But both Sindona and Calvi suffered another misfortune at about that time: the appointment as Treasury Minister of the redoubtable and uncompromising Ugo La Malfa.
La Malfa was one of the founders of the postwar Italian republic; by background and instinct he was a part of that "lay" establishment whose financial embodiments were the Banca Commerciale and bankers such as Enrico Cuccia, Sindona's great foe. Like both of them, La Malfa was Sicilian by birth; but despite, or perhaps because of that, his lifelong ambition was to haul Italy northwards to the modern mainstream of Western Europe, to let daylight into the confessional booth.
The story of Roberto Calvi would demonstrate how hard that task would be. But until his death in 1979, the name of La Malfa was synonymous with an intellectual honesty and determination unusual in Italy. In that summer of 1973 he lost no time in proving where his sympathies lay. Calvi, Sindona and the Bonomis he branded as golpisti della Borsa, or "coup-makers of the stock market". More important, he raised interest rates, and thus put an end to the policy of easy money, under which such coup-making flourished.
The plight of Sindona became desperate. To raise the dollars he urgently needed, he planned to transfer back to Italy control of SGI, the property company he had purchased from the Vatican in 1969, and subsequently run from abroad. But someone had to provide the money—and as often in the dealings of both Calvi and himself, that someone would be the small shareholder. Sindona intended that a Milanese financial company of his called Finambro would buy SGI. Finambro's capital would be raised for the purpose to 160 billion lire from a mere 1 million lire. The public would be able to subscribe only to non-voting shares, thus leaving Sindona with practical control. Unfortunately however, schemes of that dimension required Ministerial approval from Rome; and this La Malfa refused to grant.
Sindona was cornered. Despite ever more urgent solicitation of the politicians, his two Italian banks, Banca Privata Finanziaria and Banca Unione, saw their troubles steadily worsen. Hope flickered briefly in mid-1974, as the Nassau subsidiary of the Banco di Roma, the big state bank traditionally closest to the Vatican and the Christian Democrats provided him with a most timely loan of $100 million. But neither that, nor permission granted in extremis for a merger of the two banks sufficed. The newcomer, Banca Privata Italiana (BPI), was all but stillborn. On September 27, 1974, it was placed in compulsory liquidation after just eight weeks of life, and Milan magistrates issued warrants for Sindona's arrest, on charges of fraud and falsifying balance sheets. But with uncannily happy timing the bird had flown the day before to Taiwan, a country with which Italy had not signed an extradition treaty. Less than a fortnight later, the American part of his group collapsed, as the Franklin National Bank was declared insolvent in New York.
Shortly afterwards Sindona resurfaced in a permanent suite in the opulent Pierre Hotel, overlooking Central Park in New York. There he would mingle public complaining that he had been the innocent victim of a witch-hunt conducted by Cuccia, La Malfa and others of the "lay" establishment of Italy, with the private conviction that he would manage to avoid trouble on both sides of the Atlantic. In America, after all, he was not without friends in the Republican administration; while his old associates at home would be kept to heel by the threat of exposure of a tantalizing list of 500 prominent Italians, said to have exported currency illegally through his banks.
He was correct, but only in part, about Italy. The "list of 500", as it swiftly became known, did periodically cause a flutter in Italian political circles, and somehow he never was extradited back to face judgement in Milan. Indeed, notwithstanding his conviction and sentencing in 1976 to three and a half years in jail in absentia (for falsifying the accounts of Banca Unione), the Christian Democrats— or at least some of them—continued their efforts to persuade the Bank of Italy to consent to a painless solution of Sindona's difficulties right up until 1979.
But long before that, his banks around Europe had failed. In Switzerland, Finabank had accumulated losses of $50 million when it was closed by the Berne authorities in 1975.
To this day, no-one knows how much the Vatican lost with Sindona; Marcinkus has claimed that if earlier dealings are taken into account, the Holy See in fact shows a profit on the association. In any event, the archbishop kept his job and his influence, despite estimates elsewhere that involvement with Sindona cost the Vatican anything from $30 million to $300 million.
