Gerardo D’Ambrosio, Milan’s chief investigating magistrate, had taken charge of the Calvi probe in April 1981.1 The following month, on May 20, Calvi was arrested at his Via Frau apartment.2 It was only a week after the attempted assassination on John Paul, and six days before Italy’s fortieth coalition government since World War II collapsed because of fallout from the P2 scandal.
Calvi and six directors of La Centrale Finanziaria, a financial company at which he was also president, were indicted for violating the country’s currency statutes by improperly exporting up to $50 million of lire through a web of offshore operations.3 News of Calvi’s arrest kicked off a tumble on Milan’s stock exchange, the beginning of a 40 percent slide over several weeks.4 The central bank drafted six major Italian banks into a consortium to stabilize the Ambrosiano with a line of credit.5
To his family and friends Calvi insisted that he had only carried out the actions at the heart of the indictment on behalf of the Vatican Bank. Marcinkus, Mennini, and the IOR’s chief accountant, Pellegrino de Strobel, were aware of every transaction. The evidence he said, was in the files of one of the Ambrosiano’s Swiss banks, the Banca del Gottardo. Papers there proved the deals were actually masked transactions for the IOR. Swiss privacy laws, however, barred releasing documents about a third party without their consent.
“My father really wanted the Swiss bank to disclose the IOR information,” Carlo Calvi told the author, “because he knew it would immediately shift the responsibility for the offshore deals from him to the Vatican. But they wanted none of it.”6
What was at the Banca del Gottardo showed that the Vatican Bank—through its secret ownership of United Trading and Manic—owned all the offshore companies named in the indictment.7 Key Gottardo executives had played more than just an intermediary role; they had in some cases assumed director’s positions on companies like United Trading.8
Calvi could not do much as he was in jail since the court had refused him bail.9 One day after visiting him in prison, his wife, Clara, and daughter, Anna, got into a waiting car to return home. Calvi had given Clara some papers on which he had written: “This trial is about the IOR.” He had told her to go to Marcinkus and ask for his help.10 Clara later claimed that Luigi Mennini’s son Alessandro jumped into the car before they drove off and warned her: “You must not mention this name [IOR] even in confession.”11
Calvi, meanwhile, had hired Francesco Pazienza as a “special consultant” for a huge retainer of 600 million lire (about $500,000).12 The thirty-four-year-old ex-intelligence officer was a nonpracticing physician and adventurer who boasted contacts in Italian and American politics as well as good ties to U.S. and French spy agencies.13 He was also close with Marcinkus. Although he was not a P2 member, he was a top Gelli ally and a friend to many others in the Masonic lodge.14
Pazienza had a reputation for digging up dirt. That was why Secretary of State Casaroli had tapped him the previous year to look for any scandal about Marcinkus. And in 1980, conservative Republicans had hired him as a freelancer to investigate President Jimmy Carter’s brother, Billy. “I uncovered everything,” Pazienza told the author.15 He discovered that the “first brother” had taken $50,000 from Libya’s Muammar Gaddafi, and had also visited Yasir Arafat of the Palestinian Liberation Organization as well as wanted terrorist George Habash, of the Popular Front for the Liberation of Palestine.16 Pazienza’s findings became a 1980 presidential campaign issue after the explosive story was published that October in The New Republic.17 And Pazienza had added to his own allure with a series of dramatic and ever-changing claims. At times he said he had given the Vatican a six-month advance warning about the attempted assassination of the Pope; and that he was the founder of Gran Italia, a group headquartered on New York’s Park Avenue whose stated goal was to unite all 120 million Italians worldwide for a “second Risorgimento.” Pazienza later claimed Gran Italia was a cover for an intelligence operation to nab Italians linked to terrorism.18,I
“My father had personally hired Pazienza,” recalls Carlo, “because he was recommended by the former Secretary of the Christian Democratic Party. He was close to military intelligence officials and top industrialists as well as other men my father respected. He was one of those people who acted as a fixer.”20
Pazienza’s ambitious brief from Calvi was to work to resolve the Ambrosiano’s mounting problems.21 “I start all my work diplomatically,” he told the author, “but if you want to get destroyed, okay, then I can destroy you.” But he also had another goal: to use his connections with Middle Eastern oil sheiks and Western investors to find a buyer willing to pay up to $1.2 billion for 12 percent of Ambrosiano. The deal seemed tantalizingly close at times but ultimately never happened.22
With Pazienza working in the background, Calvi requested that his son, Carlo, then living in Washington, D.C., fly to the Bahamas to look for any exculpatory evidence. The senior Calvi had arranged for his son to access his personal safe deposit box at the Nassau bank Roywest.23
“When I opened the safe box,” recalled the younger Calvi, “there were lots of papers, most of them hard to figure out. But one that seemed clear was on the letterhead of the accounting firm Coopers & Lybrand. It asked whether the Vatican was good for the money behind the deals, whether the money was recoverable from the IOR.
