Banco Ambrosiano

Founded in 1896 in Milan by Giuseppe Tovini, Banco Ambrosiano was established as a Catholic counterbalance to Italy’s secular banks, named after Saint Ambrose, Milan’s patron saint. Known as the “priests’ bank,” it served religious organizations and maintained close ties with the Vatican’s Institute for the Works of Religion (IOR), commonly called the Vatican Bank, which became its main shareholder. Under Roberto Calvi, who joined in 1947 and became chairman in 1975, the bank expanded aggressively, creating a complex network of offshore subsidiaries in Luxembourg, the Bahamas, and Latin America. This expansion, however, laid the groundwork for illicit activities that led to its collapse.

Scandals

The Banco Ambrosiano scandals emerged in the late 1970s and culminated in 1982, driven by massive financial irregularities and Calvi’s intricate web of fraudulent transactions. Calvi orchestrated a scheme involving approximately $1.2–$1.5 billion in unsecured loans to shell companies, primarily in Panama, with names like Bellatrix Inc. and Manic Inc. These companies, often mere mailboxes, were controlled by Calvi and linked to the Vatican Bank, which owned stakes in them. The loans, funded through Eurodollar market borrowings, were used to inflate Banco Ambrosiano’s share prices, purchase media assets like Corriere della Sera (via Rizzoli Editore), and funnel money to political and criminal entities. The bank’s Luxembourg subsidiary, Banco Ambrosiano Holdings, and its Peruvian branch, Banco Ambrosiano Andino, were central to these transactions. For example, Andino made loans to Bellatrix without oversight, later uncovered as fraudulent. These activities violated Italian banking laws, which restricted capital exports. Investigations revealed Banco Ambrosiano’s role in laundering money for the Sicilian Mafia, particularly through its offshore accounts, and channeling funds to political causes, including the Polish Solidarity movement, the Nicaraguan Contras, and the Somoza regime in Nicaragua, allegedly with CIA involvement.

Vatican Bank

The Vatican Bank, under Archbishop Paul Marcinkus, was deeply implicated. Marcinkus, a director of Ambrosiano’s Nassau subsidiary, facilitated Calvi’s schemes by issuing “letters of comfort” that endorsed the loans, misleading creditors about their security. The IOR held a 10% stake in Banco Ambrosiano and owned several shell companies involved in the fraud. Calvi’s close relationship with the Vatican earned him the nickname “God’s Banker.” In a June 5, 1982, letter to Pope John Paul II, Calvi warned of an impending collapse that would damage the Church, hinting at Marcinkus’s errors and prior scandals, such as the 1974 Franklin National Bank collapse involving Michele Sindona, another Vatican-linked financier. The Vatican denied legal responsibility but acknowledged “moral involvement,” agreeing in 1984 to pay $224–$244 million to Ambrosiano’s creditors, a settlement seen as an attempt to mitigate reputational damage without admitting guilt.

Propaganda Due P2

◦ Banco Ambrosiano’s collapse was entangled with the Propaganda Due P2 Masonic lodge, a secretive organization led by Licio Gelli a fascist sympathizer with ties to Italian intelligence, the Mafia, and anti-communist networks. Calvi and Gelli were P2 members, and the lodge was suspected of orchestrating political subversion, including funding anti-communist activities possibly linked to Operation Gladio. P2’s influence extended to Italy’s elite, including politicians, military officials, and businessmen. The lodge’s exposure in 1981 led to the fall of Prime Minister Arnaldo Forlani’s government, intensifying scrutiny on Calvi, who was convicted that year for illegally exporting $26.4 million, receiving a four-year sentence (suspended pending appeal).

