Even though the Vatican is probably the
oldest--and most fascinating--institution in the western
world, it had two depend on two meager forms of income for
it survival: The once a year Peter Pence contributions--
a tradition that dated back to the Crusades-- which brought
in anywhere from $10 to $20 million; and the dividends and
interest it earned on its "patrimony"-- which was its investment
portfolio (that grew out of the $90 million settlement to
it by the Italian government in 1929 as compensation for
its seizing of Rome and other Papal properties in the nineteenth
century. With the expenses of administrating the Holy See
growing by leaps and bounds, and its income fixed, there
was no way of avoiding what amounted to a permanent deficit.
The financial crunch became even more desperate in the early
1960s when Italy instituted a withholding a 15 per cent
tax of dividends that would further reduce their income.
While protesting that this tax violated
its treaty with Italy, the Vatican moved to moves all its
Italian investments off-shore, and out of the reach of Italian
taxes. This was completely legal since the Vatican is a
sovereign state, unrestricted by the laws of Italy on anyone
else. Unfortunately, the financier chosen to help it make
this move, Michael Sindona (now also dead via poisoning),
turned out to be involved in bank-rigging legerdemain--the
so called "Crack Sindona" that landed him in prison. Pope
Paul next turned to a completely reliable bank, founded
by priests, which the Vatican was the single largest stockholder--
the Banco Ambrosiano. He put his trusted bodyguard in charge,
even though he was, as he acknowledged, "no banker" so he
could make sure, unlike the "Sindona situation", the Vatican
never again lost control.
Marcinkus, to this end, sat on the Board
of the Banco Ambrosiano's subsidiary in Nassau (the one
that controlled the Monte Carlo telex conduit). Control
also came through the secrete purchase of the bank's stock
by dummy corporations, through a daisy-chain of Swiss companies
(Though Marcinkus refused to comment on such machinations).
By the mid-1970s, the Vatican's "Institute For Religious
Work" had become willy-nilly a fairly aggressive off-shore
bank in the Caribbean-Liechtenstein- Luxembourg network,
borrowing, lending and taking rich commissions. By taking
full advantage of its sovereign status, which made it free
from any regulations, the Vatican greatly increased its
income-- making more than $20 million on a single deal (which
was more than Peter's Pence some years); and this money
in turn allowed Pope Paul, and his successor, Pope John
to carry out many of their laudable reforms.
Calvi, the son of a bank clerk, undertook
to be the intermediary, and organized the clandestine connections--
including those through which the money could be funneled
into the Panamian phantom companies. He was regarded by
Marcinkus as "simply an honest functionary."
Somewhere along the line, Calvi, whether
or not Marcinkus knew it, began using the off-shore bank,
and the Vatican's phantom companies in Panama, to make other
investments-- such as buying the Rizzoli newspapers. The
assumption may have been that if the investments failed,
the Panamian companies to whom the money was loaned, would
quietly go bankrupt, and the banks would absorb the losses.
Since the Vatican ownership of these the companies was supposed
to be an irretrievable secret, written only in one sealed
document in Luxumburg, no one would be able to hold it responsible.
On the other hand, if the investments proved profitable,
as everyone believed they would, the Vatican would make
an immense profit, and be able to continue its worthy social
What those involved in the scheme failed
to anticipate was how everything that could go wrong would
go wrong. Sindona, who was arrested in N.Y. on an unrelated
matter, also began blackmailing Calvi by plastering posters
up in Milan asking questions about the Banco Ambrosiano's
relations with the Vatican. This in turn focussed the Bank
of Italy's attention on Calvi's activities. Calvi was jailed
on an unrelated (and probably unfair) currency charge; and,
thrown in a cell with terrorists, he attempt suicide. Calvi,
desperate to get political influence, then joined an illegal
Masonic lodge, P-2, which was exposed as trying to pull
a coup d`etat-- and Calvi's name appeared on its roll call.
The bank, newspapers and other financial investments collapsed
in the stock market-- wiping out,along with interest charges,
most of the borrowed 1.4 billion. In his last interview
with the press before fleeing,Calvi said "It is a question
of surviving in a climate that is becoming like a religious
war...It is an atmosphere that favors every sort of barbarism."
Finally, half-mad, he fled Italy to London-- and his mysterious
Suddenly, with banks around the world
left holding the bag, the scandal became inevitable. The
Vatican begrudgingly agreed to pay back $250 million to
the banks. This required it to go further into debt, worsening
its already precarious situation.
Behind this all was a simple secret,
the secular world had left the Vatican with great responsibilities--
but no money.