“And here I was, caught between my father wanting the Vatican to release the Swiss files, and the church saying no. I was excited because I thought I finally had found a document to force the Vatican’s hand.”24
In a pre–cell phone and email business era, telexes were often used for fast and reliable international communications. An afternoon storm had knocked the bank’s telex machine out of order. So Carlo walked through a tropical downpour to a public station next to the courthouse. From there he sent a telex to Marcinkus: “Call me after 3 p.m. Carlo.”
Back at his hotel, he took a nap. At 3 p.m. when the phone woke him he was so groggy that he had forgotten who was calling until he heard Marcinkus’s voice.
“Why are you bringing up our problems with the bank?” Marcinkus asked. “Our problems are also your problems.”25
Marcinkus called Pazienza and told him that the young Calvi was trying to pressure the church. Pazienza got on the next flight to Nassau. “I put a stop to Carlo’s craziness,” he told the author. “I told him if he tried to use any telex machine again, I would personally smash it with my fists.”26
Carlo thought that the Banca del Gottardo should issue a statement about his father’s innocence.27 “They agreed to answer some interrogatories,” says Carlo, “and promised they would help. But in the end, they released almost no information. It all stayed in Switzerland.” The Italian court rejected the Gottardo proclamation about Calvi because it was so generic, and crippled by too many caveats and legal disclaimers.28
Pazienza called the younger Calvi and said he was “authorized” to arrange a personal meeting between Carlo and Archbishop Giovanni Cheli, the president of the Vatican’s Council for Migrants and Travelers and also its United Nations observer in New York.29 Calvi had no idea that Cheli had secretly been angling to replace Marcinkus as chief of the IOR.30 At a predetermined time, the young Calvi flew to New York and took a taxi to a Manhattan address supplied by Pazienza.
Two men were waiting inside an Upper East Side apartment. One was Sebastiano Lustrissimi, a businessman who worked for Italy’s largest construction company, Condotte d’Acqua (a company in which the Vatican had sold its controlling interest to Sindona in 1969).31 He was a friend of Pazienza (the young Calvi mistakenly thought he was either a mobster or an Italian intelligence agent).32 The other man was Lorenzo Zorza, a middle-aged priest. Zorza was living at Manhattan’s St. Agnes parish and was an energetic volunteer to the Vatican’s Permanent Observer Mission to the United Nations.33
“When I met him—Zorza—he was dressed like a priest,” Carlo Calvi recalled, “but he did not behave like one. I can’t really explain it, but I had doubts about him right away.”34
Zorza had a nervous habit of twitching his head from side to side. And Calvi’s instincts about having some “doubts” were good. Zorza was no ordinary priest. A favorite with parishoners, the voluble Zorza always seemed to be part of some grandiose scheme that promised to blend religion and commerce. At Pazienza’s urging, Zorza had asked the senior Calvi for $5 million from the Ambrosiano to develop a huge project in Brazil. Half of that loan would have been a kickback split between Pazienza and “the people at the Banca.”35,II
That early summer evening in 1981, Calvi sat between Lustrissimi and Zorza. They did almost all the talking. “Be polite to Monsignor Cheli,” Zorza cautioned Calvi. “And listen carefully. And be certain to pay attention to his advice.”37
Lustrissimi drove Zorza and Calvi to the United Nations. There they met Archbishop Cheli in a hallway. Cheli talked to Calvi in a hushed tone so no one nearby might overhear. He said, “Tell your father to be quiet, not to reveal any secrets, and to continue to believe in providence.”
“Unfortunately,” recalls Calvi, “providence was not something I could then believe in.”38
Carlo Calvi called Marcinkus several more times. “He kept brushing me off.”39
After the senior Calvi’s indictment, Pazienza could not derail his trial. It got under way in a Milan courtroom that June. On the stand Calvi was hesitant, speaking in broad generalities. He tried shifting the blame for any wrongdoing to one of his codefendants, Alessandro Canesi, the bank’s ex-chairman and his longtime mentor. Canesi was also a former chief of La Centrale Finanziaria, now headed by Calvi, which was allegedly behind the entire illegal export operation. Conveniently, Canesi was unable to answer the charges since the eighty-four-year-old had died at his villa near Lake Como on June 15, a few days after the trial started.40
While the courtroom drama played out, on June 30, at Calvi’s insistence, two senior Ambrosiano executives, Filippo Leoni and Carlo Olgiati, met at the Vatican with Marcinkus, Mennini, and de Strobel. They were frustrated that the Vatican officials refused to tell them what the IOR might do if questions arose about its ownership of the ghost companies.41
On July 9, a defense attorney told a stunned courtroom that Calvi had failed to show up for the trial that morning because he had tried killing himself by swallowing ninety barbiturate pills and cutting one of his wrists.42 Calvi’s family cited it as startling evidence of his melancholy. His prison warden cast doubts on it, claiming that the wrist wound was superficial and that Calvi had not taken a lethal dose. “We’re dealing with a suicide attempt that failed at birth,” he told the press.43
Carlo Calvi thought his father’s botched suicide was a sign of his desperation over the Vatican’s refusal of the Ambrosiano’s pleas for help.44 The next day, the Ambrosiano’s Leoni Olgiati and deputy chairman Roberto Rosone met again at the Vatican with Marcinkus and his top two deputies. They all later gave slightly different accounts of what transpired but agreed the discussion was about whether the IOR would continue cooperating with the Ambrosiano.45 By this time, the Vatican officials worried that the fallout from the Calvi affair might result in their own criminal problems. Only five days before that meeting, de Strobel had traveled to Lugano, Switzerland, to review files at the Banca del Gottardo. Marcinkus needed some documents there. But de Strobel was concerned that if he returned with photocopies, he might be stopped and searched by Italian authorities. Instead, the Papal Nuncio in Berne later forwarded the Gottardo papers by diplomatic pouch.46
Meanwhile, Calvi’s suicide attempt was serious enough to land him in the prison hospital. There he developed pneumonia and was too ill to attend the trial that continued while he recovered. He was still in the infirmary when the three-judge panel issued its verdict on July 20, 1981: guilty as the mastermind of illegally exporting $26.4 million to Switzerland. His sentence was four years in prison—more than the prosecutors requested—plus an $11.7 million fine.47 Calvi was released on bail pending his appeal. His wife picked him up from the hospital in their armored Mercedes. The security motorcade—two cars with bodyguards—took the convicted banker home.48 To Calvi’s detriment, word leaked that before his release, he had met with prosecutors and discussed possibly cooperating in return for vacating his sentence.49 Nothing was firm, but such news was a potentially ominous sign for those who had profited from Calvi’s many ventures.
