by Rich Thomas
I covered a fifth of all U.S. treasury secretaries and nearly half of all Federal Reserve Chairmen in my 40 years at Newsweek. But the most fantastic financial story I ever reported was corruption at the Vatican bank. The Istituto per le Opere di Religione as it is called, soared to infamy in 1982 by laundering $750 million belonging to a giant Venetian bank, Banco Ambrosiano, through its own secret accounts into Panamanian shell companies. From there, the funds vanished. IOR had taken a ten per cent cut as the funds passed through.
Discovery of the body of Banco chairman Roberto Calvi, hanging by the neck below an arch of Black Friar’s Bridge in London, had launched the scandal. Newsweek gave me what turned out to be three weeks to get the story on the Instituto (the title translates to “Institution for the Works of Religion”).
I went to New York, London and then Rome. Dozens of American and other international bank loan officers had seen their careers ruined by their losses on big deposits they had steered into the now bankrupt Banco. These angry men—and one woman--were among my prime sources. But Newsweek’s then-famous religion editor, Ken Woodward, had given me the name of a hip young lawyer in Rome who turned out to be both chatty and incredibly well informed about Vatican finance.
Astounded: I had been running my--to me, anyway--flabbergasting discoveries past Ken Woodward’s source every night over late dinner—oh, those Newsweek expense accounts. About a week into our dinners, my source asked me, would I like to meet Benedetto Argentiere? Would I! Argentiere headed the Vatican’s other great financial institution, the Administration of the Patrimony of the Holy See. This agency manages a multi-billion-dollar portfolio of stocks and real estate bequeathed to the papacy by faithful Catholics, literally over several centuries. It turned out my lawyer source was an informal adviser to Argentiere and had been telling him about my discoveries. Argentiere now wanted—off the record—to see me. A settling of scores between him and Monseignor Paul Marcinkus, the head of IOR?
I’m deeply moved by Roman history and architecture. The sun was setting over the mellow Alban hills as I walked through St. Peter’s great square to the entrance of Vatican Palace. Swiss guards, halberds clanking, escorted me up a broad cream marble staircase and then through a labyrinth of hallways, all hung or dressed with magnificent tapestries, sculptures and paintings. Two vast carved renaissance walnut doors swung open and I found a slim and elegant Sr. Argentiere seated behind a large black medieval trestle table.
A stunning renaissance chiaroscuro battle scene painting hung behind him on the wall between two great medallion windows. Several huge statues of the saints that stand atop St. Peter’s famous Bernini colonnades were visible just beyond the window panes.
Argentiere got straight to business. In impeccable British English, he wanted to know everything that I had found out. I went through my reporting from the beginning, covering each vital detail. This was an unparalleled chance to get second source—or in this case ultimate--confirmation.
Moneywasher: My basic story was this. The Vatican bank, which various cardinals had claimed for decades to be just a tiny institution serving Vatican citizens, was probably the world’s greatest, most perfect, laundromat. Its accounts were totally secret and it had assets of at least $10 billion (vs. the $25 million the cardinals routinely claimed). IOR took a tithe—a 10% no-questions-asked cut—out of any legal or illegal money deposited from anywhere in the world, Mafia included. IOR would then send the money, under a secret code number, anywhere the depositor required.
There was not even a Vatican banking commission to hold IOR accountable; IOR answered directly and only to the Pope himself. I’d also discovered that a succession of Popes had themselves been lying about overall Vatican finances. In annual public appeals, Popes since 1965 at least had declared the Vatican to be losing tens of millions of dollars each year and desperately needed more money from the faithful if it was to survive. My reporting proved that the claim of poverty willfully ignored the $400 million in profits that the Papacy was pocketing each year from its own wildly larcenous bank. The Vatican was awash in cash.
Monologue: I talked for almost an hour. Argentiere occasionally corrected a detail. But otherwise he listened in silence, smiling and nodding his head.
When I stopped, he simply said, “It’s a fantastic story, isn’t it?”
“Oh, more than that to me, sir,” I replied. “It is just unbelievable. If I wasn’t so sure of my sources, I wouldn’t believe it myself.”
“Well,“ he said, “you’ve certainly been industrious. But tell me, what has surprised you most?”
I was almost pinching myself. “Sir,” I said, “I guess what really shocks me is the cardinals. The cardinals, sir, they lie. Continuously and often. They are lying about everything involving this scandal and this bank right now.”
“Oh you know the cardinals,” said Argentiere, with a wave of the hand. “They’ll say anything.”
Stunned, I said, “I’m sorry sir, but I don’t know the cardinals. I’m just a simple protestant boy from the American midwest. I’m not particularly religious, but I have profound respect for religion. I had no idea that the cardinals would lie.”
“Look,” said Argentiere, still smiling, tapping his forefinger on his desk, “this is an absolute, absolute monarchy. In secular affairs as well as sacred. So the cardinals need fear saying only that which will offend the monarch. Otherwise, they’ll say whatever they please.
“Let me put it this way,” he continued. “If the Pope this afternoon had said that he wished a statue of a Golden Calf to be erected in the center of St. Peter’s Square, I guarantee you that as you walk out this evening you would see workmen erecting the scaffold.”
Postscript: The Vatican officially declined to comment on any detail of my story. Newsweek ran it with all the facts laid out here, and much more, at cover length. But it only made a cover overseas. I forget what breaking news drove Maynard Parker to tear up the mag on Wednesday or Friday and run with something else. The Vatican bank later paid the Italian treasury $400 million to settle the treasury’s suit for fraud in the Ambrosiano heist. Two Italian Mafioso were convicted years later in the killing of Calvi.
Copyright: Rich Thomas, 2012
Rich Thomas served as business writer in New York and chief economics correspondent in Washington from 1962 until 2002.