God’s Bankers is not so much about the history of money in the church as it is about the skullduggery surrounding it. When the pope was the absolute ruler of central Italy, there weren’t many money problems, because, like any king, he got his money from taxing his subjects. But after Italian nationalists took away the pope’s kingdom by 1870, leaving him only the miniature Vatican City, the money troubles began.
The source of the Vatican’s wealth today, according to Posner, is the $92 million dollar payment that Pius XI accepted from Mussolini in 1929 in compensation for the church’s property that had been seized during the unification of Italy and the subsequent investment of those millions by skilled financiers working for the Holy See. We learn in detail about these financiers, starting with Bernardino Nogara, who was called on to invest the original payment from Mussolini.
In 1942, with the creation of the Vatican bank—formally called the Institute for the Works of Religion, or I.O.R., its Italian initials—Nogara had a way to move money around wartime Europe in what the Federal Bureau of Investigation called “in the black—off the radar of Western investigators.” Nogara, through various shell entities, invested heavily in insurance companies in eastern Europe. Here is Posner’s most serious charge: that through I.O.R.’s takeover of Generali, a formerly Jewish-controlled insurance company whose owners and directors had been deposed by the racial laws, the Vatican profited from the “escheat” of insurance policies of Holocaust victims. This, at least, is Posner’s surmise. As he states, “Generali’s paperwork on this matter is missing.”
Nogara served the popes until 1956, having made another fortune for the Vatican by carefully investing in Italy’s postwar real estate and construction boom. He was succeeded by the troika of Massimo Spada, Henri di Maillardoz and Luigi Mennini, which lasted until the infamous criminal Michele (Michael) Sindona wormed his way into Vatican finances through his friendship with Cardinal Giovanni Battista Montini, soon to be Pope Paul VI. The financial chicaneries of Michele Sindona, his protégé Roberto Calvi and their dupe, Archbishop Paul Marcinkus, president of the I.O.R., is the meaty center of Posner’s book.
Marcinkus was a Chicago priest who had studied at the Vatican diplomatic academy. He gained papal favor first by serving as an English translator for important visitors and then by organizing international papal trips. In 1971, Paul VI made him the head of the I.O.R., a post for which he was uniquely unqualified and where his on-the-job philosophy was, “You can’t run the church on Hail Marys.”
Michele Sindona owned a number of private banks in Italy, which he used to launder illegal funds. Marcinkus invested I.O.R. funds in these banks and allowed Sindona to use the I.O.R. for foreign currency transactions, thus avoiding Italian currency laws. When Sindona’s banks failed, according to Massimo Spada, who had left I.O.R. to work for Sindona, the Vatican lost $56 million dollars. Roberto Calvi’s bank, the Banco Ambrosiano, in which Marcinkus bought a 10 percent interest for I.O.R., was another criminal front. When it failed, I.O.R. had to come up with $244 million to pay the Ambrosiano’s creditors.
Marcinkus was indicted in Italy for his role in the Ambrosian fraud. For years Italian policemen watched every gate of the Vatican, so that they could arrest Marcinkus if he came out. But Marcinkus did not leave the Vatican’s walls during the two years it took the Vatican to challenge Italy’s jurisdiction. When Marcinkus did depart in 1990 to return to the United States, it was in disgrace, but at least not in handcuffs.
Throughout his time at the Vatican Bank, and despite these scandals, Marcinkus had retained the support of Paul VI and John Paul II. One reason for John Paul’s support may have been Marcinkus’s reliability in shuffling money from the Vatican to Poland’s Solidarity movement through the I.O.R. Posner reports that at one point Marcinkus, using I.O.R. funds, purchased $3.5 million in pure gold ingots from Switzerland that were then smuggled into Poland by a priest in the false bottom of his sport utility vehicle.
Things did not improve much at I.O.R. after Marcinkus’s departure. Throughout the 1990s, I.O.R. served as an “off-shore” bank for rich and influential Italians. Seven-time Italian prime minister, Giulio Andreotti, used it to hide a $60 million slush fund, oddly called the Cardinal Spellman Foundation. In December 2012, the secretary of state at the time, Cardinal Tarcisio Bertone, instructed I.O.R. to make a loan of $20 million to a film studio whose owners were his friends. The loan has since been written off as a complete loss to the Vatican. Even now, a Vatican monsignor, Nunzio Scarano, is under arrest in Italy and awaiting trial for attempting to use I.O.R. to smuggle 23 million untaxed euros into Italy for his wealthy friends. In March 2014, Italy indicted Paolo Cipriani and Massimo Tulli, former director general and vice director of I.O.R., for money laundering. This past October, a Vatican prosecutor froze I.O.R. accounts of the former president and another vice director of the I.O.R., Angelo Caloia and Lelio Scaletti, on suspicion of embezzling money from the sale of I.O.R. real estate.
The Vatican bank obviously needs the complete housecleaning and restructuring that Pope Francis has decided to give it, which Posner describes in the book’s last chapters. God’s Bankers is an effective brief on why such drastic measures are long, long overdue.