Cracking the Silent Citadel
On the Trail of God's Bankers

by David Montero

with the Center for Investigative Reporting

Riding on the tide of the Catholic Church’s sex scandals, as well as mounting demand for transparency in corporate financial dealings, a new case in San Francisco attempts to break the Vatican’s bulletproof wall of impunity.

illustration/Reynaldo Barrioz

Attorney Jonathan Levy is hoping he can pry open the books of the world’s most secretive bank – the Instituto Per Le Opere di Religione (IOR), or the Office of Religious Works. In other words, he hopes to break the bulletproof wall of diplomatic immunity that surrounds and protects the Vatican Bank.

Levy’s case, Alperin v. Vatican Bank, filed in 1999 with the district court of San Francisco, involves some three hundred plaintiffs seeking restitution for assets allegedly stolen during World War II by the Ustasha dictatorship, Hitler’s Croatian puppet regime. In addition to slaughtering Jews, Serbs, and Ukranians in Nazi-style concentration camps, the Ustashi were also known to have drained millions’ worth of their victims’ personal holdings into the Croat treasury.

Central to the Alperin case is the claim that the Vatican Bank was instrumental in laundering the stolen loot after the war, before it was spirited off to several destinations in South America to bankroll fugitive Nazi sympathizers. Vatican officials have so far claimed innocence in the affair, but documents recently declassified at the plaintiffs’ request, including several CIA memos, have helped to raise troubling questions about the extent of the Holy See’s involvement.

Also in the arsenal of evidence, and perhaps most damaging of all, is a U.S. State Department report that laid the groundwork for the Alperin case in the first place. Based on investigations undertaken by Under Secretary of State Stuart Eizenstat in 1998, the report implicated the Vatican in laundering Nazi gold, verifying what had been until then a widely held but unsubstantiated myth. “200 million Swiss francs (about US $47 million) ‘was originally held in the Vatican’ before being moved to Spain and Argentina,” the report reads.

Levy believes the evidence is sufficient to warrant a formal audit of the Vatican Bank — a feat never before been undertaken by anyone outside the Holy See. And therein lies the heart of this dark matter. Formally established in 1942 as the official bank of the Vatican state, the IOR enjoys sovereign immunity under the terms of a pact signed between Pope Pius XII and Benito Mussolini in 1929. As a result, it doesn’t make its financial operations transparent to anyone but itself. That distinction has so far allowed the bank to operate with relative impunity (while perhaps also helping it attract a less than savory clientele). But Levy contends the Vatican’s claim to immunity is no longer morally tenable. Several lawsuits now pending against the Holy See, involving everything from sex scandal cover-ups to federal racketeering charges, point to a clear pattern of corruption on the part of Vatican officials, he says.

“All these scandals may be the thing to convince the U.S. courts that the Vatican is not a hapless victim — but a shrewd and corrupt business organization,” Levy said in a recent phone interview. “With so many cases against them, it’s very difficult for [Vatican officials] to claim they don’t know anything.”

This past June, Levy filed a request with the U.S. District court of San Francisco asking that all the U.S. cases be consolidated in one court, with the aim of deciding once and for all if the Vatican can actually be sued in a court of law. If granted jurisdiction to prosecute, Levy will face the rather Herculean task of deciphering the contents of a vault fortified by decades of secrecy, Byzantine financial arrangements and murder. The blueprint he needs, if there is one, may rest in the mind of an eighty year old man now living in the Arizona desert.

Born in Cicero, Illinois, the birthplace of Al Capone, Archbishop Paul Casimir Marcinkus was head of the Vatican Bank from 1971 to 1989 — a post he ran with a steely sense of pragmatism best captured in his famous quip, “You can’t run the Church on Hail Marys.” And indeed he didn’t. It was during his tenure that the IOR became embroiled in several of the greatest financial scandals in history — namely the collapse of a financial empire headed by a Sicilian banker named Michele Sindona, and, shortly afterwards, the collapse of Banco Ambrosiano, at the time Italy’s largest banking group.

Marcinkus in earlier days with HIs Holiness.

