God's Banker (14 page)

But there were other and more visible consequences of the new balance of power. Ortolani joined Rizzoli's board, as did Calvi's trusted Gennaro Zanfagna, who had been involved with the birth of Suprafin back in 1971. Piero Ottone, the independent-minded editor of the
Corriere,
who had so disturbed the Christian Democrats, would depart, to be replaced by his deputy, Franco Di Bella. Four years later, in 1981, Di Bella in his turn would be compelled to resign. The records maintained that he had been a paid-up member of the P-2 since October 10, 1978.

For Tassan Din, on the other hand, the successful conclusion of the capital increase was the signal to embark upon a hectic shopping expedition. Rizzoli, with the financial support of Ambrosiano, bought newspapers left and right, often with an eye on the political favours that might be purchased too. The group launched new publications of its own, notably
L'Occhio
, supposed to be Italy's mass selling equivalent of the Daily Mirror, but which lost money from the start. Rizzoli invested much in the burgeoning Italian private tele­vision of the day, and planned ventures in Malta and beyond. For with Calvi's money and Ortolani's guidance, Tassan Din enlarged Rizzoli's Latin American interests, notably in Argentina.

Everyone could count themselves satisfied. Tassan Din could theorize about turning Rizzoli into a global communications con­glomerate; the inroads of the political parties into the Italian media were fostered, while in the end, Gelli and Calvi exerted unsuspected control. Expansion, however, brought above all an expansion of losses. By 1980 Rizzoli's financial disarray was such that end-of- month salary payments were occasionally in doubt up to the last day, while Tassan Din would in time become as tireless an advocate of retrenchment as he once had been of growth.

By early
1976 the post-Sindona squall seemed to have blown itself out, and thanks to the surreptitious activities of Suprafin, Ambro­siano's share price had steadied. Within the bank, the new chairman was remote, vaguely feared, but seemingly infallible. Most of his interest would be devoted to La Centrale, of which he was by now also chairman; the everyday banking business of Ambrosiano scarce­ly bothered him. But the unfailing growth shown by its balance sheet would still most doubts.

True, some may have had misgivings, but proof did not exist. Ambrosiano that year was permitted by the Rome authorities to borrow $100 million abroad, on the loose justification that the funds would be used to help finance Italian exports (a pretext which would crop up regularly in the future). The subsidiary in Luxembourg, which had changed its name from Compendium into Banco Ambro­siano Holding, was granted permission to triple its capital; this meant that the Milan parent could "export" almost 300 million Swiss francs to subscribe its 70 per cent share of the increase.

There were even signs that the tangle of overlapping shareholdings was being sorted out. The Luxembourg holding company would take charge of the foreign subsidiaries, notably Banca del Gottardo and Cisalpine Overseas in Nassau. Control of La Centrale was transferred from Luxembourg to the parent bank in Italy, where La Centrale would hold Ambrosiano's domestic interests, in Banca Cattolica del Veneto, Credito Varesino and Toro. For a moment, a measure of clarity was seemingly returning to Calvi's affairs—but predictably, it was not so. For several of these transactions had the familiar dark underside, of which a currency crisis would indirectly force exposure.

Never, before or since, has the Italian lira been so roughly treated as in the year of 1976. Three times in the space of ten months it was the target of speculators. In that period, its value against the dollar fell by 50 per cent; at one point the usable foreign exchange reserves of the Bank of Italy dwindled to beneath $500 million. International mar­kets were full of talk of the "Italian risk", a
portmanteau
expression which denoted huge deficits, inflation well into double figures, and the possibility of Communist victory at the general election held that summer. As the country's credit rating fell, the Rome Government introduced drastic measures to stem the flood of capital which both individual citizens and companies were despatching to the safety of Switzerland and beyond.

Law "159" of April 1976 has survived to this day. It turned the illegal export of currency from a simple "administrative" offence into a penal one, inviting arrest and imprisonment. The "159" was a blunderbuss, a desperate measure for desperate times, whose indiscriminating nature was to be bitterly criticized. Given the shortcom­ings of bureaucratic Italy, the argument ran, hardly a company did not have to breach it on occasion if foreign competition in export markets was to be overcome. The law, to make matters worse still, was also retroactive.

For Calvi, there were two consequences, one general and one particular. In broad terms, the "159" made it harder to operate those convenient offshore companies with impunity. Previously, if a for­eign debt became too much of a concern, the possibility existed of settling it by sending lire out of Italy. After April 1976, that safety valve was largely removed. Foreign debts could now only be paid off by contracting new ones abroad; most often these would be denomi­nated in the ever more expensive dollar. The tiny Liechtenstein and Panama companies were obliged to borrow, to subscribe their share of the capital increase carried out by Ambrosiano in 1976, from 10 billion lire to 20 billion lire.

But the new law had even more specific relevance to Calvi. On November 17, 1975 he conducted a transaction which—though he could not possibly have imagined it then—would lead to his ruin. That day La Centrale, now Ambrosiano's arm in Italy, bought 1.1 million shares in Toro, on the face of it enough to secure outright majority control of the insurance company. Curiously, however, the sellers, all companies based in Liechtenstein, were instructed to make the shares available by Banca del Gottardo, Calvi's arm in Switzer­land. What was more, the sellers were all, directly or indirectly, within Ambrosiano's orbit already. One of them was even Sapi, one of those mysterious offshore shareholders of Ambrosiano itself. It would later transpire that the shares in question
had been bought by La Centrale itself,
in the days when La Centrale was controlled through Luxembourg, in 1973 and 1974. They were then tucked away in the foreign nominee companies like Sapi.