Back in Milan, Calvi also looked at first to have survived with reasonable comfort the tempest caused by Sindona's passing. Indeed, the latter's departure for the United States, the quiescence of the Bonomis, and the ebbing energies of Carlo Pesenti had left him seemingly alone on the winning side. But appearances were deceptive.
After a brief rally in 1973 (partly thanks to rumours that the little loved La Malfa might resign as Treasury Minister) the Milan market began to fall in earnest as Sindona's misdeeds unravelled. Austerita, moreover, was the watchword of the day, as Italy too faced up to the harsh economic realities imposed by more expensive oil. Shares in Calvi's companies were worse affected than most, because of his known close links with the bankrupt Sindona. But there was another ingredient to his misfortunes: an apparently deliberate effort to provoke his downfall. Not only was Ambrosiano stock being heavily sold on the over-the-counter market, but gossip was doing the rounds that both the Milan bank and Banca del Gottardo in Switzerland were experiencing difficulties.
Whether the whispering campaign existed—or whether it was an early product of Calvi's persecution complex—cannot be said with certainty. He was however sufficiently alarmed to notify the Bank of Italy of "false and tendentious" rumours, aimed at disrupting Ambrosiano. Much more important, Calvi took the episode as a signal that he should begin protecting himself and his bank by all means to hand.
A perspicacious book which took stock of Italian finance at about this time observed: "Calvi is condemned to expand. There is little prospect of an orderly retreat, for almost inevitably these enterprises end in disaster."* Eight years were to elapse before that prophecy was fulfilled. But for Roberto Calvi the long defensive battle was already under way.
*Scalfari and Turani: Razza Padrona, Feltrinelli, Milan, 1974.
CHAPTER SEVEN Defence
Despite the fading pink paint on the cosy eighteenth-century facade overlooking Largo Bellotti, Banco Ambrosiano's headquarters just behind La Scala had many of the qualities of a fortress. Once inside, the visitor would find sombre windowless corridors stretching before him. The senior directors' offices on the fourth floor were only attainable after a special key on the third floor had activated the lift to go higher. To Roberto Calvi, now Ambrosiano's unchallenged but wary master, the fortress would have seemed under special threat when he gazed out over the rooftops of Milan in those closing months of 1974..
Not only were unknown assailants trying to undermine the bank, but the political climate in Italy at large was changing to his disadvantage. The country was moving leftwards, a process reinforced by the widespread indignation felt at the Sindona affair, and the evidence it had afforded for the dubious overlap between high finance and low Christian Democrat politics. The beneficiaries were the opposition Communists, who were promising a wholesale cleansing of Italian public life, and not least of the country's banking system, if they came to power. And for a while it seemed as if they really might.
In the summer of 1974, as Sindona's improbable financial edifice was coming apart, the Christian Democrats chose to ally themselves with the Church against the pressures for modernization of Italian society, in a referendum on divorce. The outcome was humiliating defeat. In regional elections the following year, the Communists won an unprecedented 36 per cent of the popular vote. If that trend continued, they might even overtake the Christian Democrats to become Italy's largest party at the general elections to be held by 1977 at the latest, but probably rather sooner. The fear must have been deep in Calvi that Ambrosiano might be threatened not only by financial takeover, but
by political one as well. Accordingly, he started to take precautions in both directions.
In each case, the mechanisms were to hand, ready for employment: the network of foreign subsidiaries created by Ambrosiano between 1960 and 1973, and that adept of the black political arts, Licio Gelli. As we have seen, the exact date of Calvi's meeting with the Venerable Grandmaster of the P-2 is uncertain. What does seem certain is that partnership in earnest began around 1975.
Already, however, Calvi was setting about his financial purpose. He would buy control of his bank, and—with the assistance of the Vatican—transfer that control abroad. The mystery at the heart of the Banco Ambrosiano affair was beginning, in the shape of an obscure company called Suprafin.
