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The Understold Story: The Vatican, the Mob, Super Ponzi Schemes and MORE

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In the 1980s American news media both print and broadcast began to report on growing evidence that an alarming number of Roman Catholic priests had engaged in serial sexual abuse of children and teens, and that the church hierarchy had not only failed to properly address the situation, but in many cases engaged in racketeering to protect accused clerics and thereby minimize scandal and financial losses. However, coverage and investigation by the media and by the authorities was intermittent and insufficient, so it was not until after the turn of the century that the issue became a major national scandal. In part because charges were not brought soon enough few clerics have faced criminal charges. Another wave of pedophilia charges in a number of countries has yet again inspired a wave of public concern about the ethics of the Vatican, this time focused in Europe.

What few understand is that the pedophile disgrace is just the tip of an iceberg of outrageous church activity extending back over history (click here). It is alarming that the body politic is failing to appreciate that the Roman church has been involved in a chain of illegitimate activities that expose the inability of the autocratic patriarchy to avoid a high level of chronic corruption. The lack of adequate appreciation can be attributed in part to a pattern of under reportage and inadequate investigation by the news media and press concerning an array of questionable and extraordinary church activities during the 20th century and continuing into the 21st. These often bizarre events would seem to be out of a Dan Brown novel if they had not been documented by the mainstream press (to the best of my knowledge this is the only effort to survey and outline the contents of all major newspaper articles from the 1970s on that cover the below criminal schemes.) Nor has a mainstream book documenting the extent of the problem been produced and received widespread attention, a remarkable lapse of the publishing industry considering the fascinating scope of the subject and best seller potential of such a work. Another problem concerns insufficient government actions against potentially illicit church activities. Prosecutions have been rare, and when pursued are usually thwarted by the special status of the Vatican.

This essay focuses on events in the last century, which rested upon events in the 1800s. When it constituted a national entity with large territories the Papacy was able to tap large governmental revenue streams. However, over the centuries the lands and peoples controlled by the Holy See dwindled. The last remnants were stripped from the Papacy as the Italian majority rejected a Papal nation still plagued by corruption and excessive power, reducing the institution to some property in Rome by 1900. The Vatican was correspondingly impoverished in the first decades of the 20th century. Alleviating and then preventing a return to this condition has obsessed the Vatican.

At the beginning of the 21st century the official budget of the Holy See city-state stems from limited sources including the charitable Peter's Pence and sales of merchandise amounting to about $175 million a year. But total Vatican revenues and assets must be in the many billions. The 1929 Italian-Vatican settlement described below should now be worth multi-billions assuming standard investment returns. The Vatican receives one tenth to one fifth of monies received by lower levels of the church hierarchy. German Catholics have been funding the church through income taxes since the early 20th century; according to tax data the current yearly amount is about 5 billion dollars. In America donations at the parish level on up amount to over 6 billion a year. Total global annual revenues must be in the tens of billions. The bulk of the assets received by the Holy See probably reside in accounts of the Institute per le Opero di Religione (IOR), or the Institute for Religious Works, commonly known as the Vatican Bank, which does not release information on its holdings and investments. Investigators have concluded that the Vatican Bank has extensive accounts in Switzerland and other nations and islands with minimal banking regulations. In 1979 Hoffman reported that "Papal finances are to this day enveloped in secrecy." According to Colby (1987) Vatican bank officials have "had their own political interest in maintaining the bank's independence. The profitable, discreet institution, with important holdings in publishing, regional banking and insurance, wield[s] much power in Italy." Because the Vatican is a sovereign nation it is not been accountable to any system of national law, rendering it effectively immune from investigation by national law enforcement organizations, legal suits, or the media. Nor does the Vatican have extradition treaties with other nations. In legal terms Vatican affairs are subject only to international investigation, although this may be changing (Anonymous 2005, Cooperman 2005, suit by Dawkins and Hitchens).

The events that led to the Vatican transforming from an impoverished church subject to Italian law to a wealthy, independent nation occurred in the 1920s and 1930s; the collaboration between fascists and the church that facilitated this rise in church fortunes has been well documented by historians (Scholdor 1988, Gellately 2001, Steigman-Gall 2003, click here).

