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“Protect the Source”

The Calvis braced for what they expected would be the complete unraveling of the Ambrosiano and its role with the Vatican. They had enough problems without getting involved further with Father Zorza.

The man on the spot, however, after Calvi’s death, was Archbishop Marcinkus. Even the Chicago Tribune, normally friendly to the hometown boy, reported, “The plot would do credit to a paperback thriller, but it is less than entertaining to key men in the Vatican who are deeply worried by Archbishop Marcinkus’s latest brush with the shadier side of Italy’s financial world.”1

There was little doubt that Marcinkus’s long list of Curial enemies, as well as those who resented the IOR’s unmatched autonomy, would demand full answers and real reforms.

Il Mondo, a financial weekly, broke the story that Marcinkus and the IOR had given Calvi “guarantees of some of its dealings in South America” (the patronage letters).2 When the Italian Bankers’ Association held its annual meeting in Rome on June 22, 1982, it seemed that everyone was trading gossip about the rumored comfort letters. That same day the parliamentary committee investigating the P2 scandal expanded its probe to encompass Calvi and his businesses (a second committee would soon focus solely on the Ambrosiano). The Calvi family added to the drama by announcing they believed that Roberto Calvi had been murdered.3

On Friday, July 2, Beniamino Andreatta, Italy’s Treasury Minister, told parliament that he expected no less than “a clear assumption of responsibility on the part of IOR, which appears to have played the part of a de facto partner in certain operations with Banco Ambrosiano.”4 Andreatta, a committed leftist, was not about to allow the church to shirk its responsibilities, as he believed it had done when the Sindona affair had unraveled.5 He realized there was “practically no way to confront the IOR because of the autonomy it enjoys.”6 So he instead urged the Pope to voluntarily acknowledge the church’s responsibility for the $1.2 billion in debt that had led to the Ambrosiano’s collapse.

That same day, two Bank of Italy investigators met informally with Marcinkus at the Vatican.7 The issue was again the patronage letters. Marcinkus repeatedly refused to answer direct questions.8 But he repeated what Mennini and de Strobel had told the Ambrosiano’s Rosone: the secret letter from Calvi absolved the Vatican of any responsibility for the debts listed in those letters. As far as the investigators were concerned, that counter-letter meant that Marcinkus and Calvi had conspired to pull off the scam. Calvi had written his indemnity while serving as the chairman of Ambrosiano Overseas in Nassau, the very company on which Marcinkus sat on the board.9

To assuage their obvious irritation, Marcinkus suggested that the Vatican Bank might accept responsibility for a single loan—for an undetermined amount—to the Banco Andino branch in Peru.10 That was an offer he soon might have wanted back. The following day, a senator, Franco Calamandrei, announced from the floor of Italy’s parliament, “A traffic in sophisticated arms to Argentina through the Banco Andino seems to be the last link in the chain of events that led to Mr. Calvi’s death beneath Blackfriars Bridge.”11

The Italian press was in a feeding frenzy, mixing solid reporting with a hodgepodge of anonymously sourced rumors. Milan’s Corriere della Sera and Turin’s daily, La Stampa, reported that Secretary of State Casaroli had prevailed on John Paul to convince Marcinkus to resign.12 According to Milan’s Il Giornale Nuovo “the pope would appoint Marcinkus as archbishop of Chicago to fill the position left empty since Cardinal John Cody died last April.”13 A Rome tabloid claimed Italian prosecutors were weighing fraud charges against the IOR chief.14

“Every day there were more bad headlines in the Italian press,” recalled former U.S. Deputy Chief of Mission Michael Hornblow, who was stationed at the Vatican from 1980 to 1983.15 “It was such a big deal. It was hard to know what was true or not, but there’s no doubt that a lot people blamed Marcinkus for the scandal. And there were plenty who were asking why the Pope did not get rid of him.”16

Marcinkus was not aware that Italy’s Treasury Ministry was lobbying hard behind the scenes to get him booted. The Bank of Italy officials who had interviewed him just days earlier had sent John Paul a blunt memo, contending that in order “to avert further embarrassment. . . . It is in the best interests of the Holy See that the Archbishop not remain in a position of suspicion.”17 The recommendation was unofficial since Italy could not advise the Pope, a sovereign head of state, to fire Marcinkus.

