The Vatican Bank – Then and Now

Twenty-five years ago this morning, the most well-known banker in Italy finished his morning coffee, then began to scream “They have poisoned me!” An absurd thought, because he was at that moment safely confined in an Italian prison. But it turned out Michele Sindona was right; two days later, he was dead. The power associated with the Vatican Bank had struck again.

The Vatican Bank was established with a massive sum provided by the dictator Benito Mussolini in “payment” for the loss of Papal-owned territories 60 years earlier, when the inhabitants of those territories decided they would rather be part of a united Italy than continue to be ruled directly by the Pope.  Its first director, a brilliant but unscrupulous financier named Bernardino Nogara, used those funds and others to control a substantial portion of Italian economic life, including the ownership of several banks, munitions factories, and Italy’s largest manufacturer of the contraceptive devices that were officially banned by the Church.  The Church’s insatiable demand for funds, particularly to finance its attempts to influence European politics in the postwar era, led the Bank to seek even greater profits by plunging into organized crime: evading Italian currency laws, laundering Mafia drug profits, and serving as a front for fraudulent securities schemes.  In 1948, a Vatican official named Monsignor Edoardo Cippico was arrested and imprisoned for evading Italian currency controls through money-laundering operations at the Vatican Bank.

In 1968 Pope Paul VI selected as the Vatican’s chief financial advisor a man named Michele Sindona, a well-known Mafia banker who was later convicted of fraud, theft, perjury, and murder. In 1973, Sindona engineered the sale of the Banco Cattolica del Veneto, which had previously been owned by the Vatican, to the Banco Ambrosiano of Milan.  The Cardinal of Venice was shocked and infuriated by this sale, for Banco Cattolica had for decades served as a “friendly” bank offering low-cost financial arrangements for the parishes of Venice.  He immediately set out for Rome to demand a meeting with the Pope, in an attempt to undo the sale and to punish its perpetrators.  He never got to see the Pope, though.  He was shunted instead to Archbishop Paul Marcinkus, the American who then ran the Vatican Bank, who not very politely asked “Eminence, don’t you have anything better to do?”  “You can’t run the Church on Hail Marys,” Marcinkus is often quoted as saying.  Intensely frustrated, the Cardinal closed all diocesan accounts at Banco Cattolica, and wrote an angry letter to its new Board demanding it remove the word “Cattolica” from its name.

By the late 1970s, the illegal activities of Sindona and the Vatican Bank were not a well-kept secret.  Italian and even American investigators were sniffing around, getting closer and closer to the truth.  

Even the Italian financial press was publishing editorials asking for the Pope to impose “order and morality” on his Bank, a secretive institution that according to insiders controlled over $10 billion of assets.  The one airtight protection they had was the fact that the Vatican Bank operated inside the Vatican compound, which despite comprising only 108 acres is treated as a separate “country” whose institutions are not subject to the laws of Italy.  Italy therefore had no authority to examine the records of the Bank. 

Warrants were issued at different times for the arrest of Archbishop Marcinkus and two other senior Vatican Bank officials, but so long as they remained within the compound (as they did) there was nothing the Italian government could do.  Even when Marcinkus once offered to give a videotaped deposition (as a “character witness”) for Michele Sindona, the Vatican forbade the proceeding only hours before it was to commence.  The only thing that could go wrong would be for the Pope to order a housecleaning at the Vatican Bank, which Pope Paul VI certainly had no intention of undertaking.

The unraveling began on August 6, 1978, when Paul VI died.  The College of Cardinals surprised everyone, especially Archbishop Marcinkus, in choosing a dark horse candidate as his replacement.  It selected Albino Luciani, the Cardinal of Venice, whose favorite local bank Marcinkus and Sindona had spirited away just five years earlier.  He took the name John Paul I.

Luciani was known as a kindly man, but he was not a forgetful man.  Even if he had been, his memory might have been jogged when immediately after taking office he received a circular from Italy’s Office of Exchange Control warning of illegal activities involving transfers to the “foreign” Vatican Bank to violate the nation’s currency laws. According to David Yallop’s book In God’s Name: An Investigation Into the Murder of Pope John Paul I, Luciani quickly ordered an investigation of the Vatican Bank, and on the evening of September 28, 1978, after only 33 days on the job, he reviewed final drafts of documents approving sweeping changes, including the immediate replacement of Marcinkus. The next morning, Luciani was found dead. The changes at the Vatican Bank did not happen.

Would anyone really have had the audacity to murder the Pope in his bed? Yallop makes a highly persuasive argument that this is exactly what happened, and that Michele Sindona and his cronies are the leading suspects. A few months after the Pope’s mysterious death, Italian prosecutor Emilio Alessandrini began closing in on the facts of the Vatican Bank’s criminal activities; he was gunned down in the streets by men paid by Sindona. Alessandrini’s work was picked up by prosecutor Giorgio Ambrosoli; he was murdered too. Sindona even attempted to arrange the assassination of an American district attorney, John Kenney, who was cooperating with his Italian counterparts; nonetheless, he was convicted in the United States on 65 counts including fraud, perjury, and embezzlement.

Sindona’s political connections got him extradited back to Italy to stand trial for Ambrosolli’s murder; Sindona thought this would be a clever move, because it would be easier for him to wangle his way out of an Italian than an American prison. He miscalculated, though; on March 18, 1986, he was convicted and sentenced to life. With nothing left to lose, he began putting out the word that he was willing to tell what he knew, including about the death of the Pope, in exchange for his freedom. Two days later, his jailer handed him a cup of coffee, from which he never recovered. No one has ever been charged for Sindona’s murder.

The Vatican Bank wound up paying over $250 million to settle claims for over a billion dollars of losses of innocent depositors in a Milan bank that its crimes had helped to destroy. But that was then, this is now. Everything is clean and on the up-and-up today, right? Wrong. Just last fall, police seized over $30 million of Vatican Bank funds said to be involved in yet another money-laundering scheme. The official Vatican response is to be “perplexed and baffled” as to how this could happen.

What is truly perplexing and baffling is why the world allows the farce of pretending the Vatican to be an independent country to persist. Picture the Scientologists or the Southern Baptists announcing the formation of an “independent country” on a few acres of land in the middle of Washington, opening a bank there that is not subject to any regulation but their own, using that bank to fund criminal enterprise throughout America, and using the profits from those crimes to recruit more converts to build more political power to keep that bank alive. Someone please explain to me, slowly, why this would be OK.

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