A body hanging from a bridge... Missing funds ... Political intrigue and "black ops" dating back to the Second World War. It reads like a spy novel, but it's a true story, one linking the Vatican bank to charges of fraud and other questionable activity.

Web Posted: September 16, 1998

he French Riviera town of Cannes is known throughout the world for its international film festival, as well as being a magnet for the cosmopolitan jet set. But a different sort of attention fell on the resort last Thursday as Italian and French police swept into Cannes to arrest a man named Licio Gelli, a fugitive since May, and dubbed "the Puppet Master" for his role in some of the most bizarre events of recent decades.     Gelli's arrest touches on scandals and secret deals going back to the Second World War; many of these events involve the Vatican, especially the role played by the Holy See in operating a "rat line" expatriation movement for Nazis and other war criminals, and a financial deal linking the papacy with illegal, dirty money flowing through its bank, the IOR or Institute for Religious Works.

    Start with a body found on the morning of June 17, 1982 beneath London's Blackfriars bridge. The corpse was dangling from a rope, weighed down with 14 pounds of brick and stone; the victim's hands had been tied behind his back, a fact which seemed to be ignored by the coroner who pronounced the affair a simple suicide. But there was much more. The body was that of Roberto Calvi, head of the elite Banco Ambrosiano, at the time the largest privately owned financial institution in Italy. A second inquest, demanded by Calvi's family, began to blow open a financial and political scandal that has reverberated throughout the continent, and beyond.

    When investigators began digging into the Calvi affair, they discovered a shortfall of nearly $1.3 billion at Banco Ambrosiano. Later, the money was traced to accounts owned by the Vatican. Calvi and his bank were also involved with a shadowy figure named Licio Gelli, head of a renegade secret Masonic lodge named P-2 or "Propaganda Due." The P-2 membership roles included over a thousand leading political, financial and government figures; subsequent investigation revealed that Gelli's organization had links to the Italian intelligence ministries, senior military staff, even top figures in the nation's media. Forty-eight members of the parliament were secret members, along with four Cabinet ministers. Gelli had created a "state within a state." It was no wonder that in ruling circles, the enigmatic and secretive Gelli was referred to as "the Puppet Master."

    Who was Licio Gelli? And how was he linked to the Vatican bank?

   Gelli had declared that "the doors of all bank vaults open to the right," a metaphorical claim about the penchant of big monied interests to fund the sorts of causes that the Puppet Master operated. Gelli had been active in the fascist Black Shirts Battalion in the Spanish civil war when aristocrats and the church threw their lot behind General Franco, and during World War II he served as a key liaison officer to the elite German SS Division Hermann Goring. In the cold-war era, he brokered his services to the Italians, the British and by some accounts even to the Soviet KGB.

    But Gelli's main efforts centered on resurrecting a Fascist order in modern Italy; to do this, he used his connections in the Italian secret service to obtain some of the most sensitive intelligence files on leading citizens, thus giving him carte blanche to blackmail his way into the circles of the country's ruling elite. "Propaganda Due" was the culmination of that effort.

   The Vatican connection to the Gelli-Calvi affair dates back to rise of Benito Mussolini, who in 1921 organized the Italian fascists of the old Fascio di Combattimento as a political movement. After becoming Prime Minister, Mussolini negotiated a series of agreements with the Vatican and finally settled "the Roman Question" which had arisen in 1870 when the newly formed Italian kingdom annexed the Papal States. Since then, the Italian government had guaranteed the Roman Catholic Church only limited sovereignty, and a subsidy of 3,250,000 lire per year. By published accounts, the popes considered themselves "prisoners" of the state.

   The Lateran Treaty, also known as the Vatican Concordant, resolved that dilemma by creating a Catholic state and guaranteed political autonomy to the papacy. A series of financial "compensations" were arranged as well, including seed money for what became the Vatican Bank. It was not until 1984, though, when a revised treaty was signed that ended the Roman Catholic Church's status as the official, government-funded church of Italy.

    After World War II, the race was on between the Soviet and western blocks to apprehend Nazi wars, or recruit intelligence and other assets. The Vatican used its resources to provide passports, money and other support for church- run "Ratlines" that transported former Nazis and supporters out of Europe to safer havens in the Middle East, Britain, Canada, Australia, New Zealand, the United States and South America. Organizations like ODESSA (Organization of Former Officers of the S.S.) and "The Spider" took advantage of this service, and by some accounts the Vatican Ratline provided support to as many as 30,000 Nazis. Among the beneficiaries of the Holy See's largesse were former Gestapo operative Klaus Barbie, Adolph Eichman, Dr. Joseph Mengele (the "White Angel" or "Angel of Death of the Auschwitz death camp), Gustav Wagner, Commandant of the Soirbibor camp, and Franz Stangl of the Treblinka extermination facility. Members of the Waffen SS "Galician Division" were resettled as well.

