Roberto Calvi: Italy’s Corruption Laid Bare

[00:00:09] Morning folks and welcome to today's episode called Roberto Calvi, Italy's Corruption Laid Bare. And this is a story I've wanted to get to the bottom of for years because for those of you who aren't aware of who Calvi is, he was known as God's banker. He's the guy who managed the Vatican's money back in the 70s and the early 80s and he was found hanged under Blackfriars Bridge in 1982.

[00:00:37] 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 debt 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

[00:01:06] mystery. So, as you can imagine, this is a story that has so many different strands. You could probably do a dozen different stories and a dozen different episodes on all of the characters and plot lines in this. But Calvi's story, it shines a light on just how corrupt Italy was. It is a

[00:01:30] cracking episode. Enjoy. So, Roberto Calvi, born April 1920 in Milan. His father was a senior banking executive. He goes to Bocconi University in Milan. It was described as the Harvard of Italian economics. Now, why not Bocconi, the young Calvi? He runs the press and propaganda office for the university's fascist student group because this is 1939. So, it's Mussolini's Italy. So, I suppose you have to

[00:02:00] read it in that context. During World War II, Calvi gets conscripted as a cavalry officer and they sent him to the Russian front where he gets severe frostbite. Tree fingers are permanently paralyzed. Then after the war, he initially joins the bank his father worked as before leaving to join Banco Ambrosiana in 1947 as a junior clerk. Now, Banco Ambrosiana, it was set up to cater very,

[00:02:26] very explicitly to Catholics only. It was known as the priest's bank. And to open an account there, you had to present a baptismal certificate and a letter from your local parish priest. So, as you can imagine, it was a very, very conservative bank. And for context, Italian banking overall back then was very conservative and restrictive. It was difficult

[00:02:52] to move large amounts of money out of Italy. So, you had companies and wealthy Italians. They wanted a way to secretly hide their money from the Italian tax authorities because tax rates were very high. And Calvi and his direct boss, a guy called Alessandro Canisi, who was next in line to take over the bank. They began designing an overseas network to help these wealthy Italians

[00:03:16] and companies hide their money from the tax authorities. So, they co-founded a bank in Switzerland, which of course was shielded by Swiss banking secrecy laws. They also register a holding company in Luxembourg. And the way they structured this meant that it was exempt from local banking supervision. But their plan isn't simply to help rich Italians and companies avoid the tax man. They also use these

[00:03:45] offshore entities to borrow from foreign banks without the Italian regulators knowing about these loans, so that they can then use this money from these loans for other activities, such as buying Ambrosiana's bank stock to both enrich themselves and also to keep the stock price up. And they can also funnel money into political activities, which I'll cover later in the episode. Now, Calvi learns French, German and

[00:04:13] English, so he becomes one of the very few people in the bank who can negotiate directly with foreign financial institutions. He installed a large computer accounting center to process foreign exchange transactions. And the traditionalist bank board members, they're old school and they're kind of illiterous in computing and in modern foreign exchange mechanics. So, Calvi's department becomes,

[00:04:39] in the words of one insider, a state within a state. So, throughout the 1960s, Calvi, he's starting to build real influence inside Banco Ambrosiana. And it's around this time that he gets involved with two very, very controversial men who are central to the story. The first is Michel Sindona. Sindona was an international banker, but that's kind of a nice way of describing him. He was this Sicilian-born

[00:05:07] tax lawyer. And in Italian financial circles, they called him the shark. And here's a quote from an article in Mother Jones describing Sindona. 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'd a knack for making the

[00:05:36] right connections. So, he'd built this vast empire by connecting legitimate corporate structures with the Vatican bank on one side and organized crime on the other. Now, another crucial and very dark part of this whole story is this secretive and exclusive Masonic lodge called Propaganda Jew or P2. Both

[00:06:04] Sindona and Calvi were members, as were senior figures from the Italian military, politics, business, the judiciary, the press, and 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

[00:06:27] with the mafia and with all sorts of dirty dealings, as we shall see. Now, through Sindona, Calvi gets introduced to the second controversial figure I mentioned earlier, and this was Archbishop Paul Marcinkus. He was president of what's called the IOR, the Institute for Religious Works, which is

[00:06:50] basically the official name for the Vatican bank. Now, Marcinkus likes Sindona such an interesting figure. He was a 6'4", imposing American from Chicago. At the seminary, he'd be known as this tough, rough-and-tumble football player, and his nicknames were the Gorilla and the Big Man. And he put his football skills to great use in the Philippines in 1970, when Pope Paul VI was attacked with a knife.

