Morning folks, and welcome to today's episode called Roberto Calvi: Italy's Corruption Laid Bare. This is a story that I've wanted to get to the bottom of for years. For those of you who aren't aware of who Calvi is — he was known as God's Banker — the guy who managed the Vatican's money back in the 70s and early 80s, and who was found hanged under Blackfriars Bridge in 1982. And here's an excerpt from the BBC on Calvi:
"Calvi was at the centre of an incredibly complex web of international fraud and intrigue. It involved the Italian banking world, the underworld, the Mafia, Freemasonry and, most startling of all, the Vatican. The banker's death would trigger a wide-ranging political and financial scandal in Italy. It would involve the disappearance of millions of dollars, and leave behind an enduring mystery."
So as you can imagine, this is a story that has so many different strands — you could probably do a dozen different stories from all of the characters and plot lines. But Calvi's story shines a light on how corrupt Italy was. This is a cracking story — enjoy.
Roberto Calvi was born on the 13th of April, 1920, in Milan. His father was a senior banking executive.
He went to Bocconi University in Milan, described as the Harvard of Italian economics. While at Bocconi, the young Calvi ran the press and propaganda office for the university's fascist student group. This is 1939, Mussolini's Italy, so you have to read it in that context.
During WW2, Calvi was conscripted as a cavalry officer and they sent him to the Russian front, where he got severe frostbite — three fingers are permanently paralysed.
After the war, he joined the bank his father worked at before leaving to join Banco Ambrosiano in 1947 as a junior clerk. Banco Ambrosiano was set up to cater to Catholics — very explicitly — it was even known as the priests' bank. To open an account you had to present a baptismal certificate and a letter from your local parish priest, so as you can imagine it was a very conservative bank.
For context, Italian banking overall at that time was very conservative and restrictive — it was difficult to move large amounts of money out of Italy. In short, companies and wealthy Italians wanted a way to secretly hide their money from the Italian tax authorities because the tax rates were very high, and Calvi and his direct boss Alessandro Canesi, who was next in line to take over the bank, began designing an overseas network to facilitate this.
They co-founded a bank in Switzerland, which of course was shielded by Swiss banking secrecy laws. They also registered a holding company in Luxembourg, and the way it was structured meant that it was exempt from local banking supervision.
But their plan wasn't to simply help rich Italians avoid the taxman. They also used these offshore entities to borrow from foreign banks without the Italian regulators knowing about these loans, and so Calvi could use the money from these loans for other activities — such as buying his own bank stock to both enrich himself and to keep the stock price up, and he could also funnel the money into political activities, which I'll talk about later in the episode.
Calvi also learned French, English, and German, becoming one of the very few people in the bank who could negotiate directly with foreign financial institutions. He installed a large computer accounting centre to process foreign exchange transactions. The traditionalist board members — they were old school and were kind of illiterate in computing and modern foreign exchange mechanics. Calvi's department became, in the words of one observer, a state within a state.
So throughout the 1960s, Calvi was starting to build real influence inside Banco Ambrosiano. And it's around this time that he got involved with two very controversial men who are central to the story.
The first is Michele Sindona. Sindona was an international banker — Sicilian-born, originally a tax lawyer — and in Italian financial circles they called him The Shark. Here's a quote from an article in Mother Jones: "Sindona rose from peasant roots in Sicily to become one of the most influential bankers in the western world. At the height of his power, he lorded over a financial empire that stretched from Rome to Hollywood and included half the largest banks in Switzerland. He had a knack for making the right connections."
He had built this vast empire by connecting legitimate corporate structures with the Vatican Bank on one side, and organised crime on the other.
Now, another crucial and very dark part of this whole story is this secretive and exclusive Masonic lodge called Propaganda Due — or P2. Both Sindona and Calvi were members, as were senior figures from the Italian military, politics, business, the judiciary, and the press. Its stated aim was to fight communism in Italy and abroad. But as one Italian journalist told the BBC: "while P2 was theoretically a masonic lodge, it was something very much associated with the mafia and with all sorts of dirty dealings."