Only eight days after his conviction Calvi chaired a meeting of the Ambrosiano’s board of directors. The Bank of Italy thought he should resign but was powerless to remove him. And the Ambrosiano’s directors voted unanimously to keep him as chairman, saying there had been no suggestion at the trial that Calvi ever profited from his wrongdoing.50
Maybe even more surprising was that Calvi’s felony conviction did not scare off Marcinkus. When asked why a few years later, Marcinkus offered a weak justification: “When Calvi was in jail, I asked somebody, ‘Hey! What’s going on?’ And the fellow says, ‘Nah, if you’re not caught, you’re not worth anything.’ ”51
For the remainder of 1981, the Ambrosiano’s stock price climbed.52 Some market analysts suggested that investors were voicing their confidence in Calvi’s savvy running of the bank and a widespread belief that his talented legal team would prevail on appeal.53 Others concluded that between the P2 revelations and the string of powerful politicians who had testified to his good character, small investors believed they were investing in a company protected by the so-called sottogoverno (the secret government).54
No investor then knew that the Ambrosiano’s foreign subsidiaries in Peru, Nicaragua, Panama, the Bahamas, and Luxembourg had borrowed over a billion dollars from other banks and the IOR, much of which Calvi had recycled to buy the Ambrosiano shares, thereby inflating the stock price. The IOR was still on the line for about $140 million.55
The greatest problem facing Calvi by the end of 1981 was that the Ambrosiano’s many offshore subsidiaries had fallen behind on servicing its back-to-back loans and accumulated debt.56 He was desperate because if he could not raise money his convoluted ghost company network would unravel.57 So Calvi turned to Marcinkus, the only person he trusted.
Calvi broke his holiday in the Costa Smeralda and flew to Rome on a Learjet owned by United Trading.58 On August 26, he met with Marcinkus at the IOR headquarters and pleaded for help. Marcinkus agreed to give Calvi two official IOR letters, known in the banking industry as “letters of patronage” or “letters of comfort,” documents meant to assure third parties that the Vatican stood behind the Ambrosiano. Written in English on Vatican Bank stationery and dated September 1, 1981, the letters read, “This is to confirm that we directly or indirectly control”—it then listed ten of the Panamanian, Luxembourg, and Liechtenstein ghost companies. “We also confirm our awareness of their indebtedness towards yourselves as of 10 June 1981 as per attached statement of accounts.”59 One letter was addressed to Nicaragua’s Banco Comercial and the other to Peru’s Banco Andino.60 The language was vague, not constituting an express guarantee of the debt, but rather intended to convey the impression that the IOR was somehow endorsing the $1.4 billion in unsecured debt the Ambrosiano had issued to the ghost companies. Read with a lawyer’s eye, the letters did not represent that the IOR had any intention of honoring the debts. Luigi Mennini, as the IOR’s chief administrator, and Pellegrino de Strobel, the Vatican Bank’s chief accountant, signed for the Vatican.61
Attached to the letters was a purported assets and liability summary for seven of the ten companies. According to that eight-page document, the companies owed $867 million to the Nicaraguan and Peruvian banks, but had assets of $1.21 billion. This balancing act was accomplished by inflating the value of the Ambrosiano shares and also omitting $217 million of back-to-back debts between the Cisalpine and Banco Andino (or, as a Wall Street Journal investigation concluded six years later, “In essence, the Vatican bank had borrowed money . . . and lent it to itself”).62 Marcinkus would have known the figures on Calvi’s attachment were wrong. The financial statements he had just received from Switzerland’s Banca del Gottardo showed the true and far more sobering numbers.63
As a condition of giving the letters of patronage, Marcinkus insisted that Calvi give the IOR a secret counter-letter—backdated to August 26—absolving the Vatican of any obligation to repay the loans. Calvi agreed that no matter what the patronage letters said, the IOR would incur “no further damage or loss.”64 A one-page attachment listed all the outstanding back-to-back loans and stated that $300 million was owed to the Vatican.65 That Calvi letter also had an important clause upon which Marcinkus had insisted: the IOR’s role in the ghost companies would terminate in another ten months, no later than June 30, 1982.66 Marcinkus had belatedly concluded that it was time for the Vatican to extricate itself from Calvi’s offshore empire. The best the IOR chief could do was to start the clock running.
