Saturday, February 21, 2015
Book Review 338: God's Bankers
“God’s Bankers,” though lengthy is only a history of Vatican money and power in modern times, starting with Napoleon’s conquest of Rome.
The Vatican didn’t even have a bank until about 1930, when it needed one to manage an indemnity it collected from the Fascist government. In fact, until well into the 20th century, Roman Catholic doctrine condemned the charging of interest for loans, and the Vatican didn’t produce even pro forma budgets until after the Great War.
Which is not to say that great amounts of money didn’t flow through the Vatican, but they were managed like the policy bets at a corner candy store. And I mean that in every sense.
Pius XI selected a skilled, prudent, unscrupulous layman, Bernardino Nogara, to manage the windfall, and he generated excellent returns, helped by using Vatican intelligence for insider trading and aided by a side business in helping Italians cheat on their taxes.
When war came, the Vatican Bank (formally the Institute for Works of Religion) did even better by helping the Nazis and Fascists rob and murder Jews and other non-Catholics. Gerald Posner’s heavily-annotated volume is more about power than money, and his chapters 7 and 8 are the best short summation I know for the actions and inactions of Pope Pius XII and most of the Curia in furthering the Holocaust. (The professional Roman Catholic defenders will squeal at this review -- and are already squealing at Posner -- but there is no longer any real controversy about the Church’s pro-Nazi role.)
The Vatican Bank was more like a German merchant bank or a hedge fund than a commercial bank, taking stakes in businesses and putting its nominees on their boards. It was also more like a Swiss or Luxembourgeois private bank in helping tax evaders.
It also laundered money for mobsters and acted “like an offshore bank inside Rome” to help hide dirty money; and it was a source of or conduit for illegal political contributions to the Christian Democrats. It also conspired with rightwingers to plot overthrows of democracies in Italy, Greece and (probably) elsewhere.
This ought to have been good business, and to an extent it was. But after the cautious Nogara retired, the bank was in the hands of amateur crooks who speculated wildly. “God’s Bankers” is frustrating on finances because the numbers are so sketchy. This is not Posner’s fault, as the Vatican was able, until 2013, to keep almost all its dealings secret.
But it may be that the bank lost capital faster than it made dirty profits. It certainly lost a lot of capital.
What we do know about it came out in repeated scandals, some murderous, when Archbishop Paul Marcinkus, an American hoodlum, ran the bank. He tied up with two of the biggest financial fraudsters in Italy, Michele Sindona and Roberto Calvi.
In addition, during those same years, sleuths recovered more and more evidence of the Vatican’s robbery of Jews, using the money and gold it stole from them to finance the flight and life in exile of mass murderers in, mostly, South America and Syria.
From time to time, some players ended up with a stiletto in the chest, or defenestrated, or hanged or -- a modern touch -- shot; but the modern story of the Holy Roman Church and money was not different from the story during the Renaissance, though without the refined taste.
Pope John Paul II, of soon to be sainted memory, was unconcerned about the thievery and used the bank to fund subversion in Poland and elsewhere. Paul VI was part of the pro-Nazi wartime Vatican camorra, and Benedict XVI was a hands-off administrator who showed no interest in the crimes.
The Vatican was not alone. Italy was thoroughly corrupt -- the Vatican was a conduit for under-the-table payoffs that, at one point, went to more than half the members of Parliament. Much of what we have learned about the Vatican’s crimes came from investigation and attacks launched by elements of the secular Italian government -- invariably from the left, but leftist deputies took Vatican money as well.
It was secularism that finally cracked the Vatican Bank’s secrecy. The anti-money laundering and anti-terrorist rules adopted by the United States and the European Union narrowed and narrowed the room for the Vatican to maneuver, because as part of a worldwide organization, some of it legitimate, that needs to be able to transfer and store funds, the Vatican Bank needs to have correspondent banks. (The Vatican could have used commercial banks but it was, and is, touchy about its sovereignty.)
When those banks started refusing to do business with the Vatican Bank, and when Pope Francis cleared out the supervisors who had never supervised, the church started showing signs of cleaning its house.
At least Posner was hopeful of that as he finished his book toward the end of 2014, but the Vatican has been a gangster state for nearly 2,000 years and it would be naive to think that it will stay straight. After all, the crooks are still there.