Mussolini was not an absolute dictator because he served at the pleasure of the King (M was legally deposed in 1943 after the Allied invasion). Consequently the founder of Fascism sought the elimination of the Catholic political opposition in the 1920s. In 1929 Mussolini and Pious XI signed a concordat and other treaties which included a lump sum payment of nearly 100 million dollars (equivalent to a billion in current dollars), more in investments in Italian industry plus government salaries for the clergy, and the sovereign Vatican state. A few years later, in negotiations that grossly violated conflicts of interest, the German Catholic church members Hitler, Papen and Kaas negotiated with the Holy See a mutually beneficial concordat that the Protestant dominated Weimer democracy had refused. The Fuhrer's legitimacy was greatly enhanced, and the all German Catholic bishops were required by the concordat to swear loyalty to the Reich, rendering impossible direct clerical opposition to the existence of the regime. In exchange a provision of the concordat insured that the Reich Treasury transferred into church accounts the income taxes of German Catholics, amounting to about $1 billion from the beginning to the end of the Third Reich (equivalent to about 10 billion in current dollars)1. The tax income and contribution made at the time included money stolen from Jews by German Catholics, the Holy See has made no attempt to use the revenues it gained from Hitler's Reich to compensate the victims.

After the war Vatican elements operated the "ratline" that helped fascists subject to prosecution for war crimes flee the allied dragnet (Gowan and Caniglia 1947, Dedyer 1988, Manhattan 1988, Quetteville 2003). In many cases the escapees paid for the assistance. Among those who escaped were the ruthless Fuhrer of the Balkans, Pavelic, as well as Mengele, Barbie and Eichmann.

In response to the infusion of large funds from the Italian and German governments, the Vatican set up the IOR and put its accounts under the charge of Bernardino Nogara, an pious, noncorrupt financial genius. His strategy was to engage the church in extensive corporate investments. This required the regular charging of and receipt of interest, which violated the long standing church ban on usury (Vatican II endorsed charging interest).

Mussolini harshly cracked down on the Mafia. Consequently the U. S. military allied with the latter in the states and in Italy during the 1943-45 campaign (Rodney 1977). This, in combination with the long term refusal of J. Edgar Hoover to even acknowledge the existence of organized crime, plus a series of unstable Italian governments, allowed the Mafia to expand operations on an international basis, and more deeply entrench itself into American and especially Italian life at multiple levels (Rodney 1977, Hammer 1982, Arlacchi 1983, Gambetta 1993, Schneider and Schneider 2003).

To outline the case linking criminal elements and the Vatican we start with a

1972 Wall Street Journal article (Kessler 1972) that reported that "Michele [mick-ale-e] Sindona, one of Italy's richest and most influential financiers, is preparing to make a substantial increase in his American investments..... described as "Italy's Howard Hughes' because of his wealth and secretive nature.....[He] staged a lavish reception to celebrate his latest venture..... Among those attending were U.S. Ambassador Graham Martin, Rome Mayor Clelio Darada, cabinet minister Giuseppe Lupis and Bishop Paul Marcinkus of Chicago, president of the Vatican's Institute for the Works of Religion, commonly known as the Vatican's bank because it administers the church's vast funds. Bishop Marcinkus' attendance was taken as proof of Mr. Sindona's strong ties with the Roman Catholic Church."

Further linking Sindona to the Vatican is a New York Times article (Farnsworth 1974a) that notes in "1969 Mr. Sindona acquired one third of the shares of Generale Immobiliare2 from the Vatican's Institute for Religious Works, the body that manages the Roman Catholic Church's big investment portfolio. There were rumors at the time that Mr. Sindona had signed the final agreement with Pope Paul VI. Mr. Sindona is also in partnership with the Vatican in the Finabank of Geneva..... He also acquired another property from the Vatican, a company known as Codotte Dacqua, which supplies Rome with water..... Mr. Sindona was a friend of Jocolyn Hambro, managing partner of the Hambros Bank..... This London bank has had close ties with the Vatican for generations." Another 1974 NYT article (Farnsworth 1974b) further observed that as Sindona's "partner in some ventures, he had the Vatican's powerful Institute for Religious Works, the body that manages the Roman Catholic Church's investment portfolio." Numerous other newspaper articles recorded Sindona's ties to the Vatican, citing him as the Holy See's financial partner and/or adviser; Hoffman (1979) noted that Sindona "advised the Holy See and Bishop Marcinkus on how to handle its assets and investments, " the same year Lubasch observed that Sindona's "financial activities reportedly included advising the Vatican," and according to Dionne (1986b) "Sindona had also once served as financial adviser to the Vatican" (also see Lubasch 1980, Anonymous 1981a, Martin 1982, Raab 1982, Suros 1986, Dionne 1986a). But, as he publicly expanded his American interests none of the 1972-74 newspaper articles quoted specifically mentioned Sindona's ties with certain elements described below, although Kessler (1972) referred to SEC concerns about his mysterious financial dealings. Playing a game of global high stakes duplicity that left him chronically on the edge of ruin, Sindona was also mentally borderline3.