Calvi assured Marcinkus he would only share the patronage letters inside the Ambrosiano with his fellow directors. He did not keep that promise. Calvi needed the letters to calm the Ambrosiano’s jittery foreign lenders.67 Marcinkus would later aver that he gave Calvi those letters as an “assistance to a friend” because “Calvi comes out of jail . . . and he says, ‘I’m having trouble and I’ve got to get this thing all set up.’ ”68 Sindona told author Nick Tosches, “Calvi—no one knew this, but it is true—paid the Vatican through Marcinkus, $20 million for those two letters of comfort.”69 (Two parliamentary investigations failed to find evidence of such a payoff.) What was proven was that the day after Calvi got the patronage letters, Mennini transferred $3.5 million from an IOR subsidiary in Lugano to a Swiss lawyer, who in turn sent it along to an account in Lausanne controlled by Pazienza, Calvi’s crisis manager.70
The following month, October 26, Mennini and de Strobel—with Marcinkus’s approval—signed revised patronage letters to the Banco Comercial and the Banco Andino.71 The new language suggested that any money raised from the sale of assets would not necessarily be used to reduce the debt of the ghost companies. Most incredibly the letter appointed Calvi as the “attorney in fact” for “all relevant purposes” under the agreements.72 (Lawyers for the IOR subsequently contended that the power of attorney had been given to Calvi only at his “express request, to formally empower him to manage the companies which the IOR de facto controls, though unwittingly so.” In essence, the church’s unlikely explanation was that once it discovered it was the unknowing owner of the ghost companies, rather than protesting, it recorded a power of attorney appointing Calvi as the administrator of the ten shells.)73
The day after the Vatican gave Calvi that authority over the ghost companies, Marcinkus and Calvi were in Zurich for another Cisalpine board meeting. According to the minutes, Marcinkus asked far more questions than usual, but neither he nor Calvi disclosed to their fellow directors anything about the patronage or indemnity letters.74
Pope John Paul II had created a special commission of fifteen cardinals to study Vatican finances and devise safeguards to prevent future Sindona-like scandals.75 The panel included American cardinals John Krol of Philadelphia and New York’s Terence Cooke.76 But few inside the Vatican thought that the Polish-born Pope intended the investigation to be hard-hitting. Marcinkus, meanwhile, did not tell the cardinals about the patronage letters. When they later learned about them they were enraged. Cardinal Pietro Palazzini’s reaction was typical: it “was crazy.”77 German Cardinal Joseph Höffner, another committee member, was so furious at Marcinkus’s deception that he insisted to John Paul that the IOR chief promptly resign.78 The Pope refused.79
During this time, Calvi made a critical acquaintance separate from the Vatican. He spent his August holiday on Pazienza’s yacht, off Costa Smeralda. They chanced upon another yacht, owned by Flavio Carboni, a forty-nine-year-old Sardinian property developer. Carboni also happened to be the partner of Carlo Caracciolo, the publisher of La Repubblica and L’Espresso.80 Italy’s Secretary of the Treasury was on the boat that day. The flashy Carboni, with his fleet of fast cars, a plane, and two mistresses in addition to his wife, was a well-known personality in southern Italy.81 His solid connections, Calvi hoped, might allow him to offset Gelli’s lost influence.82
Although Calvi was not the most personable man, Carboni got along with him from the moment they met.83 The Sardinian wanted something from the Ambrosiano too, a $500 million loan for an ambitious seaside resort project. Though short of money, Calvi nevertheless agreed.84 It took only a couple of months for the relationship to go beyond lender and borrower, to friendship, and then to confidants. Carboni visited Calvi at his home and was often at the Ambrosiano’s headquarters. Knowing of Calvi’s pending prison sentence, Carboni offered to lobby important politicians on his behalf.
Some close to Calvi were unsure about Carboni’s intentions. Carlo Calvi did not like him. Nor did Calvi’s Ambrosiano deputy, Roberto Rosone, who warned others there was something sinister about him.
