CHAPTER THIRTEEN Messages from Licia
As the 1970s closed, Calvi was to outward appearances at the height of his powers. With that disconcerting blend of shyness and arrogance which marked him in those years, he went about his business. He travelled ceaselessly, to Rome to see Gelli and his political contacts, and abroad to visit the scattered outposts of his realm.
Apart from the handful in the know, his staff at head office took the expansion at face value, unaware of the debilitating underside and unconcerned that the chairman was so often away. Ambrosiano's board, made up of members of a docile Milan establishment and cronies of Calvi from Rome, asked no questions. At a lower level in the bank, the growth seemed merely proof that a skilful Catholic banker could with determination mount a challenge to the "lay" establishment of Italy. If the central bank had probed Ambrosiano, if gossip abounded that Calvi was so secretive because he had much to hide—might that not be just a sign of the jealousy of less able rivals? Within Ambrosiano, Calvi was the master, his potency only enhanced by mystery. The foreign department in particular was happy in the belief that the growth abroad showed how it was running rings around lumbering competitors like Banca Commerciale.
On the few occasions that someone would express anxiety, Calvi might hint at the identity of his ally-cum-shareholder in foreign parts. Don't worry, he would say with the flicker of a smile, "It's all priests' business." Dietro ci sono le tonache, "the cassocks are backing us." And as further proof, there was the presence of Alessandro Mennini, one of the many sons of the IOR's Luigi, as a rising young executive on the foreign side. Rarely was additional elucidation demanded, and none was ever forthcoming.
And perhaps, during the weekends spent with his family at Drezzo, or on his foreign travels where the Italian press and its insinuations did not arrive every morning on his desk, Calvi would feel that his worst forebodings were unjustified. The Bank of Italy's teeth had been drawn, while Mucci seemed to be making little headway in his investigation into the apparent criminal offences unearthed by its 1978 report. In October 1979 he again questioned Calvi about the inflated price of the Toro and Credito Varesino transactions between 1973 and 1976, but there was no way to break through the stonewalling answers. Gelli's protection, if increasingly irksome, was also paying dividends: Calvi and Sindona settled their differences, thanks to the grandmaster's good offices.
Drezzo became particularly important at this stage. There Calvi would play out his role as a family man, busying himself with the modest pleasures of the countryman which perhaps he was at heart: cutting wood, looking after the hens and cows on the dozen-or-so- acre estate, and above all the two handsome white maremmani sheep dogs to which he was attached. No matter that later visitors would find even Drezzo cold and gloomy; for Calvi it was a refuge.
Life there was simple, and meals, even when important guests were present, unelaborate. His wife or daughter would usually serve at table. Calvi would show his guests the converted barn where he kept a modern sculpture of a church portal of which he was most proud. In the evenings, he could perhaps read about criminology. Those who knew Calvi well were surprised at his knowledge of financial frauds of the past. He was fascinated in particular by those which involved electronic gadgetry and computers. Of course, it is not difficult to see why.
For the rest, he remained a creature of the shadows. If duty compelled him to attend some meetings of the Italian banking association he would sit through proceedings, impassive and unmixing. His contribution would be brief at best. On the Milanese cocktail and reception circuit, he was virtually unknown. The ideal was for someone to appear on his behalf. In finance, too, the principle was the same, as a revealing episode at about this time displays.
An old-established private banker in Milan had heard that a small American bank was for sale, and was asked if he was interested in buying it. He wasn't, but was informed that Calvi might be. The banker went to tell Calvi about the idea. Calvi listened intently, but then indicated that he couldn't become involved himself because of possible problems with US regulations. There was a silence. Then Calvi came up with his suggestion: why didn't the banker buy it himself? But no, came the answer, he wasn't interested, and in any case didn't have the money. "Ah," said Calvi, "but you've missed the point. The money will be no problem." The other banker, realizing what Calvi was offering, politely declined, and left. In a sense it was the old "fiduciary" approach at work, but it also revealed Calvi's perennial tendency to try and entrap new people in his web, for money in return. Ambrosiano, moreover, always had the reputation of being a bank which paid its staff well.