In his early years Sindona was recognized as a mathematical and accounting genius, and he worked his way to the top ranks of Italian wealth. The means by which he did so are well documented (Hammer 1982, Martin 1982, Arlacchi 1983, Fonzo 1983, Colby 1987, Tosches 1988, Gambetta 1993, Behar 1999, Schneider and Schneider 2003). Beginning as a wartime black marketer in association with quasi-fascist "Don" Vito Genovese of Murder Inc. as well as U.S. military ally Lucky Lucianco (Rodney 1977), Sindona soon became a leading banker for the Italian Mafia, and then moved to the international scene where he is alleged to have worked with the Italian Inzerillo crime family, related to the American Gambino organization. The FBI and Interpol cited Sindona as attending the famed 1957 Palmero mob conference that rationalized and expanded the international La Cosa Nostra for the heroin trade. Sindona, the "Godfather Banker," was one of the great Mafia criminals of the 20th century.

In the 1960's Sindona, who, with the exception of the 1972 party detailed above, usually avoided publicity, quietly developed ties with major figures in the Republican Party. Sindona also developed closer connections with the Vatican banking complex. Nogara had died leaving the IOR with insufficient guidance. This apparently was one link in a broad pattern of cooperation between two secretive, nondemocratic organizations in deeply corrupt post war Italian society. Initial links were made immediately after the war when organized criminal elements provided critical skills and contacts for operating the ratline. When (never fulfilled) moves were made to strip the Italian church of its tax privileges in the late 1960s, it appears that the Papacy sought out Sindona's assistance. As, according to the Fransworth (1974a) article quoted above, Paul VI probably directly engaged the services of Sindona, who already had major financial dealings with the IOR.

The Catholic Sindona is also alleged to have been a Free Mason, which was infiltrated by the Mafia in Italy (Tanner 1981b, Raab 1982, Fonzo 1983, Suros 1986, Dionne 1986a, Tosches 1988). A 1981 NYT account (Tanner 1981a) covered the historic P-2 Masonic scandal in which lodge "members, according to the police, had sworn ultimate allegiance to their grandmaster rather than the nation. In a report to the government, the Milan magistrates wrote that "[Liccio] Gelli [a hardcore fascist with connections to Juan Peron] had constructed a very real state within a state,' using blackmail, favors, promises of advancement and bribes..... Italy has about 550 Masonic lodges. Membership is estimated at 15,000, including many Roman Catholics. But Flaminio Piccoli, the Secretary of the church-connected Christian Democratic Party, said a few days ago that membership in a Masonic lodge was incompatible with being a Christian Democrat because "the Masons are a force that attacks the church'"4. Raab (1982) reported that Sindona "denied in the [official] interview that he had been a member of P-2. But he conceded that he had "prepared all economic projects' for the lodge in Italy and South American countries..... The panel is investigating whether members of the lodge plotted to take over the Italian government through unconstitutional means." According to Dionne (1986a) "Mr. Sindona was also a financial advisor to the secret Propaganda 2, or P-2, Masonic Lodge, a group of prominent Italians accused of criminal activities and right-wing intrigue in Italy and South America. The discovery of the P-2 Lodge brought down an Italian Government in 1981." According to the accounts cited above the P-2 state within a state was used as an intelligence network to detect, detour or deter those who might interfere with its questionable, potentially revolutionary activities. It was soon banned.

At the lodge Sindona allegedly became close to the Bishop Paul Marcinkus mentioned in the 1972 WSJ article quoted above. The 6' 4" "Gorilla" had become the Popes' personal bodyguard and travel agent (Hoffman 1979, Anonymous 1981b, Reaves and Ettenborough 2003). Possibly at Sindona's request, Paul VI made Marcinkus President of the IOR in 1971 even though as the bishop acknowledged to the press "I have no banking experience." He is also quoted as often saying that "You can't run a church on Hail Marys" (Reaves and Ettenborough 2003).

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Gregory Paul is an independent researcher interested in informing the public about little known yet important aspects of the complex interactions between religion, secularism, culture, economics, politics and societal conditions. His scholarly work (more...)
 

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I lived in Chicago for more than 20 years, and thi... by Margaret Bassett on Saturday, Jul 3, 2010 at 11:35:20 AM
I have to admit I couldn't be bothered reading thi... by Suzana Megles on Saturday, Jul 3, 2010 at 1:05:39 PM
Whilst it is good that all this info is brought to... by Paul Barbara on Saturday, Jul 3, 2010 at 3:57:49 PM
Good essay and I agree, what the public knows abou... by Mark Erickson on Saturday, Jul 3, 2010 at 5:09:39 PM
Thanks for all your research, many respects to you... by Debbie S on Sunday, Jul 4, 2010 at 4:09:19 PM