That death was one of the defining events in a complex web of intrigue that stretched from the Vatican to the Bahamas and South America, forcing a global crackdown on offshore finance that is still ongoing.
In 1982, 62-year-old Roberto Calvi supposedly committed suicide after the collapse of Banco Ambrosiano, Italy’s largest private banking group, which he headed. But an inquest the following year left open the question of whether his death was suicide or murder.
Then, in 1998, an Italian Judge ordered the exhumation of Calvi’s body for another autopsy – there have been three so far. And, following a detailed case review, prosecutors concluded two years ago that Calvi had indeed been murdered.
Now, three Italians and an Austrian have been indicted in Rome for the murder and will stand trial in October. They are businessman Flavio Carboni, his ex-girlfriend Manuela Kleinzig, and two men with alleged Mafia ties – Pippo Calo and Ernesto Diotallevi.
Italian prosecutors believe Calvi was killed partly because he knew too much about Mafia money-laundering. They allege that Mr Calo ordered the killing, and that the other three suspects lured Calvi to his death in London. But there are lots of other theories circling this case.
In fact, no other event apart from the assassination of President John F Kennedy has spawned so many conspiracy stories. The Financial Times once described the collapse of Banco Ambrosiano as the gravest crisis in the history of Western banking. And the Bahamas was a key link in a global puzzle that took years to unravel.
Back in the day, Banco Ambrosiano Overseas was one of the top players in the Bahamian financial sector. Its flamboyant Swiss president, Pierre Siegenthaler, was a leading member of the sailing club, and Calvi himself maintained a luxurious villa at Lyford Cay. The bank’s multi-million-dollar Bay Street office overlooking the harbour was said to be one of the biggest non-hotel investments in the country.
“The wealth and power of Banco Ambrosiano of Milan – the largest private bank in Italy and parent of the Nassau bank – is strongly evident,” wrote Tribune reporter Athena Damianos after a guided tour. The four-storey building featured a retail banking hall, a vast marble stairway, luxurious appointments, an impregnable security system, and penthouse apartments for the use of visiting directors.
Among those directors was Cardinal Paul Marcinkus, the powerful head of the Vatican’s own bank – the so-called Institute for Religious Works. The IOR was a principal shareholder of Banco Ambrosiano and was closely linked to the financial scandals, eventually coughing up $250 million to pay creditors after the collapse.
When Banco Ambrosiano opened the doors of its plush Nassau offices in April, 1982, Siegenthaler joked about the lavish appointments: “We don’t have gold phones, but the style of this organisation is to do things with taste and to do it well…We’re going to be here a long, long time.”
Less than four months later, Calvi was dead, Siegenthaler and his 53 employees were out of a job, and the fancy East Bay building was on the auction block. Siegenthaler later spent time in a Swiss prison and died in an alpine avalanche a few years ago.
The scandal began to unfold shortly after Banco Ambrosiano opened its Nassau office. Italian auditors uncovered more than a billion dollars in questionable loans made through the bank’s Bahamas subsidiary to dummy companies in Panama. Calvi disappeared – and a few days later his body was found hanging under a London bridge.
Italian authorities learned that the Panamian companies were secretly owned by the Vatican bank, which had begun making offshore investments in the 1970s. Through a maze of subsidiaries, the dummy companies had borrowed $1.2 billion from Banco Ambrosiano’s Bahamas branch, which had in turn borrowed the money from banks in Europe.
The Vatican insisted that their ownership was only nominal, and that Calvi and others used the IOR name for their own purposes. Cardinal Marcinkus claimed the IOR had made a mistake in signing documents obligating the Vatican to repay the loans.
Calvi was also said to be skimming funds that the bank was laundering for the Italian and American Mafia. And he was also found to have bribed Italian president Bettino Craxi. As a result, Craxi was forced to resign and became a fugitive from justice in the early 90s. He died in exile five years ago.
According to newspaper reports, Banco Ambrosiano channeled Vatican money to the Contras in Nicaragua and to Solidarity in Poland during the 1980s for political reasons. The bank’s managers also siphoned off funds via fictitious banks to personal shell company accounts in Switzerland, the Bahamas, Panama and other offshore havens.
In August, 1982 the bank’s Nassau subsidiary went into voluntary liquidation. And lawyer Geoffrey Johnstone, accountant Clifford Culmer and banker Jack Smith presided over one of the most complex and difficult wind-ups in the history of Bahamian law.
In mid-1984, an agreement was reached to pay the banks that had made loans to the Ambrosiano-IOR group about two thirds of their money – some $600 million. Of that, almost half was paid by the Vatican bank on the basis of non-culpability. At least $400 million is still unaccounted for.
That’s the bare bones of the story. But there are deeper implications.
“What was the Calvi affair all about?” one commentator asked. “I think that it signified the intersection of several very powerful segments in Italian society that all had international connections. It certainly wouldn’t be the first time where the interests of nation states, gangsters, the Vatican and intelligence services overlapped.”
This comment refers to Calvi’s connection to a decades-long covert campaign of the Western alliance called Gladio (from the Latin for sword). Gladio was set up by the British and Americans after the Second World War as a network of clandestine cells designed to be activated behind the lines in the event of a Soviet invasion of Western Europe. In some nations these anti-communist secret armies became a source of internal subversion, while in others they remained a prudent precaution.
Reports say Calvi helped finance the Italian secret army by siphoning money from Banco Ambrosiano and using the Vatican bank to launder the funds. Whether as a result of blackmail or political ideology, he funneled huge sums to a secretive Masonic lodge known as P2, which was run by one of the coordinators of Gladio, a former fascist.
