Sunday, December 08, 2013

The Vatican Bank - The Money Launderer's Bank of choice!

The Financial Times of Saturday 7th December has published a detailed dossier of an investigation into the dubious activities of the Vatican Bank and the I.O.R (Istituto per le Opere di Religione), and particularly its part in recent major money laundering activities!

From my perspective as a professional consultant and a critical commentator on these issues for over 35 years, I am always quietly amused by the absence of historical knowledge or understanding possessed by so many of the compliance personnel who are employed to facilitate the compliance with the anti-money laundering laws, and who come to these revelations with no historical perspective to assist them in their functions.

The truth is that the Vatican Bank and the I.O.R  have been closely engaged in criminal money laundering activities for many years, and they have had a very chequered history of dishonest activity which has been covered up and denied by successive generations of Papal administrations.

What follows is a distillation of a chapter taken from my book 'Money Laundering' which was published in 1994, and which began by examining the history of money laundering, and which examined the role played by the Vatican Bank.

Money laundering was not invented by the European Directive on Money Laundering in 1991, but had a long historical tradition arising out of the emergence and criminal activities of international organised crime. Like all businesses the various disparate activities had to be managed effectively, and the event which finally brought the influence of the  gangsters such as 'Lucky' Luciano and Meyer Lansky, as well as financiers as Michele Sindona together in the most ambitious and far-reaching enterprise of them all; an episode which would eventually be realised to have been the single most important event in the history of organised criminal money laundering, occurred between October 10th to October 14th, 1957 in the Sala Wagner of the Grande Hotel Des Palmes, Palermo.

It is from this moment that what we now call 'money laundering' changed from being merely an unstructured series of unrelated events intended to disguise the proceeds of individual criminal enterprises, to the sophisticated, organised, institutionalised system of alternative financial management it has now become, and its motivating factor was the explosion in demand for a new narcotic of choice, Heroin.

Like all great events in history, the meeting of the heads of the U.S and Sicilian Mafias in the Grande Hotel in Palermo did not happen simply by chance, and with the benefit of hindsight we can see the important influence of Sindona and his connections to the upper hierarchies of the Vatican and its bank.

Michele Sindona had been born in Patti, near Messina in 1920. Graduating with a degree in Law from university in 1942 he was well placed to assist the invading Americans, while conducting lucrative black-market dealings on the side with the leading Sicilian black marketeer, Vito Genovese, who, believing himself to be the next target on New York District Attorney Thomas Dewey's list, had escaped to Sicily from New York with $750,000 in 1937 after the conviction of Lucky Luciano.

Sindona's expertise in creative financing had soon brought him to the notice of his local bishop who in turn recommended him to the papal Secretary of State, Cardinal Giovanni Batista Montini, later to become Pope Paul V1. These two connections would later serve Sindona well as he began his climb through the upper echelons of the three pillars of Italian society, the Roman Catholic Church; the Christian Democratic Party and the Mafia. By 1948, Sindona had settled in Milan specialising in Corporate Tax affairs and acting as a commercial adviser to a wide range of clients.

At this time, all the major figures in Italian and Sicilian organised crime in the United States were either first generation immigrants from Europe or were the children of immigrant parents. Many, if not all had direct blood relations still living in Italy and Sicily, and the links and family connections on both sides of the Atlantic were still very strong.

It was this valuable family connection that Luciano intended to exploit in order to continue the lucrative international narcotics trade which he and his counterparts had created, but which was now increasingly under threat in the United States. It was this topic which was at the top of the agenda when the leading U.S mafiosi travelled to Palermo in 1957 to confer with their relations and colleagues.Every man who attended the meeting at the Grande Hotel was a noted drug trafficker, all of whom would be later indicted as a group by an Italian judge for 'organizing the drug traffic to the United States via Sicily'.

As a result of the confessions of Tommaso Buscetta, we now know that the most important topic of conversation on the agenda was the organization of the heroin trade on an international basis. The outcome of the meeting was an agreement between the Americans and the Sicilians on the way in which they would combine their resources to facilitate the trafficking in narcotics, and like all great ideas, its genius lay in its simplicity.