    As the cold war heated up, the western allies formed a Europe-wide network under the authority of the Supreme Headquarters Allied Powers Europe (SHAPE); proposed by CIA Director Allen Dulles, the network -- dubbed "Stay Behind" was envisioned as a team of anti-Communist guerrillas would operate behind any Soviet lines in the event of an invasion from the East. As part of "Stay Behind," another covert program -- Operation Gladio -- was put in place in 1956. This was a joint undertaking between the Central Intelligence Agency and various European secret services. Licio Gelli was one of the coordinators of Gladio network, which by the 1970s had mushroomed to over 15,000 operatives and contacts.

    If Gladio and "Stay Behind" might be considered the front line troops in Gelli's operation, then P-2 was the "shadow government." It took money to operate all of this, however, and one insight into how Gelli was intimately connected with ruling circles is demonstrated in his 1974 secret meeting with Alexander Haig, former NATO Supreme Commander who had become White House Chief of Staff under Richard Nixon. Haig assured Gelli of continued funding for both Propaganda Due and his various black ops.

    It was here that Roberto Calvi enters the picture. Both Calvi's Banco Ambrosiano and the Vatican's Instituto per de Riligione (IOR) became conduits for laundered money of all sorts. Under the direction of American Bishop Paul Marcinkus, head of the IOR, money was flowing through the Holy See's ledgers from a number of sources, and included cash from "Stay Behind" funding and even Italian Prime Minister Silvio Berlusconi, himself a money conduit for organized crime figures.

   There have been published reports that Albino Luciana, elected Pope John Paul I, was intent on putting an end to the dirty activities of the IOR, and the tenure of Bishop Marcinkus. Various conspiracy theories have been proposed to explain how thirty days after his election to the papacy, John Paul I was suddenly found dead in his bed. In any case, the new Pope -- Carol Wojtyla, Pope John Paul II -- was elected, and implemented his own conservative agenda. It was "business as usual" at the Institute for Religious Works. Under John Paul, the Vatican received official diplomatic recognition from the U.S. government, and soon over $12,000,000 in American covert ops funds were being funneled through the Vatican Bank to aid the Solidarity Trade Union in Poland, and help to ensure both the breakup of the Soviet Union and the church's position in a post-Soviet Europe.

   Meanwhile, Banco Ambrosiano was in financial trouble. Calvi began skimming from the funds flowing through BA to prop up bad loans, and even agreed to "launder" drug money for Mafia elements. He reportedly sought financial help from the secretive Catholic group known as Opus Dei ("God's Work), and traveled to London to meet with group's treasurer in hopes of selling a minority stake in BA. But Calvi had crossed too many people, and the skimming operation threatened a political scandal. In 1992, a Mafia defector told investigators that Calvi had been murdered on the orders of a British drug dealer named Franceso DiCarlo. The plan unraveled when Calvi's family demanded a second inquiry into his "suicide."

    Licio Gelli already "disappeared" from a Swiss prison several years ago where he was being held after the discovery of the P-2/Calvi/IOR scandal. And the threads linking the murder of Roberto Calvi and the Vatican are still in the headlines today.

   ¶    Court documents made public in July of this year trace the flow of money from the Corleone Mafia family to investments in the Vatican bank. In connection with the "spectacular failure" of Banco Ambrosiano, Britain's Daily Telegraph observed "The Holy See resisted all attempts by magistrates investigating the crash to force the now-retired Marcinkus to submit to Italian justice over the crash." Another twist involves a new probe by Italian authorities into Calvi's murder, and a report that a "Vatican finance figure" (Telegraph) was present at the meeting where the plan to murder Calvi was discussed.

   ¶    Why does the Vatican's involvement in the Calvi affair keep cropping up? The criminal organizations behind the scandal had links to the IOR and the Vatican hierarchy. In late August, it was announced that Cardinal Michele Giordano, Archbishop of Naples was under investigation for usury, extortion and membership in a criminal group. Giordano was served with a warrant at his "palace" by prosecutors and members of Italy's Finance Guards unit; he threatened a diplomatic incident and claimed that his residence, being an office of the papacy, enjoyed diplomatic immunity and extraterritorial status. Investigators still obtained paper documents and computer disks.

    The Cardinal's brother, Mario Giordano, had been arrested a week earlier in connection with a probe of Banco di Napoli. Two other bank officials including a former manager have been charged with extortion and running an illegal usury operation with interest as high as 400%. "Investigators have traced back to the cardinal and his administration cheques totaling more than 250,000 pounds cashed by his brother..." notes the Telegraph.

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