The church will not disclose whether the IOR later destroyed its wartime records or they remain sealed inside the Vatican.1 Eastern European countries occupied by the Nazis have shown little enthusiasm to search for documents that might expose their own dubious collaboration. Complicating the quest for answers is that files of some major companies that did business with the IOR remain inaccessible to private researchers and historians. A few firms did not preserve their wartime records.2 Bombing raids demolished the archives of others, such as the giant German insurer Allianz. Russian troops seized truckloads of paperwork in the closing days of the war, and sometimes burned them or in other instances shipped them to Moscow, where they remained undiscovered for decades. Some Third Reich business documentation ended up in Polish government archives, most of it damaged in a 1997 flood, before any historian had reviewed it.3 Argentina’s Juan Perón destroyed most of his country’s wartime state banking records, closing the door to tracking the IOR through its primary South American trading partner. And the largest Italian insurance firm, Assicurazioni Generali, claimed for decades that important files were destroyed at the end of the war, but in 1996 two private detectives found them on the top floor of a waterfront warehouse in Trieste, Italy.4
Despite all those obstacles, there are scattered remnants of information in accessible private files of companies with whom the IOR did business, as well as in the national archives of several countries. That diverse information provides a broad picture of what the Vatican Bank did during the war.5 Much of it leads back to Nogara’s close friend Count Giuseppe Volpi di Misurata, one of Italy’s most celebrated industrial titans. U.S. intelligence described Volpi as “an unscrupulous man, absolutely unreliable,” who wielded “great[er] power than J. P. Morgan, John D. Rockefeller and Bernard M. Baruch, plus a dozen other magnates.”6 Volpi and Nogara had become friends in 1902 and business colleagues shortly after. Serendipitous events aligned their financial interests. During World War II Nogara felt safe investing Vatican money in Volpi’s companies while Volpi wanted the IOR’s cash since it came with the church’s implied moral sanction.
Volpi was a self-confident promoter. Long before the war he was involved in ambitious private projects throughout the Balkans, Constantinople, and his native Venice.7 Nogara had started his career as an electrical and mining engineer for a company owned by an investment group that included Volpi.8 The efficient and low-key Nogara was the perfect foil for the flamboyant and garrulous Volpi. Volpi engineered Nogara’s appointment as a director to BCI, Italy’s largest bank.9 Nogara worked with Società Commerciale d’Orientale in Constantinople. The Società was BCI’s Ottoman financial syndicate.10 From there, Nogara became Volpi’s indispensable insider, managing a coterie of informants in the Turkish capital.11 And he helped Volpi arrange enormous loans to establish beachheads in steel and shipping, a seaport development, Italy’s largest electrical utility, and a transnational railroad. The pair even managed to secure a personal stake in Montenegro’s lucrative tobacco monopoly.12
As ardent Italian nationalists, both men saw Mussolini as a bulwark against encroaching communism. His goal of expanding the Italian empire, they believed, was good for business.13 While Nogara advanced at Società Commerciale d’Orientale and BCI, Volpi served four years as Il Duce’s Governor of Libya and another three as Italy’s Finance Minister.14 After Volpi stepped down as Finance Minister in 1928, Mussolini tapped him the following year to be a key negotiator in talks with the church over the Lateran Pacts.15
When Nogara moved to the Vatican to invest the $92 million settlement that Volpi had helped negotiate, Volpi flourished in the private sector.16 He was elected president of the country’s most powerful trade group, Confindustria.17 As Nogara carved out his power base at the Vatican, Volpi boasted that his goal was to build Italy Inc., a diversified Italian-based business empire that would rival the country’s great industrialists, the Pirelli and Agnelli families.18 Nogara and Volpi were back in business. Nogara used his BCI connections to arrange the financing for Volpi to take control of Wagons-Lits, a travel conglomerate that ran the Orient Express and also owned the international travel agency Thomas Cook (Nogara had earlier tried and failed to buy the grand Wagons-Lits Parisian headquarters).19 He also convinced BCI to finance more Volpi deals for electrical utilities in Greece and Dalmatia, a banking network in Croatia, and a newly formed insurance consortium, The Group, in Romania.20 In return, Volpi offered Nogara preferred terms on deals involving the church. The Vatican invested in SADE, Volpi’s Italian and Balkan-based electric utility, as well as Bastogi, the country’s oldest holding company, which Volpi had recently purchased.21 It was the insurance industry, particularly Italy’s largest insurer, Assicurazioni Generali, that Nogara judged as the best business opportunity for the Vatican.