Now, through Sindona, Calvi got introduced to the second controversial figure — Archbishop Paul Marcinkus, who was president of the IOR, the Institute for Religious Works, which is the official name for the Vatican Bank. Marcinkus was a six-foot-four imposing American from Chicago. At the seminary he had been known as a tough, rough-and-tumble football player, and his nicknames were the Gorilla and the Big Man.
And he put his football skills to good use in the Philippines in 1970, when Pope Paul the Sixth was attacked with a knife. The pope was stabbed twice, but before the assailant managed to stab the pope a third time, Marcinkus tackled and overpowered him, possibly saving the Pope's life. So he and the Pope had a very close bond.
He was described as a hearty, friendly, very American archbishop who once said — and this is a quote — "you can't run the church on Hail Marys."
Crucially though, Marcinkus had no formal training in economics or banking whatsoever. So from the start he needed outside help, hence Sindona and Calvi.
To understand why the Vatican Bank was so attractive to people like Calvi and Sindona — outside of the obvious, I suppose you'd call it the halo effect of working with the Vatican — is that the Vatican is its own sovereign state, and Italian financial regulators have no oversight of it whatsoever. As one source put it: "The Vatican is entirely free of exchange controls and other government regulations; secrecy is everything. The Vatican has to account to no one for its financial dealings, and enormous sums of money can be sent anywhere in the world without anyone knowing about it other than those directly involved."
So when Calvi, Sindona, and Marcinkus got together, they very quickly worked out what they could do for one another. In Calvi and his bank, the Vatican got a sophisticated financial partner who also paid them a higher interest rate. While Calvi and Sindona got access to a structure that was completely shielded from Italian regulators.
Meanwhile, inside Banco Ambrosiano itself, Calvi's position was getting stronger. In the early 1970s he was promoted to head central director — kind of like the COO — while his boss Alessandro Canesi was now president.
But Sindona's side of the operation was about to fall apart badly. In 1972, he bought a controlling interest in Franklin National Bank, a large commercial bank in New York. He then started to make huge high-risk bets on foreign currency markets, while at the same time he was also laundering drug profits for the Sicilian Mafia.
When the US market went into recession in 1974, Franklin National Bank collapsed — at the time the largest bank failure in American history. Sindona's Italian banks also collapsed, and because the Vatican Bank had been a major investor and partner throughout, it lost somewhere between thirty million and over a hundred million dollars.
Sindona reached out to Calvi asking for money to save his bank. Calvi refused. Sindona felt betrayed, and he wasn't going to forget it, as we'll see later.
With help from the American Gambino crime family, Sindona disappeared from New York and secretly fled to Italy. While underground, Sindona spent his time trying to blackmail his old political and Vatican associates into saving his empire. When that failed, he reappeared in New York a few months later, claiming he had been kidnapped and had escaped. The FBI didn't buy it.
He went to trial in New York and was convicted in March 1980 and was sentenced to twenty-five years.
While he was serving that sentence, the Italian government demanded his extradition to face charges back home, and he was sent back to Italy in 1984. On top of all the criminal financial charges, Sindona was given a life sentence for ordering a US hitman to kill an Italian lawyer in 1979, because the lawyer had uncovered a transaction that showed Sindona had paid six and a half million dollars to Marcinkus and Calvi. And that lawyer was killed by the hitman.
Two days after Sindona received that life sentence, he was in his cell in a maximum-security prison in Italy when he died after drinking a cup of espresso that had been laced with cyanide. Whether he poisoned himself or was murdered — by the Mafia, or by politicians terrified he was finally about to start naming names — has never been definitively established.
With Sindona gone, Calvi was now the Vatican's primary financial partner. Somehow, despite having lost the Vatican tens of millions of dollars and having been at the centre of a very murky scandal, Marcinkus held onto his job.
Then in 1975, Calvi was appointed President and Chairman of Banco Ambrosiano. So now Calvi had total control within the bank, he had the Vatican on one side, and P2 — a secret network that effectively controlled large parts of the Italian state — on the other. I imagine he would have felt pretty untouchable.
And why wouldn't he? On paper the bank looked like it was prospering — its assets had grown substantially, exceeding $2.3 billion, and its share price was high.