It was agreed therefore that the Sicilians would arrange for the importation of heroin into the United States and would run the distribution networks. The Americans would merely provide the 'front' facilities behind which the Sicilians would operate; they would collect the money, and arrange to launder the profits through a series of semi-legitimate companies, thus giving all the appearances of running a perfectly normal business enterprise. It was in the laundering of the heroin money, some through what would later become known as the 'Pizza Connection,' that the genius of Meyer Lansky's foresight and the artistry of Michele Sindona's technical facilities would come into their own.

Sindona is reported to have attended the meeting in the Grand Hotel des Palmes, although he was not present at the follow-up in Appalachin in up-state New York which took place on November 13th 1957, less than a month after the Palermo meeting. All those who had been together in Palermo reconvened to pass on the details of the agreement worked out in Sicily to other members of the U.S families. Lansky himself was not at the meeting, he was in Havana, but he was represented by Sam Giancana, who would later become the head of the Mafia in Chicago.

However, despite his absence, it is clear that Lansky had a great interest in the outcome of the proceedings and wished to be kept appraised of what transpired at the meeting. Who better to represent him therefore than Giancana, with whom Lansky had long enjoyed close business relations and for whom he had been conducting laundering operations in Havana since the late 1940s.

The Palermo and Apalachin meetings marked the turning point in the professionalising of the Mafia's handling of the international narcotics trade and its associated money laundering requirements and it is from this point that the influence of the Sicilians and particularly Sindona and his connections with the Vatican Bank became pre-eminent, because of their use by the CIA in the laundering of money and the channelling of funds to anti-communist elements in Sicily, much of the money forwarded to the church and the Christian Democratic party flowing through corporate fronts organised by Michele Sindona.

Having moved to Milan, Sindona had been introduced to the Istituto per le Opere di Religione (IOR) the bank which existed to serve the needs of the Vatican. The Vatican has always enjoyed a unique place in the legal and political life of Italy, having been recognised by Mussolini as a sovereign state in the Lateran Treaty of 1929. After the war, the Church, in conjunction with its new-found friends in the CIA, continued to assist in fostering anti-communist sentiment through its support of the Christian Democratic party and much of its financial influence was channelled through the IOR, which had been founded originally to facilitate the Church's supply of funds to support church organizations around the world.

The IOR did not merely function as a religious organisation however. It also acted for specially introduced clients whose financial affairs required a degree of discretion not normally found even in mainstream banking circles. Many of those clients were international tax evaders, but they also included leading Mafiosi, whose relations with the Church, both in Sicily and in the United States had always been cordial, and so meant that they could be given the requisite introductions without qualm, as Sam Giancana had discovered in Chicago.

'With Cardinal Stritch's move to New Orleans, Giancana claimed he hadn't lost an ally in the Church; he'd merely gained additional channels for money laundering.'

Through its trusted agent Sindona, the Vatican, together with its American bankers, the Continental Illinois Bank and Trust Company of Chicago, had in 1959 provided itself with the means to provide those discreet services by acquiring control of the Banca Privata Finanziaria (BPF), a Milanese bank with a record of assistance in illicit financial movements. Later in 1964, they added to their institutional portfolio by acquiring the Swiss Banque de Financement (Finabank), in Geneva.

It was through these facilities that Sindona was able to provide the Sicilians with so much assistance in the cleaning up of their illicit Heroin money, while at the same time, providing the CIA and its Catholic associates with the means to move secret funds around the world to support anti-communist influences in foreign countries.

'During Giancana's tenure outside the United States millions of dollars flowed to Continental Illinois, a bank then heavily invested in Finabank, a Swiss Bank owned in part by the Vatican and controlled by financier Michele Sindona, Giancana's Gambino connection.'