The small Jewish communities in Venice and Trieste had founded Generali in 1831.22 By the mid-1930s, Nogara had bought a stake in Generali for the Vatican and was friendly with all its directors.23 Mussolini’s 1938 anti-Semitic laws crushed Generali and other Jewish-owned insurers such as Riunione Adriatica di Sicurtà (RAS).24 At Generali alone, twenty Jewish directors were forced to resign and sixty-six top ranking employees were dismissed. All the Italian insurers appointed fascist directors. A government decree converted Generali into an Italian company and relocated its headquarters to Rome. Generali’s Jewish chairman—the son of the company’s founder—had to stand down.25 His replacement? Volpi.26,I
Nogara was one of the Generali investors who supported Volpi’s appointment to fill the vacancy created as a result of the race laws.28 Men like Nogara and Volpi likely viewed the removal of Jewish executives as the price of doing business in fascist Italy.29 The great irony was that Generali was primarily successful because of its Jewish roots. Generali’s founder, Giuseppe Lazzaro Morpurgo, had set about in the nineteenth century to target the nascent insurance trade among Eastern European Jews. He believed that the poor Jewish populations in the East would welcome a Jewish insurer who offered them life insurance policies that doubled as annuities. The policies—often called a poor man’s Swiss bank account—guaranteed a payout at the end of a fixed term and were marketed as an easy and safe way for families to save money.30 They also offered an immediate payout to the families if the policyholder died early. Morpurgo knew the untapped market was huge. Generali started by setting up small information tables at marketplaces popular with Jewish families.31 In those early decades, Jews showed up in person, paid their premiums in cash, and left with a tiny chit of paper as proof of their policy. Eventually Generali established formal offices in all Eastern European capitals.32 Its success fed on itself. As it grew, Generali branded itself as the most reputable and safest of insurance companies.33 The result of Morpurgo’s singular focus was that by the start of the twentieth century, Generali dominated the Eastern European Jewish insurance market.
Generali’s Jewish roots and success did not bother Volpi, an opportunist who was concerned about profits far more than he was about anti-Semitism.34 The Italian insurance industry accounted for a remarkable quarter of Italy’s gross national product. And Generali was far and away the most successful company, claiming a third of Italy’s insurance trade.35
Some Generali executives had fresh memories of how badly World War I had hurt their business. They warned Volpi about the pitfalls of any new European conflict. Increased death rates for soldiers and civilians translated into punishing early payouts on life insurance policies.36 The damage from bombing raids in the transport of commercial goods meant huge losses. Writing fire insurance on industrial facilities put enormous capital at risk. Generali’s assets during World War I had plummeted by a third.37 But none of that worried Volpi. His natural confidence set him apart from his colleagues and he demonstrated that early on. He had taken charge at Generali at the same time Hitler announced the Anschluss between Germany and Austria. Two dominant German firms, Allianz and Munich Re, planned to subsume the Austrian insurance industry. But Volpi objected and lobbied German executives as well as Italian government ministers.38 The result was an extraordinary assurance from the Reich Economics Ministry that going forward Generali would be treated as a German insurance company.39 Volpi took personal control of Generali’s Austrian subsidiary, Erste Allgemeine, and ended up with a solid share of business in the new order.40 In return, Generali reiterated its loyalty to the Axis powers. And Volpi led the effort to establish Roma, a well-funded Italian reinsurance syndicate that became an integrated partner with its German counterparts.41
Volpi wanted to expand his interests in many countries. He and other Italian businessmen knew that high returns were available only beyond Italian borders. At the same time, Nogara was investing heavily in British, French, and Swiss real estate through his shell companies.42 Mussolini had forced those men to look abroad as Italian profits were squeezed between crippling regulations and high taxes. Most risk takers favored the Balkans and Eastern Europe, a region still developing in the wake of its post–World War I independence from the Ottoman and Austro-Hungarian empires.43
Once the war began, Germans and Italians rushed to scoop up the enormous business left behind by the British, who were cut off from their continental insurance trade. Sometimes, as in Poland, they split the business. Munich Re and Generali ended up controlling about half of Poland’s insurance, using local companies to mask the true extent of ownership.44 Concerns about the magnitude of the new risks across Europe prompted the competitors to form the Association for the Coverage of Large Risks, with Munich Re and Swiss Re each owning 25 percent, and Generali and RAS each with 10 percent. Smaller German and Swiss insurers divided the rest.45
More often they could not agree on how to divide the spoils. Volpi was willing to fight the Germans and others for business share in the conquered Eastern territories.46 Austrian insurer Wiener Allianz, for instance, was rejected in its bid to sell insurance in bloody Slovakia and the German protectorates of Moravia and Bohemia. German and Swiss firms tried monopolizing the lucrative opportunities there but Generali and RAS muscled in.47 In Greece and the succession states of Yugoslavia, Volpi pushed Generali’s marketing, undercutting German pricing by using holding companies to avoid heavy regulatory costs.48 And in Croatia he took advantage of lax rules about capital requirements for reinsurance and currency exchange to best the Germans in a struggle to control the insurance trade.49 The profits he shared with Nogara—who oversaw the Vatican’s extensive stake in Generali—were enormous.