As 1981 drew to a close, Calvi also got involved with one of Italy’s leading businessmen, Carlo De Benedetti, a former ranking executive at Fiat. In 1976, De Benedetti had taken control of office equipment firm Olivetti. Acclaimed for turning the company around, much as Lee Iacocca was later for his 1980s turnaround of Chrysler, he thought the Ambrosiano was a bargain.85 In November, Calvi and De Benedetti announced that the Olivetti chief had invested $45 million to buy a 2 percent stake. De Benedetti became an Ambrosiano director and its deputy chairman.86
The financial world was astonished at the union between Calvi, the convicted felon, and De Benedetti, whose reputation was flawless.87 It was a moment of personal triumph for Calvi. “He considered it maybe a last opportunity to really revitalize himself and the bank,” recalls Carlo Calvi. “He was so proud when he introduced me to De Benedetti.”88
Sixty-five days later the honeymoon was over. Once De Benedetti had full access to the bank’s records, he was “appalled” to discover its finances were utterly dismal.89 The Ambrosiano’s Peruvian unit had accumulated a massive $800 million in debt in just over a year. De Benedetti was stunned that most of the borrowers were unknown foreign companies whose creditworthiness he could not verify. He wanted out. Calvi was resistant but when De Benedetti threatened to go public, he had no choice. Within two months, their brief “marriage” was annulled. De Benedetti got back his original investment with interest.90 (When he met the following month with the Vatican’s Secretary of State Casaroli, De Benedetti warned him that there were grave problems at the Ambrosiano.)91
The Ambrosiano was desperate for cash. Calvi again approached the Vatican Bank but this time Marcinkus turned him away. He warned Calvi that the IOR expected to be “made whole.” Calvi was more concerned about finding a financial lifeline than figuring out how to repay the Vatican. But the IOR chief did do one last favor for him. According to the byzantine paperwork between the IOR and the Ambrosiano, the Vatican owed about $18 million on some phantom loans used to boost the balance sheets of Banco Andino and the Cisalpine. With Marcinkus’s approval, Calvi used an old holding company, Zitropo, to pay $18 million to IOR accounts at Chase Manhattan and the Banca di Roma per la Svizzera. The Vatican Bank then passed that money back as payments it supposedly owed on the outstanding loans. The problem was that Zitropo was essentially bankrupt. Although it tapped lines of credit to pay the IOR, it was eventually liquidated with $46 million in debt (for allowing Calvi to use its accounts for the questionable trading, the IOR collected a small percentage of the transferred monies, a profit of $267,492).92
Although Marcinkus deemed any further investment into the Ambrosiano as too perilous, a few businessmen with a healthy appetite for risk thought the distressed bank offered an opportunity for fast, huge gains. Only days after De Benedetti’s departure, Orazio Bagnasco, a wealthy Genovese property developer and owner of the luxury hotel group Ciga, invested $20 million in the Ambrosiano.93 Bagnasco became the bank’s deputy chairman.94 And not long after he came aboard, in January 1982, his faith seemed justified when the bank announced that its prior year’s profits had tripled. The financial press heralded the results as proof that the Ambrosiano was intrinsically sound and thriving despite Calvi’s legal problems.95
The Bank of Italy, meanwhile, was still pursuing a probe into possible criminal wrongdoing. In February, only a month after Bagnasco’s investment, the central bank sent investigators to Peru to follow up on suspicious Banco Andino transactions. But Peruvian banking officials refused to cooperate.
A small circle within the Ambrosiano knew that the stellar earnings meant nothing. The debt through its foreign subsidiaries was staggering. Marcinkus was increasingly concerned about having provided the patronage letters. He confided in Calvi that he was having difficulties inside the Curia maintaining a unified front for the beleaguered banker. Still, in March, Marcinkus went public with his support. He gave an interview to the Italian newsweekly Panorama. “Calvi merits our trust,” he said. Some of the investments with Calvi, claimed Marcinkus, “are going very well.” As a result, he said, the Vatican did not intend to sell its stake in the Ambrosiano.96
That interview set off stormy arguments and accusations inside the Vatican between the IOR’s boosters and those who thought Marcinkus had again tarnished the church’s reputation. At the Ambrosiano, when executives like the deputy chairman, Roberto Rosone, questioned some of the immense Panamanian loans, Calvi dismissed them by citing the Panorama interview: “Behind those loans is the Vatican, the Pope,” Calvi told his fellow directors. “Do you have the slightest doubt about the Vatican bank?”97
Calvi was, of course, aware that the Bank of Italy was investigating his foreign subsidiaries. In a display of bluster (or possibly denial), he directed Coopers & Lybrand to prepare the documents so the Ambrosiano could offer a new class of preferred stock to raise millions of dollars (the bank had already issued additional shares earlier in the year, increasing the number of shareholders by 30 percent and nearly doubling its available capital).98
By the spring of 1982, Calvi warned his family that he feared for their safety. He told his wife, Clara, that the Vatican and Sindona were all his enemies. Calvi started carrying a pistol in his black attaché. He showed the handgun to his daughter, Anna: “If they come, I will kill them.”99 She also overheard one day a telephone conversation that her father had with Carboni. Calvi told him: “I’m just tired . . . I’ve had enough and if I have to, I will speak and tell everything about everyone.”100
A few minutes before 8 a.m., on April 27, a gunman ran up to Roberto Rosone on a quiet side street in central Milan. Rosone, who had just left his apartment, was shot twice. An accomplice was waiting on a motor scooter and the would-be assassin jumped on and sped away. A security guard rushed toward the fleeing bike and put two deadly bullets into the shooter’s head.101 The man turned out to be the boss of a local drug syndicate, Danilo Abbruciati.102