The Vatican's independency in fiscal matters had long been a bone of contention for successive post-war Italian Governments and the Vatican had been engaged in a lengthy rear-guard action to stave off the political demands for these privileges to end. In 1969, faced with the likelihood that the Government would force through the necessary legislative changes, leaving the Vatican to face a crippling tax bill, the fathers of the church turned to Sindona to assist them, through the agency of their own IOR, in the moving of their assets abroad.

In common with many European countries, Italy had imposed strict exchange control restrictions after the end of the Second World War. The Vatican however, as an independent sovereign state was not subject to the same controls and in any event,no customs facilities existed to check the sources of money flowing into and from the Vatican's coffers, usually through its own private Swiss Bank, the Banco di Roma per la Svizzera.

Sindona was by now in a unique position to help the Church in its laundering aims, and began to move huge sums of money and in addition, divest the Church of some of its more embarrassing public shareholdings through various front companies created or acquired by him for the purpose. He was supported and assisted by the man whom he had recommended for the post of head of the IOR, Archbishop Paul Marcinkus. Sindona was well aware of Marcinkus's abilities, having been previously associated with him through his relationship with Sam Giancana in Chicago.

Mob money was carried out of Chicago to Mexico under the safety of priest's robes, to be placed in banks scattered throughout South and Central America, but most often in Panama.

Often these funds were then diverted to Milan and on to the Vatican Bank in Rome, where they were easily transferred to Finabank in Switzerland - and straight into the hands of Michele Sindona and an up and coming Chicago priest residing in the Vatican, Paul Marcinkus.

Marcinkus had been recommended to Rome by his mentor, Cardinal Stritch and he had quickly come to the eye of Pope Paul V1. As an Archbishop representing the richest Catholic diocese in the world, it was only natural that Marcinkus would be able  to introduce new sources of dollar deposits which would in turn assist to cover the Vatican's operating deficit, and for a man of such obvious administrative talents, it was only natural that he should be put in charge of the affairs of the very bank which handled the money introduced by him.

Among the many institutions which came under the influence, first of Sindona and subsequently Marcinkus and which assisted the Church in the relocation of its wealth was Banco Ambrosiano, a traditionally staid 'Catholic' bank, created originally in the nineteenth century as part of a Vatican-inspired measure to counter the secular influence of Freemasonry.  Its manager, Roberto Calvi was a close business associate of Sindona as well as being a member of the sinister Freemasonic group, Propaganda Due (P2), for whom Calvi would become the lead source of financial support.

With Sindona's support and encouragement, Calvi had begun to bring about the transformation of the traditional Ambrosiano into a leading international merchant bank. His first step had been to acquire a Luxembourg shell company from Sindona which was subsequently renamed Banco Ambrosiano Holdings Ltd. This was quickly followed by the acquisition of the Swiss Banco del Gottardo and in 1971, the Banco Ambrosiano Overseas Ltd, otherwise known as the Cisalpine Bank, in the Bahamas, of which Paul Marcinkus was a member of the board of directors. Provided with these facilities, Calvi was finally in a position to supply whatever financial services his masters, whether in the Church, the Freemasons or the Mafia, required.

The creation of the Bahamian Cisalpine Bank for laundering the Vatican's wealth was an inspired move, while among Sindona's other financial creations which he used as a means of providing further laundering services was Moneyrex, a money brokerage operation which he had set up to take advantage of the volatile foreign-exchange market which had been created in the aftermath of the devaluation of the dollar in 1971. Moneyrex assisted in facilitating dollar-denominated brokerage transactions between banks with a surplus of dollars and those with a shortage, and among its other commercial partners was yet another Sindona-owned vehicle, the Franklin National Bank of New York.

Speculating heavily with borrowed dollars, Sindona plunged deeply into the world's financial markets. His foreign-exchange gambles failed to pay off however, due in no small part to the losses created at Franklin National. Despite $2 billion in loans from the Federal Reserve, and frantic efforts in Italy to stave off the impending collapse of BPF and the other institutions in Sindona's empire, the end came in the summer of 1974 and Sindona went on the run, first to Taiwan and then later to America, where he would be sheltered initially by the Sicilian branch of the Gambino family.

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