Scandal at the Pope's Bank

Outside experts are called in to investigate some shady financial dealings

A billion-dollar Italian bank fraud has reached into the heart of one of the world's most respected institutions, the Vatican. So far, two people involved in the affair have died, $1.4 billion is unaccounted for, and the financial stability of several European banks is in danger.

At the very center of the scandal is Archbishop Paul C. Marcinkus, the American-born president of the Institute for Religious Works, the so-called Vatican Bank. Investigators now know that Marcinkus played a part, perhaps unwittingly, in a huge loan scheme that could bring down the Milan-based Banco Ambrosiano, Italy's eleventh largest bank.

Last week the Vatican took the unprecedented step of appointing three international financial experts to examine the dealings between the Vatican Bank and the Banco Ambrosiano. They were Joseph Brennan, 71, chairman of the executive committee of New York City's Emigrant Savings Bank; Phillippe de Week, former president of the Union Bank of Switzerland; and Carlo Cerutti, vice president of the Italian national telecommunications holding company. The appointment of the committee is the Vatican equivalent of naming a special prosecutor in the case, and it marked the first time that the Roman Catholic Church had ever opened up the books of the Holy See's bank to outsiders.

The scandal began to unfold in May, when a special audit at the Banco Ambrosiano uncovered $1.4 billion in questionable loans that had been made to paper corporations based in Panama. The companies, it appears, were controlled by Roberto Calvi, the bank's president.

Calvi was known in Rome as "God's banker" because of his close ties to the Vatican Bank. But in financial circles, his reputation was a little less heavenly. A year ago, he was sentenced to four years in prison and fined $11.7 million for exporting $26.4 million to Switzerland in violation of Italian currency laws; he appealed the conviction. Moreover, his name had been connected with the P2 Lodge, a clandestine Masonic group that was suspected of plotting to undermine the Italian government.

Just after the Banco Ambrosiano audit was completed last month, Calvi fled to England. Several days later, his body was found suspended by a rope from Blackfriars Bridge over the Thames River. In the pockets of his expensive gray suit was $20,000 in foreign currencies. Italians quickly noted the symbolism of the location: members of the P2 Lodge dress in black and call one another friar.

Although British authorities believe Calvi's death was a suicide, there is still lingering suspicion that he was murdered. Said a leading Vienna banker: "Too many people were relieved to have him out of the way. Anyway, you would have to credit the totally unathletic banker with acrobatic talents to believe that he hanged himself the way he was found."

Just one day before Calvi's body was discovered, his personal secretary jumped to her death from a fourth-floor window in the bank's headquarters in Milan. She left behind a note that said Calvi should be "twice cursed for the damage he caused to the bank and all its employees."