[00:07:19] So the Pope was stabbed twice. But before the assailant managed to stab the Pope for a third time, Marcinkus tackled and overpowered him and possibly saved the Pope's life. So he and the Pope had a very close bond. Marcinkus was described as hearty, friendly, very American. And he had once said, and this is a quote from him, you can't run the church on Hail Mary's. Now, crucially though, Marcinkus,

[00:07:49] he had no training in economics or banking whatsoever. So from the very start, he needed outside help. Hence his relationships with Sindona and Calvi. Now, 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. It was that the Vatican is its own sovereign state. Italian

[00:08:18] financial regulators, they have no oversight of it at all. 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

[00:08:48] Marcinkus get together, they very quickly work out what they can do for one another. In Calvi and Sindona, and especially with Calvi, the Vatican and Marcinkus, they get sophisticated financial partners and Calvi's bank also pays them a higher interest rates. While Calvi and Sindona, they get access to a structure that is completely shielded from Italian regulators. Meanwhile, inside Banco Ambrosiana itself, Calvi's

[00:09:15] position, it's getting stronger. In the early 1970s, he gets promoted to a role that's called head central director, kind of like the COO, while his boss, the guy we mentioned earlier, Alessandro Canissi, by this stage he's now president. But Sindona's side of the operation is about to fall apart very, very badly. In 1972, Sindona bought a controlling interest in the Franklin National Bank. This was a large commercial bank in

[00:09:42] New York. He then started to make huge, high-risk bets on foreign currency markets. And at the same time, he was laundering drug profits for the Sicilian Mafia. And when US markets went into recession in 1974, Franklin National Bank collapsed. At that time, it was the largest bank failure in American history. Sindona's Italian banks also collapsed. And because the Vatican had been a major investor and partner,

[00:10:12] the Vatican lost somewhere between $30 million and $100 million. Now, Sindona reached out to Calvi, asking for money to save his bank. Calvi refused. And Sindona felt betrayed. And he wasn't going to forget it, as we'll see later. Sindona then, with help from the American Gambino Mafia family, he disappeared from New York and secretly fled to Italy. While underground in Italy, he spent his time

[00:10:40] trying to blackmail his old political and vascid associates into saving his empire. When that failed, he went back to New York a few months later, claimed that he'd been kidnapped and had escaped. But the FBI, they didn't buy it at all. Sindona then went on trial in New York and was convicted in March 1980 and was sentenced to 25 years. But the story just gets even more extraordinary because while he was serving that sentence, the Italian government demanded his extradition to face charges back home. He was sent

[00:11:10] back to Italy in 1984. And 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 $6.5 million to Marcinkus and Calvi. And that lawyer was killed by the

[00:11:35] hitman. Now, 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 that he was finally about to start naming names, it's never been established. But when you hear the rest of this

[00:12:03] story, I think you'll conclude that he was probably murdered. Now, 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 very centre of a very murky scandal, Marcinkus manages to hold on to his job. Then, in 1975, Calvi was appointed president and chairman of Banco Ambrosiana. So now, Calvi has

[00:12:33] total control within the bank. He has the Vatican on one side. He has P2, this secret network that effectively controlled large parts of the Italian state on the other side. So, I imagine that he would have felt pretty much untouchable. And why wouldn't he? On paper, the bank looks like it's prospering. Its assets have grown massively over the years, exceeding 2.3 billion. Its share price is

[00:12:57] high. The financial press wrote about Calvi having the Midas touch. He was the man modernising Italian banking and expanding aggressively into international markets, while he was also helping to modernise the Vatican's finances. And they started calling him God's banker. But, of course, the reality was that

[00:13:21] Calvi was building a house of cards. Here's basically what he was doing. So, I already mentioned Switzerland and Luxembourg and the entities they had there. 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, there's lots of secrecy, foreign investigators have very limited reach. And Banco Ambrosiana in Italy