Neither man objected when some of Generali’s local subsidiaries in the occupied territories eliminated their Jewish directors. Nor was there any protest when the Gestapo later sometimes seized Jewish insurance assets and converted the cash value of policies.50 Instead, Volpi, as chairman, and Nogara, as the largest investor, focused on the bottom line: Generali retained on average about twice as much business as its German competitors.51
As a neutral sovereign, the Vatican was not supposed to do business with any blocked or blacklisted company or person. Generali was itself blacklisted, as were all other Italian insurance companies. The Treasury Department had closed and liquidated Generali’s American branch in 1941 (it remained shuttered until 1952).52 The Allies were stymied, however, in efforts to prove the Vatican retained any ownership in Generali. Not only did Nogara keep that stake, but not long after the war started he invested in most top Italian insurers.53
In 1940, Nogara extended the Vatican’s role in Italy’s insurance industry. The fascists seized the assets of a British insurer, Norwich Union, which had been doing business in Italy since the turn of the century. Mussolini assigned Norwich’s complete portfolio to Fondiaria, Italy’s fourth largest firm.54 Just before that news became public, Nogara—who was a director of Fondiaria’s credit union—bought a controlling interest for the church.55 The insider tip likely came from Volpi.56 Adding to the incestuousness, the Pope’s cousin, Ernesto Pacelli, served as president of a Fondiaria real estate subsidiary in Rome.57 The Vatican’s purchase of Fondiaria came only two months after it finished purging its Jewish executives.58 When the Norwich asset transfer was announced, the Vatican’s stake multiplied in value. The Allies would not find out about the church’s ownership of Fondiaria until its president was arrested after the war.59,II
Fondiaria continued to do business with German insurers in Nazi-occupied countries throughout the war. And many of those Italian firms owned shares of successful midsized German and Austrian insurers, all of which were on the Allied blacklists.61 (After the war when Allied investigators pressed the Italian insurers for copies of their contracts with German companies, the Italians claimed many had been destroyed during the fighting.)62
Although Nogara’s Generali and other insurance investments were profitable for the Vatican, the stakes came with moral consequences. Volpi, for instance, did a lucrative business under Poland’s General Government, the Nazi military administration that ran the country as ground zero in the murder machine against European Jews.63 In Romania, where the fascist Iron Guard eliminated the country’s Jews and Gypsies, Volpi split the profitable transport insurance business with Germany’s Munich Re and Jauch and Hübener.64 Volpi allowed Albula, a small Swiss-based financing firm owned by Generali, to act as a proxy so Jauch and Hübener could secretly buy the shares of a Romanian insurance company.65 Even in supposedly neutral Latin and South American countries, Generali, RAS, and the German insurers used local agents and multiple layers of reinsurance and phantom trustees to mask their ownership.66 Reinsurance allowed blacklisted companies to redeem policies in neutral countries, creating another way of moving around cash that would otherwise have been blocked.