The financial press wrote about Calvi's Midas touch. He was the man modernising Italian banking and expanding aggressively into international markets, while also helping to modernise the Vatican's finances — and they started calling him God's Banker. But of course the reality was that Calvi was building a house of cards.
Here's basically what he was doing. I already mentioned Switzerland and Luxembourg — well, by now there was a sprawling network of other banks and shell companies in places like the Bahamas and Panama, jurisdictions where the rules are looser, lots of secrecy, and foreign investigators have very limited reach.
Banco Ambrosiano in Italy would lend massive sums of money to these offshore entities. On the Italian books, those loans looked like legitimate assets — like the bank was successfully financing major international business ventures and earning interest on them. It looked healthy. Profitable. But those offshore companies weren't funding real businesses. They were shells, and these shells would use the money in a variety of different and illegal ways.
For example, some of the money was used to buy shares in Banco Ambrosiano itself to artificially drive the stock price up, and also to allow Calvi to buy shares for himself and enrich himself. Through Calvi's connection with the P2 Masonic crowd, bank funds were used to finance political interference by funnelling money to anti-communist groups in various Central and South American countries, but also to the Solidarity trade union movement in Poland — a cause that also happened to align with the Vatican's own political interests.
Also, the Sicilian Mafia used Calvi's offshore network to clean cash that came from a heroin trafficking operation known as the Pizza Connection. And I love this bit of detail — the reason it was called the Pizza Connection is because the Sicilian Mafia and the American Bonanno crime family used a sprawling network of independent pizza parlours across the United States as fronts to distribute drugs and launder cash.
Now, Italian regulators weren't completely asleep. As a result of the Sindona scandal — which had not only been hugely costly financially but had also been very embarrassing for the Italian government — the regulators were starting to ask questions about Banco Ambrosiano's mysterious offshore entities and where all the money was going.
And the regulators' suspicions became even more heightened in 1977, when anonymous posters started going up across Milan's financial district, accusing Calvi of massive currency fraud. It was rumoured that Sindona, who by this stage was on the run, was behind these posters — an act of revenge because Calvi had failed to come to his rescue when his bank collapsed.
Calvi and his P2 associates put pressure on Italian authorities to raid and lock down the printers behind the posters, and they also managed to suppress media coverage.
But the regulators weren't put off so easily. They sent a team to Milan to inspect Banco Ambrosiano's books, and they uncovered Calvi's web of offshore companies. They then handed their findings to a lead magistrate named Emilio Alessandrini — a 36-year-old and well-respected magistrate in Milan. He began preparing subpoenas for the Vatican Bank's top relationship managers — a move that would legally breach the Vatican's wall of sovereignty for the first time in history.
And then on a rainy Monday morning, January 29th, 1979, after Alessandrini dropped his eight-year-old son off at school, as he sat in his Renault 5 at traffic lights, a commando unit from a far-left terrorist group surrounded his car, opened fire, hitting him eight times. Alessandrini died instantly.
Of course it didn't make any sense that a communist terrorist group would assassinate a progressive judge who was on the verge of taking down Calvi — one of Italy's ultimate capitalist tycoons — and exposing the financial corruption of the Catholic Church. Historians, journalists, and investigators believe the hit was organised by P2.
And P2 flexed its muscles even more, because just two months after that assassination, P2-controlled elements of the Italian government issued arrest warrants for senior regulators who were investigating Calvi. The charges against these regulators were completely fabricated, but one senior regulator was even sent to jail.
This really gives you a good indication of how corrupt and murderous Italy was, and as a result of all of this, the investigation into Calvi and Banco Ambrosiano was derailed for over a year.
But then came the big break. In March 1981, Italian police raided the offices of Licio Gelli — he's the founder of P2, a businessman, a fascist, and one of the most powerful people in Italy during this time.
In a safe in Gelli's office the police found a list of 962 secret members of P2, which included three cabinet ministers, 43 members of parliament, 43 military generals, and the heads of all three of Italy's intelligence services. Future prime minister Silvio Berlusconi was also on the list.