On July 7, Marcinkus gave his first public statement since Calvi’s death, a few sentences to his hometown newspaper, the Chicago Tribune: “I don’t resign under these circumstances. I have not been involved in anything that could be considered fraud . . . I am completely unaware of any move by the Holy Father to get rid of me.”18

A few days later, on July 11, the Vatican announced the appointment of Cincinnati’s Archbishop Joseph Bernardin as the acting head of the Chicago diocese (the Pope would give Bernardin a red hat the following year). Church officials hoped that made it clear “that Marcinkus would remain at the Vatican.”19 But it was too subtle a message to slow the media speculation. For the rest of the year there was a steady stream of press stories that Marcinkus was either about to resign or be fired. In November, he again dismissed the rumors as “unfounded,” and said, “I don’t intend to tender a resignation. I intend to see this thing through to the end.”20

Secretary of State Casaroli wanted to demonstrate the Vatican was doing more than just being reactive.21 So his office announced that the church had taken the unusual step of calling in three outside financial experts to examine the Vatican Bank–Ambrosiano dealings.22 The three laymen were Joseph Brennan, former chairman of New York’s Emigrant Savings Bank; Carlo Cerutti, the vice chairman of STET, the communications subsidiary of a large Italian conglomerate; and Philippe de Weck, the former chairman of Union des Banques Suisses.23 Soon, Hermann Josef Abs, Deutsche Bank’s ex-chairman, came on. Their assignment, according to the Vatican’s press release, was to “examine the situation” and then to provide “suggestions and advice.”

All members of the independent committee were devout Catholics. Vaticanologists had little expectation they might be given adequate investigating powers or that their final report might be made public.24 Italy’s Treasury noted that the committee was “a positive thing.”25 Even those words had been intensely debated, some wanting instead to push openly for Marcinkus to be relieved of his duties.

The first in a series of defaults began in mid-July on a Midland Bank $40 million loan to Luxembourg’s Banco Ambrosiano Holdings.26 That caused a chain reaction of cross-defaults with dozens of other banks.27 Later that same day the Bahamian government suspended the banking license of the Ambrosiano Overseas and began an official investigation.28 Eventually, the so-called Gang of 88, the creditor banks to Banco Ambrosiano Holdings, demanded payments of upward of $500 million in bad loans just from that single Calvi offshore subsidiary.29 The Bank of Italy resisted calls to bail out the Ambrosiano’s foreign subsidiaries, even though there were fears it might devolve into an international banking crisis. Instead, on August 6, the Treasury Minister shuttered the Ambrosiano, making the $1.4 billion dollar failure the largest in the country’s history.30

As Marcinkus and the IOR prepared for what they knew would be intense scrutiny, pressure built about P2 and Sindona. After executing another search warrant, prosecutors found evidence the Masons had been planning a coup.31 Was it possible that Marcinkus, so closely involved with top P2 members, knew nothing about it? Carlo Calvi told the press that Poland’s Solidarity had received money through his father and P2. Marcinkus knew it was only a matter of time until the IOR got dragged into “the money to Solidarity” story.I

On July 22, more bad news broke on a new front. A Milanese judge, Bruno Apicella, indicted Luigi Mennini and Pellegrino de Strobel and twenty-two other defendants for fraudulent bankruptcy and illegal currency trading related to the 1974 collapse of Sindona’s Banca Privata.33 Sindona was among those charged, as was Massimo Spada, the former IOR official and top Sindona aide.34 Before the month was finished, Luigi D’Osso, an investigating magistrate, sent comunicati giudiziari (judicial communiqués) to the Vatican informing Marcinkus, Mennini, and de Strobel that they were material witnesses in the criminal probe into the Ambrosiano’s collapse.35 The Vatican refused to accept that notice since the Italians had not sent it through diplomatic channels.36

With all the bad press and flurry of charges and countercharges, even some of Marcinkus’s best friends sometimes worried about whether he might have crossed some legal line. One of them, William Wilson, then Ronald Reagan’s personal envoy to the Vatican, was a convert to Catholicism who was—according to his deputy, Michael Hornblow—“more Catholic than the Pope.”37 Wilson was one of Reagan’s closest friends, the head of his informal kitchen cabinet, and a co-trustee of Nancy and Ronald Reagan’s living trust.38 He had lobbied hard to get the Vatican assignment even though he could have chosen a far more prestigious foreign service posting. Although he was a businessman and not a politician or diplomat, Wilson’s instincts were good. He was convinced that with the first Pope ever from an Iron Curtain country, the Vatican might be a far more important ally to Cold Warrior Reagan than anyone imagined.39