U.S. and British intelligence tried unmasking the identities of the companies behind each proxy.67 It was, according to Britain’s Trading with the Enemy Branch, “extraordinarily difficult.”68 Generali alone used up to eighty international subsidiaries—which U.S. agents considered “as an intelligence organization of no small efficiency”—to hide the real ownership as well as the distribution of profits.69 But the Americans and British had little doubt that firms like Generali were often directing the insurance trade in foreign countries.70 The insurers sometimes sent information through Italian diplomatic pouches (the Allies suspected, but could never prove, that Generali and others might have also had occasional access to Vatican diplomatic bags).71 At least one of those off-shelf partnerships, through which Generali participated in profitable reinsurance of industrial facilities, utilized slave labor. And others wrote insurance for rail transports, some of which were the trains that carried Jews to the death camps.72
Volpi emphasized to Nogara that since Italy was at war with the Allies, nothing precipitous should be done to rupture Vatican-Italian business ventures. One day the conflict would be over. Mutual friends, including Giuseppe Ferrario, the chairman of the fascist Confederation of Employees of Credit and Insurance Institutes, and Giovanni Dall’Orto, President of the fascist Confederation of Traders, said the same.73
In February 1942, American intelligence learned that Generali was negotiating to buy the Argentine company La Immobiliaria.74 The U.S. did not know that Immobiliaria was the Argentine proxy for one of Nogara’s Swiss holding companies, Lausanne Immobilier. Generali needed real estate outside Europe to convert some wartime reinsurance business into more liquid assets.75 An equity stake by the Vatican would complicate Allied efforts to determine the real owners, just as it had when Nogara and the IOR took a majority stake in Sudameris.76
That same year, an unidentified American banker passed along information to U.S. authorities that a Mexican firm, America Latina Insurance Company, was an Axis front. According to the informant, Mexico’s central bank, Banco Nacional de México, controlled the suspect company’s stock as a proxy for Volpi’s Generali. Volpi had a secret agreement to buy the shares after the war.77 Nogara and the IOR also used Banco Nacional de México. Some in Treasury wondered if the Vatican Bank had a stake in the front company. But a probe went nowhere since the layers of multiple cover companies proved too difficult to penetrate.78
The Allies failed to notice that Volpi used a BCI-owned Swiss private bank, Banca della Svizzera Italiana, to earn enormous profits by facilitating gold sales in countries such as Turkey, where the metal commanded a huge premium.79 Nogara was a Svizzera director despite the British blacklisting of the bank for doing business with Nazi puppet governments in Romania and Bulgaria.80
In 1943, any Vatican investments in Italian insurance companies, especially Generali, developed into stakes that profited from the ongoing murder of Europe’s Jews.81 German giant Allianz had set the precedent several years earlier by escheating life insurance policies of Jewish policyholders and refusing to pay accumulated annuities to those alive.82 What started off as small-time and unorganized looting developed into one of the largest thefts of the Holocaust. Postwar investigators estimated that between the illegally retained premiums and the unpaid benefits that upward of $200 billion was stolen (notices of nonpayment and evidence of the looting scheme appear in U.S. intelligence files as early as 1946).83 Although most of the money was made after the war, when families of survivors tried to collect on their policies, there were also wartime profits.
Generali’s paperwork on this matter is missing. Allied intelligence concluded, however, that Generali began escheating some policies as early as 1942 in occupied Eastern European countries, where the company held more Jewish policies than all other firms combined.84 Other Italian insurance companies soon followed. Postwar investigators believe Generali cloaked the income from the misappropriation of Jewish annuities into reinsurance issued by subsidiaries, such as Romania’s Generali Asigurari.85
All the insurers must have realized this opportunity for theft was possible only during the confusion of war. Is it merely a coincidence that Generali and others began escheating Jewish life insurance policies only after Nogara had formed the IOR? The Vatican Bank was critical from its inception to business titans such as Volpi, men who recognized that since the IOR was not answerable to any country’s central banking authority, it was the world’s best offshore bank.