Suprafin had been established in Milan in November 1971 by two of Calvi's most trusted associates: an accountant of Armenian extraction named Vahan Pasargiklian, later to become managing director of Banca Cattolica del Veneto, and Gennaro Zanfagna, a Milan lawyer. Capitalized first at two million lire, then 500 million lire, and finally one billion lire, Suprafin was controlled by a Luxembourg holding company called Anli. Early on it appeared to be primarily just another tool, along the lines of the inglorious Pacchetti, for the manipulation of the Milan market by Calvi and the Bonomis. In November 1972, the latter bought one third of its shares, to be relinquished only in 1975, when the Bonomis severed their ties with Calvi. From very early on Suprafin would deal in Ambrosiano shares, to smooth out violent price fluctuations. But after the disgrace of Sindona and the rumours about Calvi, the selling of Banco Ambrosiano turned in that summer of 1974 from a trickle into a flood.
Hardly a day went by without Suprafin buying where others were selling. And, of course, not only was the share price being supported, but Ambrosiano—or whoever truly owned Suprafin—was quite illegally strengthening control of the bank itself.
Initially most of the shares thus bought made the comparatively short journey to Liechtenstein. One of the first recipients, for example, was an anstalt in Vaduz called Ulricor, set up by an obliging lawyer there in March 1974, with a capital of just 20,000 Swiss francs.
Seven months later it was buying 170,000 shares in Ambrosiano or 1.7 per cent of the total—in keeping with its suitably innocuous declared purpose of "taking shareholdings on behalf of itself or others in industrial and commercial enterprises". Ulricor was to remain faithful right up to the end. In June 1982 it ranked as the eighth largest single shareholder, with 1.2 per cent, or 590,000 shares of the much enlarged capital of Ambrosiano. The original buying was carried out upon instructions from the Banca del Gottardo (in other words from Calvi); between 1974 and 1976 two of its administrators, with power of attorney, were Fernando Garzoni and Francesco Bolgiani, chairman and general manager respectively of Banca del Gottardo. And Ulricor, it was generally assumed, was technically owned by the IOR, the Vatican bank.
The Ulricor pattern was to become familiar. In 1974, three more strange-sounding names from Vaduz—Sapi, Rekofinanz and Sektorinvest—became prominent in the register of Banco Ambrosiano shareholders. Shortly afterwards two more, called Finkurs and Sansinvest, popped up. The next year Liechtenstein was supplemented by the more distant and even safer shelter of Panama, where registered companies did not even have to provide accounts. The first Panamanian shareholders were two insubstantial creatures called La Fidele and Finprogram. In October 1977 another four companies coalesced to join them in the steamy heat of Central America, bearing the fetching names of Orfeo, Lantana, Cascadilla and Marbella. The quartet was set up simultaneously to take delivery of 1,020,000 Ambrosiano shares, equal to 5.1 per cent of its capital. All were subsidiaries of Manic S. A. in Luxembourg.
In all, the diligent Suprafin had expedited abroad no less than 15.4 per cent of Banco Ambrosiano; a proportion which, given the fragmented structure of the capital of Calvi's bank, amounted to control. The recipients, as we have seen, were shell companies, consisting of little more than an entry in a lawyer's books; but all of them were in one way or another managed by Calvi and his bank, whatever the confusing changes of name they might sometimes later undergo. The buying orders placed with Suprafin had come first from Banca del Gottardo and then from Cisalpine Overseas, Ambro- siano's subsidiary in Nassau. The head of Lantana, which like its three Panamanian sisters had a token capital of $10,000, was Pierre Siegenthaler, President of Cisalpine and also by now the honorary consul of Italy in the Bahamas.*
In 1978, as will shortly be explained, the Bank of Italy's inspectors guessed at, but unfortunately could not prove the gathering fraud. For Suprafin's purchase of Ambrosiano shares had cost 37 billion lire, or some $60 million at the then exchange rate. This outlay would follow the Pacchetti deal as the second—and easily the most important—cause of final calamity.
Obscuring everything was the collaboration, witting or unwitting, of the Vatican Bank, which extended well beyond the IOR's probable ownership of Ulricor. For as early as November 1974 the Banca del Gottardo had set up in the name of the IOR yet another Panamanian company. It was called the United Trading Corporation, and would, like Manic in Luxembourg, be no small cog in the machinery of financial deception Calvi was so skilfully constructing.