The election of Karol Wojtyla as Pope John Paul 11 in 1978 led the Vatican bank to send money to support the Polish trade union, Solidarity, which eventually brought down that country’s communist regime. Much of this money was provided by the Americans as part of their Cold War campaign against the Soviet union.
And, of course, there is the decades-old rumour that Pope John Paul I – who died in 1978 after just 33 days in office – was murdered because he wanted to investigate the Vatican`s shady financial deals.
The Banco Ambrosiano scandal was preceded in 1974 by the collapse of Franklin National Bank, an American institution set up by the Vatican’s hand-picked financial advisor, Michele Sindona. This event brought the international banking system to the edge of disaster and forced regulators to develop new supervisory measures.
As a result, rich countries formed the Basel Committee on Banking Supervision to address the rapid changes taking place in global financial markets. In 1983, the Basel Committee revised its regulations to deal with supervisory weaknesses exposed by the Banco Ambrosiano collapse.
The committee underlined the importance of information exchange between national banking supervisors and speedy communication between host and parent authorities when serious problems developed in any part of an international banking group.
Ever since, the industrialised countries have been tightening the rules of international finance to curb money laundering, terrorist funding and fraud. And our financial services sector has come under increasing pressure as a result.
The missing boys – Two years on.
Two years have passed since a sensational killing spree began on Grand Bahama that consumed the nation’s attention for months on end.
Tough Call was running the Nassau Guardian at the time and can clearly recall the intensity of feeling that the disappearances aroused, both in the newsroom and the community at large.
Five schoolboys disappeared without a trace between May and September of 2003. They all came from low-income homes and worked as packers at the downtown Winn Dixie supermarket.
Jake Grant, 12, was the first to vanish on May 9. Mackinson Colas, 12, was reported missing on May 16; Deangelo McKenzie, 13, on May 27; Junior Reme, 11, on July 29; and Desmond Rolle, 14, on September 28.
The disappearances sparked a wave of hysteria across Grand Bahama and in Nassau. Police were totally stumped, and they reacted defensively by throwing up a wall of silence that helped foment grisly rumours that damaged the reputations of several people.
The rumours included Satanic cults, abduction by foreign slave traders, and sexual abuse. In an editorial, the Freeport News criticised police for not keeping the public informed during the investigation:
“We suspect that this constriction of information is more of a political than a law enforcement decision. This does not make sense. The media can be a valuable ally to discredit rumours before they do the damage that was done to the good names of several prominent Grand Bahamians recently when they were linked to the disappearances.”
The six-month-long mystery ended in late October with the indictment of a man that police say murdered four of the boys and another man. Cordell Farrington, 35, a warehouse employee at Kelly’s Freeport, was charged with five counts of murder in Freeport magistrate’s court.
The fifth count was that he killed Jamaal Kareem Robins, 22, sometime between Friday, July 12, 2002, and Sunday, October 26, 2003 at Freeport, Grand Bahama.
As these were indictable offences, Farrington was not required to plead and was remanded to Fox Hill Prison. The media was banned from court during arraignment. Farrington was indicted in the Supreme Court at Nassau in April of last year and is still in prison awaiting trial.
Police were under tremendous pressure to produce results during the investigation. In early October 2003 they arrested three people on the basis of tips. Although they denied rumours that human body parts had been found in a food store freezer, at one point a team of officers sealed off and searched the downtown Winn Dixie supermarket, causing a sensation.
After exhausting all avenues, foreign expertise was enlisted. Officials from the FBI, Scotland Yard and the National Centre for Missing and Exploited Children in the United States joined in the search efforts.
And America’s Most Wanted, the popular TV show hosted by John Walsh, was about to produce a segment on the missing boys. Walsh worked for the Bahama Out Islands Promotion Board years ago when his young son, Adam, was abducted and killed.
Sinister parallels were also drawn to the fact that 24 years ago, three other schoolboys (Mitchell Baptiste, Brian Pennerman, and George Lewis, all of them 12), disappeared in one afternoon on Grand Bahama without a trace.
But in spite of all this effort, the case was not broken until Farrington turned himself in.
In the case of Jake Grant, the first to vanish, four other juveniles were held responsible for manslaughter. But they were discharged a few days ago for lack of evidence.
Meanwhile, Farrington remains at Fox Hill. His lawyer, Romona Farquarson, has applied for a change of venue from Freeport to Nassau, but does not expect the case to come to trial soon.
“There are many others awaiting trial for serious crimes who have been in jail three or four years. Their cases will be heard first.”
The views expressed are those of the author, and not necessarily those of the Nassau Institute (which has no corporate view), or its Advisers or Directors.
This article was first published in The Tribune on Wednesday, May 11, 2005.
The column ‘Tough Call’ by Larry Smith is published in The Tribune every Wednesday and is reprinted here as a courtesy. Mr. Smith founded and successfully grew an advertising agency over 20 years. Under his direction Media Enterprises diversified into short-run commercial printing and publishing, and is now the largest non-fiction book wholesaler in the Bahamas. He has 30 years experience as a journalist and publicist and has contributed numerous articles and columns to the Bahamian press. A former reporter at the Nassau Guardian, local correspondent for Reuters and editor at the Bahamas News Bureau, he conceived and edited the Bahama Almanac (published 2000 by Media Enterprises), wrote the commentary for Mike Toogood’s Portrait of an Archipelago (published 2004 by Macmillan Caribbean), and edited the Bahamas Environmental Handbook (published 2002 by the government). In 2003 he took a year’s leave of absence from Media Enterprises to lead a transition management team at the Nassau Guardian after the paper was acquired by local investors. After leaving the Guardian he was contracted by the Tribune as online manager/editor and columnist. He has a degree in political science and journalism from the University of Miami.