Yet when La Centrale "re-imported" the shares into Italy in November 1975, it would pay three times the going price for them on the Milan stock market. Calvi would later claim that the exceptional price was justified, because the extra shares gave him full control of Toro. But since they had in truth been at his disposal since 1973 and 1974, and since he did not report the transaction (as he was obliged to do by the retrospective provision of Law 159) the deal would be construed as an illegal export of the difference between their value on the Milan market, and the price actually paid—in the event 23 billion lire. In 1976 Calvi performed a similar trick with a block of shares in Credito Varesino.

All of this would be unearthed by the Bank of Italy's inspectors in 1978. But why did the central bank choose to have a close look at Banco Ambrosiano at all? The answer may be traced to Michele Sindona, Calvi's former mentor and comrade-in-arms, now down, but very far from out, in the Pierre Hotel in New York.

Despite the 4,500 miles which divided them, Sindona was never long out of touch with Italy and his old friend Licio Gelli. He had already convinced himself that the collapse of his Banca Privata Italiana was unfair, that he was the blameless victim of a vendetta carried out by his "lay" enemies like Cuccia. Now, he further reasoned, all could be put right with a little assistance from grateful associates from more fortunate times.

And who owed him more than Calvi, whom he had helped so much? The chairman of Ambrosiano had after all continued to thrive; while his bank had ample resources to settle the liabilities of Banca Privata Italiana, and thus enable its liquidation proceedings to be halted.

For that second consideration was by 1977 becoming steadily more important. A lawyer called Giorgio Ambrosoli, who had been appointed by the central bank in Rome to carry out the liquidation of Sindona's Italian interests, was moving painstakingly towards the truth about some of the most questionable business channelled through his banks, including transactions involving the political far right in Europe and beyond, and the Mafia. In America, meanwhile, Watergate and the fall of Nixon and Sindona's Republican party friends, had brought a new moralistic president to power, in the person of Jimmy Carter. Less chance than ever existed of persuading United States investigators to look kindly on the demise of the Franklin National Bank.

That summer Sindona and his lawyers held what amounted to a council of war in New York, to examine how his erstwhile allies in Italy might be induced into working for a "technical" solution to his difficulties at home. The natural first choice was the Banco di Roma, still influenced by the Christian Democrats. Failing that, however, Calvi should be summoned to give assistance.

Evidently they made little progress with the Banco di Roma, for Sindona soon turned his attention to Calvi—but at first to small avail. Either (mindless of how Sicilian potentates can react when an earlier favour is not repaid) Calvi mistakenly calculated that Sindona was a spent force, who could be safely ignored; or he judged that the risk was too great in a venture of that kind, in reforging links with one whose downfall in 1974 had brought himself perilously close to the precipice. Perhaps both considerations played a part. But Sindona was outraged at such abandonment by an indebted friend, and he plotted spectacular revenge.

The chosen instrument was another of those strange
condottieri
who feature in the Calvi story. Once Luigi Cavallo had been a Communist, and a resistance fighter in the Second World War, but for many years now his prime employment had been as an
agent provocateur
at the service of the highest bidder. In the 1950s Fiat had employed him to set up docile in-house trade unions to counter the influence of the increasingly militant ones outside. Cavallo was said to collaborate with a variety of secret services. Above all, he was a practised execu­tor of smear campaigns against pre-selected targets in the Italian financial world. The campaigns, one must presume, were paid for by former colleagues of the victims, who considered themselves betrayed. For Cavallo usually appeared to be well supplied with documents.

Probably for reasons of his own safety, he resides these days in Paris. But his mouthpiece was (and still is) the so-called
Agenzia A,
based in Turin. Periodically,
Agenzia A
would come to life, as a smartly printed pamphlet containing the detailed accusations of the moment. It would be distributed, free of charge, to potentially interested readers such as magistrates, financiers, politicians, as well as journalists. No matter that the contents were unreliable, and obviously far too delicate to publish. Suspicions would be kindled, often to be proved not entirely inaccurate, should the particular episode subsequently gain public notoriety.

For Calvi, however, Sindona and Cavallo devised something even more unnerving, given the secretive nature of their target. Purported details of all Calvi's most unmentionable dealings with the Sicilian would be provided for the general Milanese public to see.

November 13,1977 had gone down in the city's financial legend as the "day of the tazebao". That morning central Milan, and in particular the crowded tiny streets around the headquarters of Calvi's bank, resembled Peking, as scores of posters, printed in white, blue and yellow appeared overnight from nowhere, plastered on available walls. No matter that Calvi, as usual in his office early, managed to have them down before mid-morning: the damage, above all psycho­logical, had been done.

The banker can only have been horrified by his public denuncia­tion. The posters claimed that he had arranged to have "tens of millions of dollars", stemming from ventures with Sindona, paid into Swiss bank accounts held by himself and his wife. After the unsuc­cessful Bastogi takeover bid, Calvi had, in the words of the poster, "appropriated for himself" $4.8 million. On November 11, 1972, he had received $3.3 million as a personal commission on the Pacchetti/ Banca Cattolica del Veneto transaction. The money, the posters alleged, had been paid into accounts bearing the code names of Ehrenkranz and Ralkov G 21, at the Zurich branch of Credit Suisse, and into numbered accounts 618934 and 619112 at the Chiasso (Switzerland) branch of the Union Bank of Switzerland (UBS). Three questions had to be answered, the charge sheet continued: first, from where did Calvi obtain the $200 million he had used to buy control of his companies? Second, how big a profit did he make on selling their shares around the Ambrosiano group? And thirdly, why did the
Corriere della Sera
never mention the misdeeds (including illegal currency exports, tax evasion and falsified balance sheets) of "its effective owner"? Each of the demands would prove to be farsighted. And in case they had escaped notice, copies
of
Agenzia A
containing further details were distributed a few days later.