The details remain murky to this day, largely because the Vatican has succeeded in keeping its involvement shrouded in secrecy. But what is known is that several large banks involved fraudulently defaulted in the seventies and eighties. It is also known that organized crime, under the guise of an organization called Propaganda Due or P2, was involved and that two bankers ended up dead. One, the chairman of Ambrosiano, Roberto Calvi, was found hanging from a London bridge in what was initially ruled a suicide. (Now, thanks to the efforts of Calvi’s son, his death has been shown in the Italian courts to have been a homicide.) The other banker, Michele Sindona, died in jail when he drank a cup of coffee laced with cyanide. In the aftermath of the scandals, millions of dollars belonging to the Vatican Bank disappeared — but not before the money was traced to Latin America.

Banco Ambrosiano first attracted the suspicion of the Italian Central Bank in 1981, when it began booking hundred million dollar loans to a series of companies registered in Nicaragua, Panama, and Perú. Upon closer investigation, the Italian authorities made a curious discovery: the Vatican in fact owned the companies, between ten and twenty in number, most of them little more than an address. Although officials of the Holy See initially denied any knowledge of ownership, it turned out that the IOR had earlier, under the authority of Paul Marcinkus, issued “letters of comfort” for the companies, using the Vatican’s patronage to vouch for their credibility. It has since been established that the Vatican did own the companies, but very little has been discovered about them or the fate of the money they were loaned. Soon after the loans were identified, Calvi fled Italy and turned up dead in London.

Recent forensic analysis suggests that he may have been murdered according to the rites of an early Mafia ritual, whereby the neck of a victim is bound to his hands and feet, causing him to strangle himself as he struggles to escape. Bereft of its chairman and besieged by scandal, Banco Ambrosiano quickly disintegrated, sending shockwaves throughout the international market. The paper trail was lost in the maelstrom.

Ambrosiano’s offshore loans have been the center of controversy ever since. Some claim the money was pocketed by Calvi himself, others that it was used to pay off the Mafia. Still others say it went toward funding the Contras or was used to purchase missiles for Argentina during the Falkland Wars. According to Carlo Calvi, the late Roberto’s son, the money could have been used for all these things. In a recent interview from his office in Montreal, Calvi described the Latin American companies as an “offshore center” that the Vatican lent out for laundering schemes of various kinds, from paying political bribes to funding right-wing propaganda movements throughout the region.

Some of the companies belonged to the Vatican, he said, others only seemed to. “The whole point was to be ambiguous and incomprehensible,” Calvi asserted, “so that only those inside IOR and Ambrosiano who needed to understand, could.” What wasn’t ambiguous, he continued, was that the Vatican was making a profit from the transactions.

Although Marcinkus has consistently denied any knowledge of the Panamanian companies, Calvi says such a claim is impossible. “There were just too many transaction, over too long a period, for Marcinkus not to have known anything,” he said. “This worked well for them, and for a long time.” That is, until the whole scheme finally came crashing down.

When it did, the only one who emerged unscathed was the Archbishop Marcinkus. Ensconced behind the walls of the Vatican, he remained in hiding for seven years, evoking sovereign immunity to dodge the prosecutorial efforts of the Italian magistrates. The Italian Supreme Court finally upheld the Archbishop’s immunity claim in 1989, effectively freeing him from prosecution. His good fortune has raised suspicions — none ever substantiated — as to his own role in the deaths of Calvi and Sindona. The official Vatican record, however, asserts that Marcinkus and the IOR were themselves hapless victims of the intrigue.

Outside observers agree that the Archbishop, while centrally involved in cultivating relationships with risky businessmen, was probably unaware of the full implications of his actions. “He took advice from a Wall Street crowd that was far, far over his head,” says John Loftus, author of “UnHoly Trinity,” a historical exploration of the links between the Vatican, the Nazis, and the Swiss banks.

Penny Lernoux, who wrote one of the classic accounts of various 1980s banking scandals, “In Banks We Trust,” may have summarized Marcinkus best: “The kindest thing to be said of Marcinkus is that he was extraordinarily naïve — not a quality one hopes to find in the sole keeper of the Vatican’s purse strings.” According to Carlo Calvi, “When [Marcinkus] came to the bank, the relationships with Banco Ambrosiano and Sindona were there already. But he cultivated them further — he intensified the relationships.”

Jonathan Levy considers Marcinkus the “key” to unlocking the secrets of the Vatican Bank. Although the Archbishop postdates the time period of the laundered Nazi loot, Levy believes he may be the only one who can speak intimately about the bank’s operations and what may have been contained within its vaults. Marcinkus would be a star witness because the historical operations of the bank are bound by “a continuing course of conduct,” Levy asserts. “It’s all connected. Marcinkus is aware of it.” Some of the money used in Marcinkus’ dealings, Levy speculates, may even have been derived from the Nazi loot. Retired in Arizona since 1990, where no one has heard from him, the Archbishop is also the only former Vatican bank official not “still hiding out in the Vatican.”