With little delay, United Trading Corporation was busy establishing various nominee subsidiaries, including two in Liechtenstein called Imparfin and Teclefin. When the Bonomis (and Anli) withdrew from Suprafin, these two little companies stepped in to replace them. So it was that the IOR came to possess the company which had purchased on the Milan stock market effective mastery of Banco Ambrosiano. Formal acknowledgement came in a letter, dated January 20 1975, which the Vatican bank sent to Calvi, stating in carefully chosen words that Suprafin "was of its pertinence"; in simpler terms, that the IOR owned it. The Vatican bank merely requested Ambrosiano to manage Suprafin on its behalf, and supply periodic reports of its activities. Whether those reports were sent is not known. Indeed, the letter itself subsequently became something of a puzzle. Some would take it at face value; but other students of the intrigue offered a different theory—that the letter, whatever the date it bore, was in fact written and provided early in 1978, just before the inspectors of the Bank of Italy exposed the function of Suprafin, as Calvi surely knew they would.
In Italy it is not necessarily illegal for a company to acquire shares in itself; but the maximum permitted level of purchases must be published in its annual report and approved by shareholders. Hence
*L'Espresso, September 6, 1981.
the need for the IOR to be interposed, if Calvi was to preserve his scheme; and thence the possibility that the letter was made available long after its purported date.
The central bank in 1978 would not conceal its suspicion that in practice Suprafin to all intents and purposes belonged to Banco Ambrosiano itself. But of course its officials had no power to visit and question Marcinkus, Mennini and de Stroebel, safe in a foreign country in the heart of Rome. For the time being Calvi's financial fortress was impregnable. He was by then looking to his political defences too.
There are few more depressing aspects of the career of Roberto Calvi than his relations with Italy's politicians. From 1975 onwards, both directly and indirectly, his bank dispensed money across the political spectrum. The beneficiaries included the Christian Democrats, the Socialists and even the Communists. By the end, in June 1982, the Communists would owe Ambrosiano 11 billion lire—not to mention more than 20 billion lire borrowed by the Rome newspaper Paese Sera, strongly sympathetic to the party, and indirectly owned by it.
In all, it has been calculated,* Ambrosiano would lend the parties some 88 billion lire to purchase their good will. As Calvi's predicament worsened later, he would invest more and more time, as well as money, in his attempts to cultivate their support. But despite increasingly frequent visits to Rome, his understanding of the politicians was limited to a grasp of their financial appetites. Taciturn and never entirely sure of himself outside the ambit of the bank, Calvi was rarely at eas
e with them socially, unable entirely to master the subtle and shifting alliances, the gossip, the assurances lightly given but often unfulfilled.
But that still lay in the future. In the mid-1970s, Calvi seemed to have found the ideal bridge between his own diffidence and centres of power in Rome, in the person of Licio Gelli. Calvi, needless to say, never had a press officer as such. I contatti con quelli la, me li tiene quello li. "This one here, he looks after dealings with that lot," he would confide. Thanks to Sindona, among other reasons, Gelli must have known many of Calvi's less reputable secrets; but the arrangement
*Mondo Economico, September 29,1982.
was mutually beneficial from the outset. In return for his brokerage of political alliances and protection, helped by a steady flow of sensitive information from well-placed collaborators, Gelli gained first access to, and then partial dominion over, a powerful private banking group. Gelli and the P-2, moreover, constituted the initial bond between Ambrosiano and Rizzoli, the largest and most important publishing house in Italy.
In its heyday the P-2 was constructed around a tripod. Two of the legs were Gelli/Ortolani and Calvi/Banco Ambrosiano. The third was Rizzoli and its most coveted asset the Corriere delta Sera, the Milanese newspaper with the richest tradition of any in Italy, and unrivalled sales of some 500,000 copies. At its height, Rizzoli was printing one in four of all the newspapers read daily up and down the country. Ultimately, association with Ambrosiano would lead it along a path to the brink of bankruptcy. But for a long while the combination of money, newspapers, and political leverage seemed irresistible.
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