Only with foreign bankers, and in foreign places, would he unbend a little. Sometimes he would invite executives from the biggest international banks to one of those suave lunches bankers like to offer each other, in the private dining room on the top floor, from where the view is best. Flanked by Leoni or Botta, Calvi might expound on the international monetary system, as he believed bank chairmen should. The meal would be simple but excellent, with immaculate service. At the end, over coffee and liqueurs, the pitch might come: how advantageous it would be if the guests' bank did more business with Ambrosiano. But Calvi would imply there was no urgency, that it didn't really matter. The wiser guests might leave wondering why Ambrosiano was so busy in Latin America of all places. The wisest of all never did lend Ambrosiano money.
Similar encounters might take place in New York in the autumn, with Calvi the guest. It was part of an annual itinerary taking him to Washington for the annual IMF meeting, and then to Nassau, Managua and Lima. He might converse amiably at the IMF with other Italian bankers, people with whom in Milan he hadn't exchanged a word in the other 360 days of the year. But talking with him, people would often have the impression that he wasn't really listening, that his mind was elsewhere. And so it probably was; for Ambrosiano's need to borrow, despite the deus ex machina of ENI, was remorselessly increasing.
In 1979, Calvi did settle the least serious of the objections of the Bank of Italy, by announcing that Banco Ambrosiano's capital would go up from 20 billion to 30 billion lire. But its perverse shareholding structure meant that this measure, which ought to have strengthened the bank, in fact undermined it further. For if Calvi was to retain control, and the risk of an embarrassing slide in Ambrosiano's share price was to be avoided, then the tiny companies in Panama and Liechtenstein would have to put up their due. And that would be paid for by more borrowing.
By the end of 1979, the exposure of the front companies, channelled by now through Banco Andino in Lima, stood probably at between $400 million and $500 million. Worse still, the dollar was about to rise rapidly against the lira, and international interest rates were moving higher. To borrow would cost more, while the assets against which the loans were secured, mainly lira-denominated shares in Milan, would be worth ever less in dollar terms. At home, other Italian banks, scenting trouble and by no means well-disposed to Calvi, were unwilling to lend to the foreign subsidiaries of Ambrosiano, of which so little was known. They would normally insist on dealing only with the Milan parent, more measurable and of better name.
Indeed, the exception in Italy to this rule was essentially only one, apart from the ever-obliging ENI which wasn't a bank at all. It was Banca Nazionale del Lavoro (BNL), Italy's largest bank, and whose general manager Alberto Ferrari was also in the P-2. Indeed, he and Calvi by some accounts had been initiated together, in Zurich in August 1975. Over the years BNL was to provide $50 million to Ambrosiano's Luxembourg holding company. Perhaps it and ENI should have had their suspicions. The same could not be said for the foreign banks, less wise in the ways of Italy, which were induced to lend Ambrosiano money.
The initial approach would be normality itself. Representatives of Ambrosiano's foreign department, often Alessandro Mennini and Carlo Costa, its two best English speakers, would visit a potential victim, quite possibly for one of those bankers' lunches. The question would be raised: would the bank consider making a loa
n to the Ambrosiano group? The money, it was sometimes assured, would help finance Italian exports, in conjunction with SACE, Italy's export credit guarantee organization. Then might follow a presentation of Calvi's bank, complete with impressive but, of course, doctored figures and charts. If these first contacts showed promise, then negotiations would continue—primarily with Ambrosiano's head office in Milan—and agreement would be reached.
Less normal was what happened thereafter. The lenders, encouraged by the implicit guarantee of the Milan parent, and happy to commit their surplus funds for profitable and apparently respectable purpose, would sign the contract with one of Ambrosiano's foreign subsidiaries. Little did they imagine that the proceeds would go to finance a clutch of nameplate companies in Panama and Liechtenstein; and that the main thing being exported from Italy was the control of Banco Ambrosiano. Still less did they conceive of the bizarre methods by which this would be done.
