Investment: Low Profile for the Vatican

Only four men were even aware of the secret nocturnal meetings last spring in the Vatican's baroque Apostolic Palace. Two were top cardinals in the church hierarchy. Two were key participants: Pope Paul VI and Michele Sindona, the tough Sicilian lawyer who in two decades has risen from obscurity to eminence as a financier and industrialist. It is almost unheard of for a Pope personally to conduct the church's business affairs, but this was no ordinary occasion. Sindona and Pope Paul closed a deal that started a shift of profound consequence in the Holy See's management of its vast temporal wealth.

The Vatican sold Sindona the bulk of its 15% interest in Italy's largest real estate firm, Società Generale Immobiliare (assets: $175 million), which has not only dotted postwar Italian cities with tower apartments but erected similar projects in Montreal, Mexico City and Washington, D.C., including the capital's most In address, Watergate. When word of the sale leaked out, jitters swept the Milan stock market; brokers feared that a liquidation of Vatican securities holdings might depress stock prices generally. Italian newspapers speculated that the Vatican was pulling its money out of Italy to avoid paying a dividend tax that has been a source of contention between the Holy See and the government.

Escaping the Onus. Actually, the sale of Immobiliare reflected the Pope's decision that church control of major Italian companies had become a liability. The Vatican owns some $200 million worth of stock in Italian firms. The church until recently either controlled or owned a substantial part of at least a dozen important enterprises, including cement-making Italcementi, paper-manufacturing Cartiere Burgo, pasta-making Molini Biondi and Vianini, a major engineering firm. The investments provide a handsome income to help defray the huge cost of running the papal establishment. But social unrest is growing in Italy. Anxious to align the church with the working class, the Vatican wants to escape any onus for closing inefficient plants, laying off workers or sitting on the other side of the bargaining table when unions ask for more pay.

Critics have long—and unfairly—blamed the Vatican for almost every controversial move made by companies in which it has substantial holdings. For example, when Immobiliare teamed up with Conrad Hilton to build the Cavalieri Hilton Hotel on a Rome hilltop, the leftist press angrily accused the Holy See of wire pulling to arrange the zoning. When the government carved Via Olimpica across Rome to speed traffic to the 1960 Olympic Games, anticlerical pundits charged that the thoroughfare was laid out to provide huge profits for Immobiliare, which owned big tracts of property along the route. Early this year, small stockholders raised an outcry against the church when Pantanella, a big flour-milling firm, cut the book value of its shares by 75% to stave off a possible financial collapse.

Rearranging the Portfolio. Moneymen expect that it will take the Vatican some time to shed all of its unwanted stock holdings. The church has retained a small number of Immobiliare shares, but recently sold its controlling interest in Italiana Condotte Acqua, a major construction firm, to a leading Italian holding company, Bastogi.