Not many outside the bank knew that Rosone—who survived—had encouraged a small group of the bank’s investors to write a personal appeal to Pope John Paul II. The note, which was translated into Polish before being sent to the Vatican by messenger, warned about serious problems at the Ambrosiano. It asked whether the Pontiff knew about the many dealings between Calvi and Marcinkus. (It cannot be confirmed that John Paul ever saw the note.)103
Calvi commiserated with the recuperating Rosone, contending that the failed hit was meant to intimidate the bank’s directors. “Madonna, what a mad world!” Calvi told his wounded colleague.104 It would be another couple of months before investigators tracked a $150,000 payment from Calvi to the hit man.105 In the wake of the shootings, most marveled at Calvi’s composure and apparent coolness. At home, however, stripped of his public bravado, his wife and family saw that he was increasingly glum.106
Adding to his angst, Marcinkus reminded him that the IOR’s patronage letters were set to expire at the end of June. Carboni had been lobbying Marcinkus for an extension. He now appealed to Luigi D’Agostini, a Rome lawyer with solid Vatican connections. D’Agostini enlisted the help of Cardinal Pietro Palazzini, another Marcinkus friend.107 Calvi and Carboni met with the cardinal, and Calvi even sent a pleading letter, in which he complained about how “Marcinkus and Mennini refuse” to be reasonable. He also wrote about the “many loans and bribes . . . to political parties and politicians.”108 Palazzini tried intervening on Calvi’s behalf but later informed the beleaguered banker that there was nothing he could do since the IOR was “impenetrable.”109 Marcinkus could not be swayed. By then, he was intently focused on limiting the Vatican Bank’s exposure.
When Marcinkus traveled with the Pope to the United Kingdom in May, Carboni took the opportunity to meet with Mennini at the Vatican.110 The Sardinian developer had made a bold proposal to Calvi: if he could repair the relationship between the IOR and the Ambrosiano and bring fresh money into the partnership, his reward would be a staggering $100 million. Enticed by that supersized commission, Carboni made an all-out effort. But he made little headway with the IOR’s number two man. When Marcinkus returned to Rome and learned Carboni had tried circumventing him, he telephoned Calvi and angrily demanded he stop looking to the Vatican for assistance.111
Calvi was more desperate than ever to find a white knight. Two back-to-back loans to the IOR, totaling $124 million, were due on May 15 (Marcinkus reluctantly gave him a one-month extension just before the deadline).112 Calvi claimed to his family that he was working on a Vatican-approved rescue plan involving Opus Dei, the secretive Catholic organization founded in 1928. For nearly twenty years, Opus Dei had wanted its status as a religious order upgraded from a secular institute, under the bureaucratic supervision of the Vatican, to a personal prelature that reported directly to the Pope.113 In the deal Calvi spoke about, Opus Dei would somehow assume the Ambrosiano’s debt and shield the church from financial losses and public fallout.114 In return, John Paul would elevate Opus Dei to a personal prelature. Even if Calvi hoped to broker such an accord, it is doubtful it went beyond a few initial conversations. In May, he stopped talking about Opus Dei (later, when the story went public, the order issued a formal denial).115
Calvi switched his attention to his Coopers & Lybrand accountants, who suggested an eleventh-hour deal with another of its clients, Bahamian-based Artoc Bank & Trust. Peter de Savary, Artoc’s British-born chairman, had invested in a Kuwaiti oil company. He and his Arab partners had opened Artoc in Nassau. The Ambrosiano already owned 20 percent of Artoc, and the accountants suggested the companies merge to form Artoc Ambrosiano.116
Since the Ambrosiano was headquartered in Italy, the Italian central bank had to approve the merger. Any chance that might happen was dashed on May 31 when the Bank of Italy’s Milan branch sent a four-page, single-spaced, typed letter to Calvi, demanding that the Ambrosiano explain in detail its $1.4 billion in loans to subsidiaries in the Bahamas, Peru, and Nicaragua.117 The central bankers insisted that their letter of inquiry be read at the next Ambrosiano board meeting, and that each director state publicly whether or not they had approved the massive foreign loans.118 That letter kicked off a raucous clash when the board met a week later, on June 7. Calvi refused the requests of several directors to produce the underlying loan documents to the ghost companies. For the first time during his seven-year tenure as chairman, the board voted 11 to 3 against him, passing a resolution authorizing the Ambrosiano to gather all the necessary financial documents requested by the Bank of Italy.119
The next morning, Calvi again told his family he thought they should leave Italy. And he met a final time with Marcinkus at the Vatican, asking his longtime friend to help him buy a large block of Ambrosiano shares at a significant premium to the market price. Calvi promised to repay the IOR, and hoped the purchase might rally its battered shares. Marcinkus again passed.120
Calvi brought a letter he had written a few days earlier, addressed to Pope John Paul. In it, he pleaded that the Pontiff was his “last hope.”121 Calvi boasted of having been a strategic front man for the Vatican in fighting Marxism around the globe.122 And he warned that upcoming events would “provoke a catastrophe of unimaginable proportions in which the Church will suffer the gravest damage.”123 He implored John Paul for an immediate meeting so he could explain everything, and “put at your disposal important documents in my possession.”124
That letter was a few days old by the time Calvi met with Marcinkus. If he had any thought of asking the IOR chief to pass it to the Pope, Marcinkus’s chilly reception was enough to change his mind. When Calvi left he gave it instead to Carboni, who in turn handed it to a Czechoslovakian bishop working inside the Vatican.125 (It is not known if the Pope ever received the letter, as the Vatican will not confirm or deny anything about it. Its existence was not known for another decade, when it turned up as part of yet another Italian government investigation into the Ambrosiano.)