Calvi was meeting the insistence of the Bank of Italy that the parent bank no longer finance its subsidiaries abroad by breathtaking sleight-of-hand. The top foreign officials in Milan like Leoni and Botta simply became directors of the foreign subsidiaries. Thus the name of the borrower would be changed from Banco Ambrosiano (Milan) to Banco Ambrosiano Holding of Luxembourg or Banco Ambrosiano Andino, but everything else would be the same. The Luxembourg holding company, in theory in charge of Calvi's foreign dominions, in 1978 consisted of just two secretaries. At its height, its employees numbered only ten. Its board, headed by Calvi himself, comprised just senior executives of his group. The one Luxembourg citizen who was a director never attended meetings, which invariably took place in Lugano or Zurich. Much the same, as we have seen, went for the bank in Lima. Such structures were not in themselves an unusual international banking practice. But they meant that the entire mechanism, outwardly so different from its predecessor, could be directed by the same three or four people in Milan.
The Luxembourg holding company was just a funding office to satisfy the voracious appetites of Managua and Lima for money, to be devoured in turn by the companies in Panama and Liechtenstein. Ambrosiano in Managua was run by Cisalpine in Nassau. The instructions went from Milan to Nassau via a "representative office" of Cisalpine in Avenue des Citronniers in Monte Carlo, where a direct telex line was installed. Almost weekly, secretaries from Ambrosiano's foreign department in Milan would travel the 180 miles to Monte Carlo with a batch of messages. So frequent were the exchanges that a touching familiarity would creep into them. Addressed to Pierre (Siegenthaler), they would be signed Giacomo, Licia or Angelica. Giacomo, of course, was Giacomo Botta. Licia was Licia Ghiggi, Botta's secretary, and Angelica was Angelica Nidasio, an employee of Ambrosiano's foreign department. Later on, the Christian names would give way to a more mysterious "XY".
A later system for sending money to Banco Andino was not very different. Instead of the direct telex line from Monte Carlo, another Luxembourg subsidiary, called Ambrosiano Services was established. Its main "service" was to pass on similar instructions for loans by Banco Andino. The instructions were given by telephone from Milan to Luxembourg by senior officials like Botta.
The money spun from one front company to another with bewildering speed. One memorable message from Botta to Siegenthaler on June 26, 1979 sent the same nine million dollars on a book-keeping world tour: from Nicaragua to Liechtenstein to Panama to Luxembourg, to Nassau and then back to Nicaragua where it started. The purpose, investigators presume, was to "generate an income" in Luxembourg. The example is extreme, but it conveys the conj uring to which Calvi had to resort for survival. The pace of the lending accelerated in 1980. Between February and October that year, Banco Andino approved sixteen separate loans for $348 million to the hungriest front company of all, Nordeurop in Liechtenstein, later to become Astolfine SA in Panama. The Andino board (in other words Leoni, Botta and Costa) assembled to give its formal blessing not in Lima, of course, but in nearby Zurich—and only after most of the money had been paid out. In this unorthodox fashion, 88 creditor banks of Ambrosiano Luxembourg were to be parted from $450 million.
The process continued, at ever more desperate speed, right up to the end. Money was shifted here and there, to plug a hole, to enable one company to show an accounting profit, to whisk a suspicious loan temporarily from under the nose of an auditor. The ploy was fiendishly complex, but brilliantly simple in its results. For although everything was directed from Milan, nothing showed up on the books of the parent bank itself. And if anyone were to find out, then the ultimate owner of the companies would emerge as the IOR in the Vatican, thanks to its ownership of the two companies Manic and United Trading Corporation, set up all those years before. The proof of this vital secret was stored in Switzerland, at the Banca del Gottardo.
But if Calvi's financial defence cost money, so did his political defence. One expensive favour was the purchase by La Centrale of a controlling interest in the Venice newspaper II Gazzettino, traditionally the voice of the potent Christian Democrat establishment in the deeply Catholic Veneto region. The paper was losing money heavily—until Calvi's appearance on the scene in 1979. Thereafter, when La Centrale had taken over, money suddenly became available. II Gazzettino was safe for the Christian Democrats, at a cost for the Ambrosiano group of some 30 billion lire over the years. But Calvi did not forget the Communists, on the opposite end of the spectrum. As we have seen, Paese Sera, the Communist-backed daily in Rome, was lent 20 billion lire by Banco Ambrosiano between 1978 and 1982.