“That’s why we want to depose him. He’s the first person we’d want to question,” Levy said.

But doing so will likely prove difficult. While Marcinkus may be the custodian of the Vatican bank’s secrets, he also personifies the difficulties involved in suing the Holy See. There’s a reason that the Archbishop, once a fugitive from Italian justice and a man of international notoriety, now spends his days playing golf and living an otherwise pastoral life of the utmost quiet. If there’s anything conspicuous about him now, it’s only his silence.

T he Italian press used to call Marcinkus “The Gorilla” because of his six-foot-four-inch frame and his burly Chicago mannerisms — traits that served him well in his service as the Pope’s bodyguard prior to running the bank. According to public records, he lived on a golf course in Sun City, a suburban retirement enclave just twenty miles northwest of Phoenix.

The church in Sun City where Marcinkus gives Mass. Photo/David Montero

The road out to Sun City cuts through a mostly forsaken stretch of land, bounded on one side by cinderblock warrens wrapped in barbed wire, on the other by junkyards piled high with rusted cars. The only sign of human activity is the kind one might expect amid such roadside blight: the Platinum Club advertised “Baby Dolls” in the evening. Mr. Lucky’s promised nude dancers. A sign standing lonely in a field advertised an upcoming gun show. But then a church appeared off to the side, standing in sharp relief against a depot of yellow school buses lined up in rows like a field of corn. Incongruously, the dust on the side of the road swept into red dirt, and from red dirt into grass. And then the walled communities began to appear, sprouting just like the oases in the desert they were intended to be. Finally a sign: “Sun City. Founded in 1960. The City of Volunteers.”

When I imagined the Archbishop, I pictured him always in dark chambers shut out from the light, large halls with sonorous marble floors tucked away in some part of the Vatican that no one was ever supposed to see. So I was surprised when I pulled up in front of a nicely appointed home of blaring white bricks, on an ordinary street adorned with well-kept gardens. A large “Welcome” sign hung just to the side of his door, in plain view for all the world to see. I pressed the doorbell and prepared myself to meet the man. But I was suddenly distracted by a rustling at my feet. When I looked down, I discovered a wounded bird fluttering by the doorstep. From the amount of feathers piled around him, and his near inability to fly, it seemed to me the bird must have been there for some time. I was just thinking that when the door opened.

And then there he was, the Archbishop, epicenter of mystery and controversy, the priest whose secrets no one outside the Vatican has ever known. He stared directly at me. “It seems you have a wounded bird at your doorstep, sir,” came out of my mouth. The words seemed to put the Archbishop at ease. “Yes, I know,” he replied, staring down at the fledgling bird, before smiling back up at me. I explained that I was a reporter.

His face did not collapse into anger. Instead, all the shift of emotion happened in the background, behind his eyes. His smile straightened to just above a frown, and he leaned back slightly to say, “About what? What’s this about?” Apparently in the middle of this senior paradise, where golf carts are as common a mode of transportation as Cadillacs, it had been some time since he had said anything like this.

I explained that I had just a couple of questions to ask him. “Oh no, you’ve got the wrong guy. I know that guy. He’s not here. Besides, he never talks. He told me he never talks,” he parlayed. It was the Archbishop, and he appeared just as he had in photos, only twenty years had of course carved more wrinkles and caused the veins in his nose to bulge. When I said that no one had heard from the Archbishop in nearly twenty years, he interjected, “That’s a good thing. Thank God no one’s heard from him in a long time.”

According to neighbors, the Archbishop is a humorous, well-liked man, and very close to the people of the town. They say he makes regular trips to the local hospital to visit the sick. At the Sun City churches where the Archbishop still gives mass, no one wanted to say much about him except that he was “marvelous.” Otherwise, I was told he didn’t do interviews, that there was nothing to be said that I couldn’t hear from the man himself, and that no one wanted to get him in trouble and therefore they weren’t going to say anything.


The Sandra Day O’Connor U.S. District Courthouse in Phoenix is an architectural wonder. A glass box encasing a huge open plaza and a cylindrical courtroom piercing its ceiling, it occupies an entire block of downtown Phoenix. A spray of water falls from the upper levels to cool inhabitants below, creating a mist that adds to the overall futuristic aura of the place. Among the voluminous cases filed there, one under the name Paul C. Marcinkus has sat unnoticed since 1994.