Three days later, Friday, June 11, when Calvi’s driver arrived to take the banker to work, he was not there. Aided by Carboni, Calvi had begun his circuitous journey to reach London, flying from Milan to Rome the night before. News that he had disappeared spread fast, and many colleagues feared for his safety. Later that same day he called his daughter, Anna, and Graziella Teresa Corrocher, his private secretary, to assure them he was safe.126 “Stay calm,” he said.127 Since Calvi’s real passport was in the custody of the court pending the appeal of his conviction, Carboni had used his underworld contacts to obtain a false travel document.128,III
Calvi was now a fugitive. On the first working Monday after he had fled the country, the Bank of Italy dispatched six inspectors to the Ambrosiano’s headquarters with court orders providing access to all the bank’s records.129 Its stock price fell 12 percent that day. That was the same day that $250 million in back-to-back IOR loans came due.130 Panic began setting in at the Vatican Bank. Late that afternoon, Marcinkus wrote to Cisalpine chairman Pierre Siegenthaler saying that because of his “many other commitments,” he had to resign his director’s post at the Nassau-based bank.131 It is difficult to imagine why it had taken Marcinkus so long to draw some distance between himself and that offshore bank. (He would later disingenuously claim that the resignation “had been in the works for a couple of years.”)132
Secretary of State Agostino Casaroli again confronted Marcinkus.133 John Paul had entrusted Casaroli with oversight of all the Vatican’s finances with the notable exception of the IOR.134 Casaroli and Marcinkus had worked together on some of John Paul’s first foreign trips and had a good early bond but it had deteriorated. They now often scrapped over money and power.135 Marcinkus was in no mood to be castigated. “I’ve done my best and if it’s not good enough you can always get someone else.”136 Casaroli did not then know that only a day after Calvi disappeared, forensics investigators for Italy’s central bank discovered that the Ambrosiano’s biggest debtor was the Vatican Bank.
Rosone, the Ambrosiano’s acting chairman, requested an urgent meeting with Marcinkus. The Vatican Bank chief was in Switzerland and suggested Rosone caucus instead with Mennini and de Strobel. On Wednesday, June 16, Rosone flew to Rome and met with the two IOR officials. He emphasized the patronage letters the duo had signed. Mennini then pulled out his “trump card,” the indemnity letter in which Calvi assured the Vatican that it was not responsible for any of the Ambrosiano’s debts.137 Rosone was stunned. It was the first anyone at the Ambrosiano knew that Calvi had secretly indemnified the Vatican. He asked if Michel Leemans, the managing director of the Ambrosiano’s holding company, La Centrale, could join them. Mennini agreed.138
When Leemans arrived and learned about Calvi’s secret indemnity letter, he contended that the Ambrosiano had been as duped by Calvi as was the Vatican Bank. They should share the risk. If the IOR accepted responsibility for all the debt, Leemans would help them raise a billion-dollar loan at 5 percent (he thought Olivetti owner De Benedetti might be interested in such a deal). Mennini said no. It put all the risk on the Vatican. Why should the Vatican accept responsibility for any debt? As far as the IOR executives were concerned, Calvi’s indemnity letter cleared the church of any responsibility.139
Leemans was totally exasperated. “Don’t you realize that this is a fraud. This will be a worldwide scandal.”140
The two IOR officials appeared unfazed.
What about the shares the IOR owned of the Ambrosiano, asked Rosone?
Take them back, the Vatican duo offered.141
Rebuffed by the Vatican Bank, Rosone returned the following day to Milan and convened an emergency meeting of the bank’s board. Nearly a year after Calvi’s conviction for fraud, the directors finally passed a resolution removing him as chairman and appointing Rosone as his replacement. The stock price was getting hammered. Nervous depositors might make a run on the bank. During the middle of the meeting, Rosone returned to his private office to take a telephone call. It was Leemans who had managed to get a meeting with Marcinkus soon after the archbishop had returned to Rome. Leemans had again insisted that the IOR live up to the promises in its patronage letters and guarantee the repayment of the ghost companies’ debt. Again he had floated the idea of a one-billion-dollar bailout loan. Marcinkus proved no more receptive than Mennini and de Strobel. The IOR would not consider any deal in which the church accepted responsibility for even a dime of the ghost company loans.