Did Volpi and Nogara strike such a deal? Did the IOR provide that service for its own insurance company, Fondiaria? The answers, if any, are likely inside the sealed archives of the Vatican. But the church has refused even to acknowledge that it maintains any relevant financial and business records for those years. (In response to a request from the author to access the files, Bishop Sergio Pagano, the Prefect of the Secret Archives, said that a researcher “would not find material” in the Secret Archives about “the financial dimension of the Holy See.” That documentation, said the bishop, might be at “the Institute for Works of Religion [IOR] which, of course, by its very nature excludes outside public access.” The Vatican is the only European nation that denies historians general access to its archives.)86
What is undeniable is that the Vatican’s stakes in Generali, RAS, Fondiaria, and other insurance firms provided a high rate of return in part because some of the profits were from the escheatment and nonpayment of life insurance and annuities to Jewish policyholders. Since the Vatican itself was not a direct insurer, however, it was never included in any postwar restitution paid by the insurers to the victims. After the war, the U.S. military office in charge of Operation Safehaven—the Allied program to retrieve plundered assets and illegally obtained profits—admitted that when it came to the Italian insurers and their strategic partners, “we know absolutely nothing.”87
When Mussolini was forced from office in July 1943, the web of interlocking business directorates and cloaked companies that Italian businessmen had carefully created began disintegrating. The new Prime Minister, Pietro Badoglio, dissolved the Fascist Party only a couple of days after assuming power. Nogara cut all ties with Generali. Croatia, Hungary, Romania, and Bulgaria moved to seize the insurance business for themselves.88
Volpi, ever the survivor, denounced fascism and donated to socialist and republican political parties.89 But events turned against him when the Nazis occupied northern Italy in September 1943, and reinstated Mussolini as the titular head of a puppet government. Il Duce wanted payback for Volpi’s flip-flop. The Nazis were agreeable since they accused Volpi of deploying dirty tactics when competing against German industrialists in the Nazi-occupied territories (his real “crime” was that he often beat the Germans for the business). Volpi beseeched Nogara for protection, but his Vatican friend could not help. The church-state was still fretting about its own security and independence in the wake of the Nazi occupation.90
On September 23, 1943, SS Obersturmbannführer Herbert Kappler—who the following month would round up the Jews of Rome—arrested Volpi at his Roman palazzo. In one of the great ironies of the war, the Nazis detained him on generic charges that he was “an agent of the Jews” and that Generali was a Jewish company that had been instrumental in spreading “the worst news . . . over Germany, on its internal situation and the military.”91 Volpi in fact had implored Mussolini to protect Michele Sulfina, a Jewish Generali executive who survived the war in Rome.92,III That race charge allowed the Nazis to plunder Volpi’s personal accounts, even seizing his wife’s jewelry. His important collection of art and furniture—and even some collectible tombstones from the family cemetery—went by train to Field Marshal Hermann Göring.94
There is no written record of the two-day SS interrogation of Volpi, or of his months in a Nazi-run prison in northern Italy. But to friends and family who later saw him, he seemed broken. Once the Vatican was confident the Germans would not move against the Pope, Nogara intervened and with the help of the Papal Nuncio in Switzerland, the Swiss agreed to patriate the Volpi family. The Germans, convinced they had gotten all they could from him, allowed them to go to Switzerland in 1944. Volpi spent most of the rest of the war in a Lausanne hospital where he was treated for exhaustion. He died in 1947 at the age of sixty-nine from a heart attack, shortly after returning to Italy.95 Knowing by then that a new history was being written about the Vatican and its wartime role, Nogara did not attend his friend’s funeral.
I. When Baron Robert Snoy, the aristocratic president of Wagons-Lits, later sent Volpi a new order further restricting Jews in any form of commerce, Volpi was required to declare his race and religion. On December 1, 1940, he wrote: “I hereby declare that I am . . . of the Aryan race, as are my ancestors since time immemorial, and I have always professed the Catholic faith.”27
II. The venture with Fondiaria was one of Nogara’s riskiest. If the U.S. or Britain had learned of the Vatican’s controlling interest in a blocked company of an enemy nation, it would have meant instant freezing of the church’s bank accounts in both countries. An even riskier venture is discussed by Professor Michael Phayer in his book Pius XII, the Holocaust, and the Cold War. Phayer makes a provocative case suggesting that Nogara might have used money—cleared by the U.S. Treasury for “food exports” in Spain and Portugal—to buy tungsten carbide. Prices for that metal had spiked because of low supply and widespread use in military hardware and steel production. Phayer’s case is suggestive, but pending release of still classified documents, it is not yet conclusive.60
III. During the war, Sulfina and his family were designated “undiscriminated,” meaning the race laws were not enforced against them. While Sulfina trained a new general manager to take his place at Generali, he lived at a Vatican-owned Roman property. After the war, there was a heated internal debate between U.S. intelligence and the State Department about whether Sulfina was a collaborator or merely the recipient of Volpi’s kindness. The same debate raged over several other Jewish businessmen, including the former RAS chairman. The consensus was that Sulfina was a likely Nazi collaborator, but the United States ultimately failed to convince the Italians to remove him from postwar Generali. He effectively ran Generali from 1948 to 1953 together with a well-connected ex-fascist, Gino Baroncini.93