[00:13:50] would lend massive sums of money to these offshore entities. On the Italian books, these 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 loans to those offshore companies weren't funding real businesses. They were shells. And these shells would use the money in a variety of different

[00:14:17] and very illegal ways. For example, some of the money was used to buy shares in Banco Ambrosiana itself. So, to artificially drive up the stock price and also to allow Calvi to buy shares for himself, to enrich himself. Through Calvi's connections with the P2 Masonic crowd, bank funds were used to finance political interference by funneling money into anti-communist groups in various Central and South

[00:14:45] American countries and also to the Solidarity Trade Union movement in Poland. That was 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, and I kid you not, the Pizza Connection. And I love this bit of detail. The reason it was called the Pizza Connection is

[00:15:14] because the Sicilian Mafia and the American Banano crime family, they used a sprawling network of independent pizza parlors across the United States as fronts to distribute drugs and to launder cash. Now, Italian regulators, they weren't completely asleep because as a result of the Sindona scandal, which had not only been hugely costly financially, but it had also been very embarrassing for the Italian

[00:15:43] government, the regulators were starting to ask questions about Banco Ambrosiana's mysterious offshore entities and where all this money was going. And the regulator's suspicions became even more heightened, I suppose you could say, in 1977 when anonymous posters started going up across

[00:16:04] Milan's financial district accusing Calvi of massive currency fraud. And it was rumoured that Sindona, who by this stage was on the run, that he was behind these posters. An act of revenge because Calvi didn't come to his rescue when his bank collapsed. Now, Calvi and his P2 associates, they put pressure on Italian authorities to raid and lock down the printers behind the posters and they also managed to

[00:16:32] suppress media coverage. But the regulators weren't put off so easily. They sent a team to Milan to inspect Banco Ambrosiana's books and they uncovered Calvi's web of offshore companies and all the illegality behind it. They then handed their findings to a lead magistrate named Emilio Alessandrini. He was a 36-year-old,

[00:16:57] very well-respected, very well-regarded magistrate in Milan. And he began preparing subpoenas for the Vatican Bank's top relationship managers. A move that would legally breach the Vatican's wall of sovereignty, I suppose, for the first time in history. And then, on a rainy morning, January 29th, 1979,

[00:17:23] after Alessandrini had dropped his eight-year-old son off at school, he sat in his Renault 5 at traffic lights and a commando unit from a far-left terrorist group surrounded his car, opened fire, hitting him eight times, killing him instantly. Now, of course, it doesn't make any sense that a communist terrorist group would assassinate a progressive judge who was on the verge of taking

[00:17:50] down Calvi, one of Italy's ultimate capitalist tycoons, while also he was in the process of exposing the financial corruption of the Catholic Church. It makes no sense. And historians, journalists, and investigators have always believed that the hit was organised by P2. And P2 flexes its muscles even more, because just two months after that assassination,

[00:18:15] P2-controlled elements of the Italian government issue arrest warrants for senior regulators who initiated the investigation against Calvi and the bank. And the charges against these regulators, like, they were completely fabricated, but one senior regulator was sent to jail. And this really gives you a good indication of how corrupt and murderous Italy was. And as a result of all this,

[00:18:44] the investigation into Calvi and into Banco Ambrosiana is derailed for over a year. But then comes the big break. March 1981, Italian police raided the offices of Licio Gelli. He's the founder of P2. He's a businessman, a fascist, and one of the most powerful people initially during this time.

[00:19:08] And in a safe, in Gelli's office, the police found a list of 962 secret members of P2. And the list included three cabinet ministers, 43 members of parliament, 43 military generals, and the heads of all three of Italy's intelligence services. And also on the list was future Prime Minister Silvio

[00:19:32] Berlusconi. The revelation caused a political explosion. The Prime Minister, his whole cabinet, resigned. The police raids also uncovered compromising documents that implicated Calvi in fraudulent practices and illegal offshore operations. And the publication of this list, it left Calvi for the first time in his career without any protection. Because all his allies run