Calvi sought added protection from Catholic quarters. Carlo Pesenti, after himself and Sindona the third of the Vatican's allies in Italian finance, joined La Centrale's board, as did Luigi Lucchini, standard bearer of the dynamic small steelmakers in Brescia, whose fame was already reaching beyond Italy. The press wrote of a new "Lombard League".
In fact, however, the day-to-day administration of La Centrale was in the hands of Michel Leemans, a Belgian brought to Milan by Calvi long before. Leemans was never to hold any formal post at Banco Ambrosiano itself. But by a strange quirk, just as Calvi was always to conduct the most sensitive transactions of La Centrale himself, so Leemans was to be the last representative of Ambrosiano in 1982, when all was about to be lost.
And as 1979 gave way to 1980, the portents of disaster were becoming more visible. Most ominous, the judiciary seemed at last to have decided that the Bank of Italy was a less worthy object of their attentions than the financiers whose murky affairs the central bank had investigated.
The first victim was Italcasse, where the central bank's inspectors had in 1977 unearthed irregularities severe enough to warrant a judicial follow-up. That investigation had, of course, contributed to the political assault on the Bank of Italy two years later. But at dawn on March 4, 1980 the findings brought even more spectacular consequence, as no less than 38 senior bankers from the savings institutes under Italcasse's umbrella were arrested. They were charged with making irregular loans to various favoured borrowers, including the Caltagirone construction group from Rome, a big benefactor of certain local Christian Democrat politicians.
It mattered little that such imprisonment before any trial was quite commonplace in Italy, and that the theatrically-tinged affair would blow over, like so many others, leaving scarcely a ripple behind it. For Calvi, the message was clear. For whatever reason, the balance had shifted, and not to his advantage. The fact that the magistrate who ordered the arrests was Antonio Alibrandi, who only twelve months before had made the accusations against Baffi and Sarcinelli at the Bank of Italy, must have made him uneasier still. For what guarantee was there that the Milan judiciary's investigation of his own alleged offences would not now land him in a similar predicament?
Gelli, too, was increasing his pressures on Calvi, mixing promises of help with half-spoken threats to let spill other of the banker's embarrassing secrets. Relations between them worsened to the extent that in April 1980, when Calvi was in Zurich for Easter, he abruptly changed
his hotel to avoid encountering Gelli, who, he discovered, had booked into the same one. Only Ambrosiano's small shareholders remained faithful, dismissing at the annual meeting all adverse gossip as "libel". Once again, a higher dividend would make them forget Calvi's reluctance to inform them of what his bank was really about. But the respite was short.
Within weeks, the overstretched construction group of Mario Genghini finally crumbled. On June 25, 1980 he was declared bankrupt by a Rome court, leaving behind him total debts of 450 billion lire, a third of them to Ambrosiano itself. The magistrates did issue an arrest warrant for fraud, but by that time Genghini was safely in Latin America. For Calvi the episode must have been proof that not even the P-2, of which Genghini was a member, could ward off financial reality for ever. Any doubts on this score were removed by the events of a few days later in Milan.
At last the specialized Guardia di Finanza financial police were reaching the same conclusions as the Bank of Italy eighteen months before. The Guardia di Finanza were now sure that the shares in the Toro insurance company despatched abroad by La Centrale in 1973 were exacrfy the same ones as it bought back at such an inflated price in 1975. In other words, in one guise or another, Ambrosiano had controlled the shares all along, and the excessive sum paid for their return in large part constituted an illegal export of capital. Calvi should have reported this under the 1976 law, but he had not. Thus armed, Luca Mucci, the magistrate still handling the case, ordered him to surrender his passport and warned that criminal charges might be on their way. Calvi's long, losing battle with the Italian courts had begun.
The loss of his passport was unnerving, humiliating and hugely inconvenient. Without it he would be prevented from his annual visit to the IMF meeting, a place where the chairman of Italy's largest private banking group ought above all to be seen. In many respects worse, he would be prevented from those important personal inspections of the foreign subsidiaries of Ambrosiano.
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