Wilson settled into Rome in February 1981. Before long he described Marcinkus as “a very good friend.”40 “We saw Marcinkus a lot,” Hornblow, the Deputy Chief of the U.S. Mission, recalled. “Marcinkus was number one on our list of people to whom we wanted to talk as much as possible. He saw the Pope the most often. He was a great gossip and storyteller.”41

Disclosed here for the first time, soon after Wilson’s arrival in Rome, Marcinkus became a confidential source of information to the U.S. mission at the Vatican.II State Department files declassified to the author reveal that Marcinkus even provided U.S. officials with personal details about the Pope. The documents lay out plans by Marcinkus—at the behest of embassy officials—to encourage John Paul to publicly endorse American positions on a broad range of political issues, including: the war on drugs; the guerrilla fighting in El Salvador; bigger defense budgets; the Soviet invasion of Afghanistan; and even Reagan’s ambitious missile defense shield.42

Although Vatican finances dominated the public news, U.S. embassy officials did not ask the archbishop about that since Washington was not interested. The focus was only politics. Marcinkus discussed with them the Vatican’s take on Eastern Europe, Lebanon, the Philippines, and a territorial dispute between Argentina and Chile. And he shared his belief that America should encourage Italy’s socialists to break their alliance with the communists and move toward the political center. He warned Wilson and Hornblow that the Christian Democrats had lost “credibility with the people” and would only regain it if they got “rid of scandal and corruption.”43 Marcinkus even agreed on one occasion—the Pope’s major 1981 address at Hiroshima about the danger of a nuclear holocaust—to review the speech in advance and try to influence it in a way the Americans desired.44 When some of Marcinkus’s private information was passed along to ambassadors at other U.S. embassies, the cables admonished in bold letters: “Please be sure to protect the source.”45 “The bottom line is he trusted us and we had a good relationship with him,” recalls Hornblow.III

The good relationship meant that Wilson widely shared with diplomats, politicians, and prominent Catholics his opinion “that both he [Marcinkus] and the Vatican Bank are innocent of any wrongdoing.”47 Their friendship also helps to explain why Wilson was prepared to make a remarkable intervention in mid-1982, on Marcinkus’s behalf, to the Justice Department (a move that would in a couple of years come back to haunt both men). In a three-page typewritten letter dated July 15, 1982, Wilson wrote to his good friend, William French Smith, Reagan’s Attorney General. New York publishers Holt Rinehart were about to release a book by Richard Hammer, a true crime author, with the first ever account of the 1973 fraud and counterfeit investigation that prompted the FBI to interview Marcinkus at the Vatican.48 Wilson told the Attorney General that Marcinkus was “very concerned about the book” since it “will contain large amounts of untrue material concerning him.”49 According to Wilson, Marcinkus was “thinking of filing a lawsuit,” but “it would be much better for the Vatican and everyone concerned if the book were not published at all if it does contain false information.” New York’s ex-Mayor Robert Wagner was Wilson’s predecessor at the Vatican. Wilson informed Smith that he had already urged Marcinkus to also discuss his options with Wagner.

Wilson’s letter included an extraordinary eight-page attachment that purported to summarize the charges against Marcinkus. On the first page of his letter, Wilson wrote that the attachment “was handed to me in London last week.” On the next page he stated that Marcinkus “has given me the enclosed letter and its attachments.” If it were Marcinkus who gave him the attachment in London it would be noteworthy since Calvi had been found dead in the British capital only a few weeks earlier. (Wilson wrote to Smith, “More lately, you will recall, a Mr. Calvi was found hanging from the Black Friars [sic] Bridge in London.”)50

Wilson assured the Attorney General that the accusations against Marcinkus were based on “innuendo and, possibly, even by association” since the IOR owns “1.5% of the common stock of Banco Ambrosiano” and Marcinkus served as a director of a Nassau-based subsidiary.