The file originally piqued our interest because it involved a court in Geneva, Switzerland, leading us to speculate that the Archbishop might keep money in a bank account there. Not so. Although the Archbishop has retired from the Vatican Bank, the Ambrosiano scandal, it seems, refuses to be retired.

Beginning in June of 1993, a civil court in Switzerland tried to depose Marcinkus regarding his knowledge of monies transferred between the Vatican and one of the Ambrosiano banks involved in the financial scandal. Letters rogatory, or letters requesting an accounting of his affairs while president at the bank, were forwarded to his address in Sun City, along with fifteen pages of pointed questions. These include: “Can you confirm that the relations between the IOR and the Ambrosiano group started in the 1960s?” and “Weren’t IOR’s assets at that time higher than US $2 billion, value 1969?”

Much of the information in the file was already widely reported, but of particular note (and unnoticed by the press) was the outcome of the case: it was dismissed, by order of the State Department no less, and Marcinkus was never questioned. Also of interest are letters from the Vatican stating that the Archbishop, although retired from the Holy See, is still considered a “member of the Consulta of the State of Vatican City in the capacity of Consultore” and is therefore privy to “functional immunity” — a privilege that may stay with him for the remainder of his days.

The paper trail revealed by the file is also most interesting: after being forwarded to the Department of Justice, the Vatican’s letters were sent to the U.S. State Department, which evidently weighed in and upheld the Vatican’s claim for immunity. On February 23, 1994 the case was closed. Although Marcinkus was born in Illinois and lived in Arizona, his Vatican passport even protected him from U.S. prosecutors in this case. The U.S. District Attorneys involved did not respond to repeated requests for comment.

The Vatican’s record of stonewalling inquiries may not bode well for Jonathan Levy’s case. In fact, the Holy See has filed a request with the U.S. State Department to have the Alperin case thrown out — once again, on the grounds of sovereign immunity.

Surprisingly, however, that request has yet to be acknowledged, let alone fulfilled — a positive sign in Levy’s eyes. It’s his contention that the State Department, having itself raised the issue of the Vatican’s involvement with Nazi gold, will want to see the matter through to trial. Levy is confident that when the State Department does weigh in on the matter, they will grant him jurisdiction to prosecute. “And when they do, Marcinkus will have to cooperate.”

That evening around dinnertime, the Archbishop didn’t want to talk about the Swiss case. He kept up the third-person routine. “I’ve been very nice now, and I told you he just doesn’t talk. I understand what you’re trying to do, but I’ve already told you, he doesn’t give interviews,” he said.

After more pressing, he insisted with a shrug of his long arms, “Aw, forget about that guy. Nobody cares about that guy anymore.” Asked about his famous golf habits, the Monsignor replied, “A fella plays a couple of games of golf and he gets a reputation. If we played one game a week in Rome it was a lot.”

Then he began closing the door, but stopped to ask, “Do you play golf?” I told him that I tried, to which he replied, “Well, it’s like I always tell him,” motioning with his head to the inside of the house, “Hit ‘em straight, hit ‘em long, and keep on trying.” I thanked him for the advice. “God bless,” he said before closing the door.

The Archbishop’s life now seems a stark contrast to the scandalous Ambrosiano days. He stands today as one of the few Americans ever to have attained a position of such authority within the Holy See. Still a practicing clergyman, he draws a large crowd to his Saturday afternoon mass at St. Clement of Rome, a Catholic church in Sun City, which lists him in its brochure as “Retired Clergy Assisting.”

On a Saturday afternoon, his crimson vestments hanging loosely on his shoulders, he could be seen walking among the pews in the minutes before mass, talking with the most elderly of the parishioners sitting in back. He focused on the nature of faith that afternoon, reading the story of Peter from Matthew, in his Chicago-tinted drawl. Afterward, he met with parishioners just outside the entrance to the church, his tall frame jutting above a ring of children who swarmed eagerly around him.

Meanwhile, Jonathan Levy waits to see if the Archbishop will be called forth from his desert parish to illuminate the workings of his highly secretive employer, that restitution might finally be served.

This article was produced in collaboration with the Center for Investigative Reporting in San Francisco, www.muckraker.org.

© 2002 El Andar Magazine

Although Marcinkus was born in Illinois and lives in Arizona, his Vatican passport even protected him from U.S. prosecutors.