The revelation caused a political explosion. The prime minister and his whole cabinet resigned. The police raids also uncovered compromising documents that implicated Calvi in fraudulent practices and illegal offshore operations. The publication of this list left Calvi, for the first time in his career, without any protection. They all ran for the hills. Marcinkus in the Vatican wouldn't take his calls, and Gelli, the P2 founder, had fled to Switzerland and then Uruguay.
Calvi was arrested, and a Milan court convicted him of illegally exporting $26 million out of Italy. Four years in prison. A fine of around $20 million. While in prison, awaiting appeal, Calvi swallowed barbiturates and cut his wrists with a broken light bulb. He survived and was released on bail.
The Italian government established a formal commission of inquiry into P2, which would expose all of the scandals and the web of illegal banking activities linked to Calvi's bank.
So with no protection and no one to turn to, Calvi wrote a letter directly to the Pope. And it's pretty extraordinary because it's a confession of sorts, but there's a lot of desperation and subtle threats — because he told the Pope that the authorities were more or less willing to cut him a deal if he spilled the beans on the Vatican's participation. And he wrote: "I won't be blackmailed, and I won't blackmail in return; I have always been loyal even when it's most dangerous!"
He got no reply. Some reports say that the letter was never given to the Pope, but it's impossible to say.
Calvi started carrying a black briefcase everywhere and told people it contained documents that could destroy the most powerful people in Italy. Not a very smart thing to do, but I think it's clear at this stage that he was under huge pressure and wasn't thinking straight.
On June 10th, 1982, Calvi shaved off his moustache. He packed a bag.
He travelled to Venice using a forged passport, and from there to London — although crucially, Calvi didn't want to go to London. He wanted to meet up with his family somewhere in South America, where P2 had influence and where he thought he might get protection from some of the military juntas he had helped fund. But his escape was organised by a guy called Flavio Carboni, and Carboni insisted Calvi go to London first. And here's a great quote from the Guardian that gives you an idea of who Carboni was:
"Although he always protested that he was just a businessman, Carboni was commonly regarded as the leading fixer in Italy's circles of hell, an omnipresent go-between from smoke-filled rooms in Rome and Milan to the criminal underworld and back again. His preferred milieu for business, however, was a yacht moored off a beach in his native Sardinia, although he took care not to legally own it, nor his house, nor his car. His address book included numbers for presidents of Italy, film stars, drug smugglers, big players in the secret services and the country's best-known entrepreneur, Silvio Berlusconi."
So Carboni arranged accommodation for Calvi through contacts that investigators later linked to the Mafia. Calvi was put in a tiny furnished apartment on Sloane Avenue.
While Calvi was in London — and we're now on June 14th, 1982 — the Bank of Italy ordered an internal audit of Ambrosiano and found that there was a deficit of $1.5 billion. A lot of this was linked to a loan that the bank had given to Marcinkus and the Vatican Bank to buy 10% of Banco Ambrosiano, to help artificially prop up the share price.
And while this loan was supposedly backed by a letter from Marcinkus, unbeknownst to Calvi's bank board, Calvi had secretly signed a "liberating counter-letter" which promised the Vatican would never be held liable for that loan.
Three days later, on the 17th of June, Calvi's 55-year-old personal secretary and longtime confidante fell from a fifth-floor window at Banco Ambrosiano headquarters in Milan. On her desk she left a note. It read: "May Roberto be double cursed for the damage he has caused to the bank and all of its employees." Italian authorities ruled it a suicide. But as you can imagine, many people involved in this case suspect that she, along with Calvi, knew too much — that she was murdered and made to look like a suicide. Which, when you think of what happens next and the timing of it, isn't beyond the bounds of possibility.
Because the morning after her death, the 18th of June, a postal clerk walking to work across Blackfriars Bridge spotted a body hanging from scaffolding under the north arch. It was Calvi. His pockets were stuffed with about twelve pounds of bricks and stones. He died on the exact same night as his secretary, and just like his secretary, the police — this time in London — ruled his death a suicide.
But his family never believed the suicide theory, and so — as I mentioned in my episode on Jules Kroll — in 1991 the family hired Kroll, and by reconstructing the scaffolding and analysing Calvi's shoes, Kroll investigators proved he hadn't climbed the bridge alone. It was murder. British authorities reclassified the death accordingly.