“It is my personal opinion and certainly my sincere hope that Marcinkus will, again, survive this.”51

Then Wilson got to the reason for his letter: a hope that the archbishop be allowed to “review the FBI files for any information they might contain concerning discussions between the FBI agents and Marcinkus.” Wilson asked the Attorney General to “supply him with a summary of what the files contain” and that “would be helpful to him and appreciated by both him and myself.” The ambassador suggested he “would prefer not to be involved in the matter.” It should be resolved between Marcinkus and the Justice Department.

Wilson’s direct intervention with a sitting U.S. Attorney General over a possible target of a Justice Department criminal investigation was unprecedented. If made public, it put Wilson at the risk of an obstruction-of-justice charge. Attorney General Smith directed his special assistant, John Roberts, to respond to Wilson the following month. Roberts made it clear that Justice would not entertain any special accommodation for Marcinkus “in such a sensitive area.” If the archbishop hoped to see anything in the bureau’s files about himself, Roberts suggested that Marcinkus follow the same procedure as any other American citizen and submit a Freedom of Information request.52

Wilson was not finished. He wrote to the IOR chief one day after receiving the Roberts brushoff, and tried to make light of the need for Marcinkus to make a FOIA request: “Thank heavens we still have some privacy privileges left in this country.” He went on to describe the three conversations he had with former New York mayor and Vatican envoy Robert Wagner. In each instance, Wilson pushed Wagner to use his influence to stop the publication of Hammer’s book. Wagner had sent a letter from his New York law firm—Finley, Kumble, Wagner—demanding that Marcinkus have an opportunity to review the manuscript prior to publication.53 He also spoke to Holt Rinehart’s president about possibly delaying the publication. Wagner was rebuffed in both instances.54 That had not dissuaded Wagner, who planned to meet with the Holt Rinehart president “to try to really get down to business to see what the implications would be for the publishing company if they went ahead with the book or what could be done to modify its contents.”55

Wilson assured Marcinkus: “Bob’s desire is to try to settle this matter in a friendly fashion rather than to become involved in litigation, however, from the way he spoke I get the feeling he is ready to put on the gloves if need be.”

After the next meeting Holt Rinehart accelerated the book’s debut by a month from October to September.56 As part of its publicity campaign it ran national newspaper ads describing The Vatican Connection as “The astonishing account of a billion-dollar counterfeit stock deal between the Mafia and the Church.” The Vatican Connection added to the perception that Marcinkus was up to no good in his Vatican post. Newsweek’s review: “If the charges that Archbishop Paul Marcinkus oversaw a decade-old scheme to obtain millions of dollars worth of counterfeit securities for the Vatican . . . are true, they can only add to the controversy surrounding the archbishop.”57 As far as Wilson was concerned, he remained convinced that Marcinkus would emerge from his problems “without any long-term bruises” but that “it may take a little longer.”58


I. “[Calvi] never talked to me about Solidarity,” Marcinkus later claimed. “I never sat down and talked specifics with him in any sense. He never mentioned Solidarity to me at all. If he gave something to Solidarity, okay, but I don’t know anything about it.”32

II. The secret relationship between Marcinkus and the ambassador’s office was revealed as part of this author’s Freedom of Information request to the State Department, in which forty-two documents constituting 160 pages were released on August 15, 2007. Among those documents, for instance, is an October 1, 1980, cable from Ambassador Wilson’s assistant, the embassy’s Deputy Chief, Michael Hornblow, to State Department headquarters, in which Marcinkus provided private details about the Pope’s upcoming East Asia trip. Near the top of the document, marked “Secret,” Hornblow wrote, “He [Marcinkus] revealed the following information to me in strict confidence and it is of the utmost importance that Marcinkus as the source of the information be strictly protected.” The State Department never had a higher-ranking confidential source of information inside the Vatican than the American-born bishop.

III. The special relationship between the American embassy and Marcinkus was not always limited to matters of politics and national security. The diplomat who replaced Hornblow, Peter Murphy, got a call once from pop star Michael Jackson, who wanted a private audience with the Pope when he visited Rome as part of a European concert tour. “If I had asked one of the Italians, they would have just said no. So I went to Marcinkus.” The IOR chief did not think it a good idea to have the Pope meet with Jackson, but he did arrange for an early morning private tour of the Sistine Chapel. Marcinkus accompanied Jackson and his entourage around Vatican City. When he left the city-state, Jackson gave Marcinkus a sealed envelope. It contained a check for $1 million for Ospedale Pediatrico Bambino Gesù, Rome’s best known church-affiliated children’s hospital.46