[00:19:59] for the hills. Marcinkus in the Vatican won't take his calls. And Gelli, the P2 founder, he fled to Switzerland and then to Uruguay. So Calvi is arrested and a Milan court convicts him of illegally exporting 26 million dollars out of Italy. Four years in prison, a fine of around 20 million dollars. Now while in prison, awaiting appeal, Calvi swallows barbiturates and cuts his wrists with a broken

[00:20:24] light bulb. But he survives and is released on bail. The Italian government then establishes a formal commission of inquiry into P2, which will of course expose all of the scandals and the web of illegal banking activities linked to Calvi and Banco Ambrosiana. So with no protection, with no one to turn to, Calvi writes a letter directly to the Pope. And it's pretty extraordinary because it's a confession of

[00:20:53] sorts, but there's also a lot of desperation and subtle threats. Because he tells the Pope that the authorities are more or less willing to cut him a deal if he spills the beans on the Vatican's participation. And he writes, this is directly from the letter, I won't be blackmailed and I won't blackmail in return. I have always been loyal, even when it's most dangerous. Now he gets no reply from

[00:21:19] the Pope. Some reports say that the letter was never actually given to the Pope. It's impossible to know for sure. Then Calvi starts carrying a black briefcase with him everywhere. And he tells people it contains documents that could destroy the most powerful people in Italy. I mean, not a very smart thing to do, but I think it's clear at this stage that he's under huge pressure and he isn't thinking

[00:21:48] on June 10th, 1982, Calvi shaves off his moustache, packs his bag. He travels to Venice using a forged passport and from there to London. But 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 he thought he might get protection from some of the military junters that he had helped fund. But his escape is organised

[00:22:15] by a guy called Flavio Carboni and he insisted Calvi go to London first. And here's a great quote from the Guardian that gives you an idea of who this 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

[00:22:45] 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, he arranges

[00:23:13] accommodation for Calvi through contacts that investigators later link to the mafia and Calvi is put into this tiny furnished apartment on Sloan Avenue in London. While he's in London and we're now on June 14th 1982, the Bank of Italy, it orders an internal audit of Banco and Brossiana and it finds that there's a deficit of 1.5 billion dollars. Now a lot of this is linked to a loan that the bank gave

[00:23:40] to Marcinkus and the Vatican Bank to buy 10% of Banco and Brossiana to help it artificially prop up its share price. And while this loan is supposedly backed by a letter from Marcinkus, unbeknownst to Banco Ambrosiana's board, Calvi had secretly signed what was called a liberating counter letter which promised

[00:24:02] the Vatican would never be held liable for that loan. Then three days later, like this story just gets more and more unbelievable, three days later on the 17th of June, Calvi's 55-year-old personal secretary and long-time confidant falls from the fifth floor window at Banco Ambrosiana headquarters in Milan. On her desk, she leaves a note and it reads, May Roberto be double cursed for the damage he has

[00:24:31] caused to the bank and all of its employees. Now, Italian authorities rule is a suicide but as you can imagine, many people involved in this case suspect that as she along with Calvi knew too much, you know, she was murdered and it was made look like a suicide. Which when you think of what happens next and the timing of it, I mean, this isn't beyond the bounds of possibilities that she was murdered. Because

[00:24:58] the very morning after her death, 18th of June, a postal clerk is walking across Blackfriars Bridge and he spots a body hanging from the scaffolding under the north arch. It's Calvi. His pockets are stuffed with about 12 pounds of bricks and stones. So, he died on the exact same night as his secretary.

[00:25:22] And just like his secretary, the police, this time in London, rule his death as a suicide. But his family never believed the suicide theory. And so, as I mentioned in my episode that I did on Jules Crowell, in 1991, the family hired Crowell. And by reconstructing the scaffolding and analysing Calvi's shoes, Crowell's investigators proved he hadn't climbed the bridge alone. It was murder. And British

[00:25:52] 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 killed has become clearer. So, in terms of who did it and why, well, I mean, no surprises that it was the mafia who killed Calvi for two main reasons. First of all, punishment. Because apparently,

[00:26:21] Calvi misappropriated mafia funds. It's believed he stole about 50 million pounds from them. Secondly, the mafia also wanted him dead to stop him revealing the details of their money laundering schemes and their connections to other powerful people within the Italian political establishment, within the secret intelligence agencies, and within the Vatican. Now, whether they all came together to plan his murder, that's not known. But the mafia were the people who actually carried out his murder.