As investigations by the Bank of Italy deepened in 1981–1982, uncovering a $1.3 billion “hole” in Ambrosiano’s accounts, Calvi faced mounting pressure. On June 10, 1982, he fled Rome on a false passport, traveling via Venice and Zurich to London. On June 17, his body was found hanging under Blackfriars Bridge, with bricks in his pockets and $15,000 in cash. Initially ruled a suicide, Calvi’s death was declared a murder after a 1983 inquest and a 1991 investigation by Kroll Associates, commissioned by his family. Suspects included the Mafia (notably Giuseppe “Pippo” Calò), P2, and Vatican officials, with motives tied to Calvi’s knowledge of sensitive financial dealings. Mafia pentito Francesco Marino Mannoia claimed Calvi was killed for losing mob funds, though trials in 2007 acquitted five defendants, leaving the case unresolved. The day before Calvi’s death, his secretary, Graziella Corrocher, died by suicide, jumping from a Banco Ambrosiano window, leaving a note condemning Calvi’s damage to the bank.

The scandals were accompanied by suspicious deaths, including Gérard Soisson, a Clearstream manager found dead in Corsica in 1983, shortly after Ernest Backes, a Clearstream whistleblower, was fired. Backes claimed they handled Ambrosiano’s illicit transactions, suggesting their knowledge threatened powerful interests. The scandals fueled speculation of ties to Operation Gladio, NATO’s clandestine anti-communist network. Ambrosiano’s funding of anti-communist causes, such as Solidarity and the Contras, aligned with Gladio’s objectives, and P2’s role in Italy’s “strategy of tension” (e.g., the 1980 Bologna bombing) suggested a broader covert agenda to thwart communist influence, possibly involving the CIA.

Key Players

• Roberto Calvi: Banco Ambrosiano’s chairman, orchestrator of the fraudulent schemes, and P2 member. His murder remains a symbol of the scandal’s opacity. • Paul Marcinkus: Vatican Bank president, whose endorsement of Calvi’s loans implicated the IOR. He claimed diplomatic immunity, avoiding prosecution. • Licio Gelli: P2’s leader, convicted in 1998 to 12 years for his role in Ambrosiano’s collapse, linked to political and criminal networks. • Michele Sindona: A Sicilian financier whose earlier scandals (e.g., Franklin National Bank) set a precedent for Calvi’s schemes. He died in 1986 from cyanide poisoning in prison. • Bettino Craxi and Claudio Martelli: Indicted in 1994 for their roles, highlighting political complicity, though outcomes varied. Investigations and Aftermath • Bank of Italy’s Role: Suspicious since 1978, the Bank of Italy faced political resistance but exposed the scandal under Governor Carlo Ciampi. The bank was liquidated on August 6, 1982, with debts estimated at $700 million to $1.5 billion. • Italian and International Probes: Investigations revealed Ambrosiano’s ties to organized crime, P2, and the Vatican. Gelli’s 1998 conviction and ongoing probes into Calvi’s death (reopened in 2005) underscored the scandal’s complexity. The Vatican’s limited cooperation and immunity claims hindered full accountability. • Financial Impact: The collapse affected 250 banks, including Bank of America, with losses up to $400 million. The Vatican’s $224 million payment and Luxembourg’s efforts to recover $600 million (via Touche Ross) mitigated some damage but left creditors short. • Vatican Reforms: Pope John Paul II appointed a panel of lay bankers (Joseph Brennan, Philippe de Weck, Carlo Cerutti) to investigate the IOR, establishing permanent oversight. The scandal prompted calls for transparency, though the IOR faced further scandals in 2010 and 2013.

Conclusion

The Banco Ambrosiano scandals, driven by Calvi’s fraudulent schemes and enabled by the Vatican Bank and P2, remain a landmark case of financial crime and political intrigue. The collapse, Calvi’s murder, and related deaths like Soisson’s and Corrocher’s exposed a web of corruption involving the Mafia, Freemasons, and Cold War operatives, with possible ties to Gladio’s anti-communist agenda. Despite investigations and convictions, many questions—particularly about Calvi’s killers and the Vatican’s full role—remain unanswered, cementing the scandal’s place as a dark chapter in financial and Italian history.