“You realize what this means?” asked Leemans. “When I leave this room I go straight to the telephone, and let the Ambrosiano board know there’s nothing else for it; they’ll have to call in the Bank of Italy. That means everything about the letters of patronage will have to come out.”
“I realize I’m going to have to pay a high price for that, personally,” replied Marcinkus.142
Rosone and Leemans agreed that without any help from the Vatican they had no alternative but to ask the Bank of Italy to take control of the Ambrosiano. By six that night, Bank of Italy regulators swarmed into the bank’s headquarters. Rosone stayed in his office to give some press interviews over the phone, trying to spin the day’s developments and to calm the nerves of 39,000 depositors and 4,200 employees. He repeatedly told reporters that it was only a temporary arrangement to help the bank stabilize itself amid a torrent of contradictory rumors. Around 7:15 p.m., while Rosone talked to a journalist from the weekly L’Espresso, someone ran in yelling, “Oh my God, she’s killed herself!” The “she” was fifty-five-year-old Graziella Teresa Corrocher, Calvi’s personal secretary, and an Ambrosiano employee for thirty years. She had evidently leapt out a fourth-floor window.143 A handwritten note scribbled in a red felt marker was found on her desk. In it, she apologized for any “disturbance I give,” but she also castigated Calvi, saying about him, “What a disgrace to run away. May he be cursed a thousand times for the harm he has done to everyone at the bank.”144 Milan’s coroner ruled her death a suicide.
That same night, Roberto Calvi died in London. His body hanged from Blackfriars Bridge until its discovery the next morning. The news of his death sent the Ambrosiano’s shares tumbling 18 percent before regulators suspended the stock (it never traded again).145 And the news was barely public when Father Lorenzo Zorza, the priest who had met Carlo Calvi in New York with the Vatican’s U.N. envoy, called the Calvi family to offer his services. “I thought maybe they needed my help,” Zorza recalled. “I might be able to assist them in some way. We knew a lot of the same people.”146 They refused.147
I. Italian criminal prosecutors later investigated Pazienza as the “mastermind” of an intelligence plot to coach the Pope’s would-be assassin into incriminating the Bulgarian secret service (no charges were ever filed). He was subsequently charged with fraud over Calvi’s Ambrosiano and extradited in 1986 from the United States, where he had been arrested in 1984 (Pazienza told the author he had helped the U.S. Marshals and FBI on key cases and considered the extradition “a complete betrayal by the Americans”). Although he was acquitted of the Ambrosiano charge, he was convicted in a subsequent case of trying to derail the massive investigation into the 1980 terrorist train bombing in Bologna that had killed eighty-five. Prosecutors said Pazienza had laid a trail of false evidence putting the blame on foreign extremists. Licio Gelli was convicted in absentia. Both men received ten-year sentences. An appeals court overturned the convictions in 1990, but Pazienza’s conviction was reinstated four years later. He was paroled in 2009. This author located him through an Italian priest, Father Lorenzo Zorza.19
II. The following March, the forty-two-year-old Zorza was arrested on federal charges of smuggling stolen Italian Renaissance paintings into the United States. An informant testified at the trial that Zorza carried a two-foot-square diplomatic pouch, and told his customers he preferred that when it came to stolen canvasses, “It’s better if it can fold.” He pled guilty and got three years probation. Five years later, New York City detectives arrested Zorza for trying to sell $40,000 in stolen Broadway tickets. The case never went to trial.
In April 1988, Zorza was charged in the U.S. for using a New Jersey home for runaway girls as a cover for shipping millions of dollars in Sicilian heroin to the U.S. The New York press dubbed Zorza the “Pizza Priest.” Italian police arrested him in Bologna and charged him with “associating with organized crime, criminal association for drug trafficking, importation of drugs, counterfeiting and illegal exportation of art works.” The U.S. charges were dismissed—his lawyer was high-priced, Miami-based criminal defense attorney Frank Rubino, who later represented Panama’s strongman Manuel Noriega. In Italy, Zorza was ultimately convicted and served eighteen months. As the only inmate-priest, he was treated very well, enjoying his spare time refereeing prison soccer matches. When the author located Zorza in 2013, he was traveling between Europe, America, and Brazil. He still boasted solid Curial connections, some of which the author confirmed. The man who asked me to call him Father Larry was promoting an Amazon-based herb company as well as seeking investors for a mammoth rainforest shrine to Popes Benedict and Francis. “I have made some mistakes in my past,” he admitted. “They have made me a better server to God.”36
III. Pazienza told the author that he was not surprised at Calvi’s flight from Italy. A few months earlier Pazienza had made initial preparations for an elaborate escape plan involving a Calvi double, a Hollywood makeup artist, a speedboat with a champion powerboat driver, and stops in Corsica and a military airfield in Morocco before a final destination in Panama. The plan was a contingency in case Calvi had no other way to get out of Italy.