[00:26:50] Because in terms of how he was killed, based on testimony from mafia insiders, Calvi left his Chelsea flat on the evening of June 17th. He goes out for dinner, and he then takes a short walk to the north bank of the Thames, and he goes on a boat, thinking he's going on a short pleasure cruise. While he's standing on the deck, his killer moves in behind him, strangles him with a cord with such force that Calvi is actually lifted off the ground. And as he struggles,

[00:27:18] his feet drag along the deck. And the scrape marks left on the heels of his shoes are so deep that they become one of the key parts of Crowell's investigation that proved it was murder. Shortly after midnight, his body is taken to Blackfriars Bridge, and his killers stuff the bricks and stones in his pockets. And for reasons that will fuel conspiracy theories for decades, they also put $15,000

[00:27:45] of cash in his pockets. And the rope is then tied to scaffolding on the bridge. Now, the day after Calvi has been killed, Carboni, he flees London, taking Calvi's black briefcase with him. The one containing all the documents that Calvi claimed could destroy so many powerful people. The briefcase disappeared and has never been found. And while many years later, Carboni and others are charged with

[00:28:12] Calvi's murder, they are eventually quitted due to insufficient evidence. Anyway, back to 1982. 29th of July, Banco Ambrosiana was declared insolvent and was shut down a few weeks later. The Vatican Bank maintained its sovereign immunity and refused any legal liability because, of course, it had a letter from Calvi absolving them of any requirement to pay them back for the loan they

[00:28:38] took out to buy those shares. But in 1984, the Vatican did admit it had a moral responsibility for the bankruptcy and it made a voluntary contribution to the bank's creditors of $244 million. So what happened to the other main players? Well, Marcinkus, Italian prosecutors, went after him. And in 1987, they issued an arrest warrant. But they couldn't arrest him because

[00:29:06] he refused to leave Vatican City and the Vatican protected him, legally claiming sovereign immunity. Eventually, Italy's highest court quashed the warrants, but Marcinkus was forced to step down from the Vatican Bank. And in 1990, he left Rome and lived out the rest of his life in a retirement community near Phoenix, Arizona. And he'd spend his mornings apparently playing golf and his afternoons hearing

[00:29:32] confessions at a local parish. He never wrote a memoir. He never gave an interview. He never once discussed Calvi, Sindona, P2. So he took everything he knew to his grave when he died in February 2006 at the age of 84. And interestingly, he served as an inspiration for, if you remember, the corrupt,

[00:29:57] chain-smoking Archbishop Gilday in the Godfather Part 3, the guy who plots a Vatican banking scam and then orchestrates a papal assassination to hide his tracks. Well, that was based on Marcinkus. Now, as for P2, in 1982, the Italian Parliament formally dissolved the P2 Lodge and they passed a sweeping law that made all secret political or Masonic organizations illegal. And an investigation lasting many years

[00:30:26] resulted in a report that did conclude that P2 was not just a social club, but it was a criminal conspiracy against the state. Now, 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

[00:30:48] in three separate governments between 1994 and 2011. Like, this story, it really blew my mind. I mean, I had a vague understanding of how corrupt Isley was during those times, but I always thought that films like The Godfather kind of inflated the role of the mafia and the level of corruption. But what the Calvi story

[00:31:12] shows us definitively is that the reality was way worse, that crime, corruption and murder is infiltrated every aspect of Italian life. The business, the politics and even the church and they were all working together in this criminal enterprise. It's flabbergasting and it just makes for an extraordinary story. Anyway, that brings us to listeners' emails and this one comes from Dominic.

[00:31:42] And coincidentally, he'd love me to do another Italian story, this one on the Parma scandal. So this was the 2003 collapse of the Italian dairy joint Parmalat, which left a $14 billion black hole in its accounts. It's a fantastic recommendation. Thanks so much, Dominic. And remember, if you have any comments, any corrections or any story that you'd like me to cover, email me at info at gbspod.com. All the best, folks.