shareholders were required to produce a certificate of Catholic baptism, plus a voucher for their good character from the parish priest. Thus armed, they had to submit themselves for individual approval by the board. This clausola digradimento, or "clause of consent", was not to disappear entirely from Ambrosiano's statute until what proved to be its last meeting of shareholders in April 1982, just two months before the end.
And there were other, even more tangible connections with the Church hierarchy of Lombardy. This century two of Milan's archbishops have become Pope. One was Achille Ratti, who took the name of Pius XI when he ascended St Peter's Throne in 1922. He was to sign the Concordat on the Vatican's behalf in 1929, and his nephew, Franco Ratti, was later to become a chairman of Banco Ambrosiano. The other was Giovanni Battista Montini, better known as Paul VI. His family, furthermore, still retains ties with Banca San Paolo di Brescia, so intimately concerned with both the foundation and re-foundation of Ambrosiano itself.
From the first, the new bank pursued its goal of "serving moral organizations, pious works, and religious bodies set up for charitable aims". A shareholder from start to fini
sh was, for example, the Veneranda Fabbrica del Duomo, the corporation responsible for the building and upkeep of Milan Cathedral, that Gothic extravagance with 135 separate spires, emblem of the bourgeois mercantile confidence of the city. Today, from the room on Ambrosiano's fourth floor which once was Calvi's office, you can look through the bulletproof glass window, across a terrace to the Cathedral's central spire, topped with its copper-gilt painted statue of the Madonnina, the traditional protectress of Milan. When disaster struck in 1982, the Fabbrica del Duomo possessed over 180,000 shares in Ambrosiano, worth 4.7 billion lire on the basis of the bank's last-ever stockmarket quotation, but subsequently all but valueless. Thirteen other organizations were listed as shareholders, including orphanages, missions and old people's homes, all run by the Church.
Not surprisingly, Ambrosiano became known as the "priests' bank". And in a quiet, conservative fashion it prospered, attracting as its customers the solid, righteous citizens of Milan. Often the depositors and borrowers would become shareholders too, creating that extraordinary trust in the bank which lasted until the end. Gradually Ambrosiano extended outward into the rich Milanese hinterland, and further into Lombardy. It became part of the fabric of the city, cautious, of impeccable reputation, but creating hardly a ripple in the world beyond. Not until 1937 did the bank open a branch in Rome, and for all its life it remained quintessentially Milanese, enmeshed with the city's aristocracy. Franco Ratti was a count and Tommaso Gallarati Scotti, chairman between 1953 and 1965, was a duke. Such a proliferation of titles must have weighed upon the mind of the young Roberto Calvi, as he embarked upon his own career at Ambrosiano in 1947.
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