And in the years that followed that finding, with additional testimony from people with Mafia connections, both the motive and the way Calvi was killed became clearer.
So in terms of who did it and why — well, no surprises that it was the Mafia who killed Calvi, for two main reasons. First, punishment for mismanaging and misappropriating Mafia funds — it's believed Calvi stole about £50 million from them. Secondly, they also wanted him dead to stop him from revealing details of money laundering schemes and their connections to other powerful people within the Italian political establishment, secret intelligence agencies, and the Vatican.
In terms of how he was killed — based on testimony from Mafia insiders — Calvi left his Chelsea flat on the evening of June 17th, ate out, and then took a short walk to the north bank of the Thames. He thought he was boarding a boat for a pleasure cruise.
While he was standing on the deck, his killer moved in behind him, strangled him with an orange cord and with such force that Calvi was actually lifted off the ground. As he struggled, his feet dragged along the deck — the scrape marks left on the heels of his shoes were so deep that they became one of the key parts of Kroll's investigation that proved it was murder.
Shortly after midnight, his body was taken to Blackfriars Bridge and his killers stuffed the bricks and stones into his pockets and — for reasons that will fuel conspiracy theories for decades — $15,000 in cash. The rope was tied to scaffolding on the bridge.
The day after Calvi was killed, Carboni fled London, taking Calvi's black briefcase with him — the one containing the documents Calvi claimed could destroy so many powerful people. The briefcase disappeared and has never been found. And while many years later Carboni and others were charged with Calvi's murder, they were acquitted due to insufficient evidence.
By the 29th of July, Banco Ambrosiano was declared insolvent and was closed a few weeks later. The Vatican Bank maintained its sovereign immunity and refused any legal liability, because of course it had the letter from Calvi absolving it of any requirement to pay back the loan.
But in 1984 the Vatican did admit it had a moral responsibility for the bankruptcy and made a voluntary contribution to the bank's creditors of $244 million.
As for what happened to the other main players — Marcinkus: Italian prosecutors went after him, and in 1987 they issued an arrest warrant. But they couldn't arrest him because he refused to leave Vatican City, and the Vatican protected him legally by claiming sovereign immunity.
Eventually Italy's highest court quashed the warrants, but Marcinkus was forced to step down from the Vatican Bank. In 1990 he left Rome and lived out the rest of his life in a retirement community near Phoenix, Arizona, spending his mornings playing golf and his afternoons hearing confessions at a local parish. He never wrote a memoir. Never gave an interview. Never once discussed Calvi, Sindona, or P2. He took everything he knew to his grave when he died in February 2006, aged 84.
He served as the direct inspiration for the corrupt, chain-smoking character Archbishop Gilday in The Godfather Part III, who plots a Vatican banking scam and orchestrates a papal assassination to hide his tracks.
As for P2 — in 1982 the Italian Parliament formally dissolved the P2 lodge and passed a sweeping law that made all secret political or Masonic organisations illegal. An investigation lasting many years resulted in a report that concluded that P2 was not just a social club, but a "criminal conspiracy against the state." A few generals were sent to jail. And while some P2 members suffered professionally, others continued to thrive — like Silvio Berlusconi, who went on to become Prime Minister in three separate governments between 1994 and 2011.
This story kind of blew my mind. I mean, I had a vague understanding of how corrupt Italy was during those times, but I always thought that films like The Godfather inflated the role of the Mafia and the level of corruption. But what the Calvi story shows us definitively is that the reality was way worse — that crime, corruption, and murder infiltrated every aspect of Italian life: business, politics, and even the Church, all working together in criminal enterprise. It's flabbergasting, and it makes for an extraordinary story.
And that brings us to listeners' emails, and this one came from Dominic, who coincidentally would love me to do a story on the Parma scandal — another Italian scandal. This was the 2003 collapse of Italian dairy giant Parmalat, which left a staggering €14 billion black hole in its accounts. It's a great recommendation — thanks so much, Dominic.
And remember, if you have any comments, any corrections, or any story you'd like me to cover, email me at: info@gbspod.com. All the best, folks.