God's Banker (17 page)

Emilio Alessandrini was one of the most promising and esteemed of the younger generation of Milan magistrates. He was a specialist not only in financial investigations, but also in the left- and right-wing terrorism plaguing the country in those years. On the morning of January 29,1979, Alessandrini had just dropped his son off at school when his orange Renault 5 was ambushed by a commando of gunmen from the left-wing
Prima Linea
("Front Line") terrorist group, a sister organization of the Red Brigades. He was killed instantly. Luca Mucci, the magistrate who took over the Calvi case, had to start again from scratch. Both a precious life, and time, had been lost. Calvi and the P-2, it must be presumed, had nothing to do with the Alessandrini murder. The same could not be said with such certainty about the events about to unfold at the Bank of Italy.

Italy's wondrous capacity
to absorb the most grievous of set­backs, self-inflicted or otherwise, is well known. But it was tested as rarely as before on Saturday March 24, 1979. At dawn that day Ugo La Malfa, the old foe of Calvi and Sindona, was struck down by a massive cerebral haemorrhage from which he was to die two days later. With La Malfa vanished what small hopes remained that a new-born government, one of whose few distinctions was his pres­ence within it, could survive and elections be avoided.

But while La Malfa's political friends and enemies alike were arriving to pay their last respects, calamity of a different kind was overtaking the Bank of Italy. In the middle of the morning officers of the
Carabinieri,
the country's paramilitary police force, entered the central bank to arrest Sarcinelli. The deputy general manager of the Bank of Italy was taken to the
Regina Coeli
(Queen of Heaven) prison on the bank of the Tiber in central Rome, charged with deliberately concealing evidence from Rome magistrates investi­gating the collapse of the now bankrupt SIR of Nino Rovelli. A similar charge was brought against the Governor himself, and Antonio Alibrandi, the magistrate conducting the inquiry, let it be known that only Baffi's advanced age had spared him too the indig­nity of prison. In the most astonishing manner, the "Bank of Italy Affair" had begun.

No episode before or since has illustrated more clearly the sinister side of public life in Italy, the contrast between the platitudes dispensed by the politicians in public, and the private, historical

reality of fiercely competing interest groups and factions.

Just who was behind the attack on the Bank of Italy, no-one to this day can say with certainty. The "smoking gun" in Italy is rarely found: despite Gelli's mania for files, photocopies and tape record­ings, pressures and connivances are often undocumented, even un­spoken. But the circumstantial evidence is overwhelming, that an attack it was—or rather a counter-attack, carefully framed to teach the central bank a lesson it would not forget.

Probably the investigation of Ambrosiano was not the only reason. Rather, the inspection of Calvi's bank in 1978 was but the latest of a series of challenges to the complicities and financial conveniences of the system, which could not go unanswered. Objectively the cam­paign of Baffi and Sarcinelli to throw light on the dark corners of Italian banking could not be faulted. Realistically, however, to have tried to do so without adequate political "cover" beforehand was perhaps naive and inviting reprisal. The Italian system implied a paradox: that even the central bank's power could only remain intact if wielded moderately.

On successive occasions the Bank of Italy had trodden on the toes of the politicians. Carlo Pesenti, that most Catholic of financiers, had been ordered to straighten out irregularities in his banks—with the result that in December 1978 he was forced to sell off one of them to pay his debts. Then it had exposed the existence of Italcasse's "black" funds (to have most eyecatching consequences in 1980). Even more serious, the central bank had blocked efforts by the Christian Demo­crats to secure the "technical" solution to the problems of Michele Sindona, which would have allowed that notable benefactor of the party to return to Italy unmolested. All this, and now the assault on Calvi's Ambrosiano, linked to the P-2 and also another prime source of largesse for the parties—not only the Christian Democrats.

It is too much to believe that the issue of warrants against Sarcinelli and Baffi by the magistrate Alibrandi so soon afterwards was a coincidence. Not just its timing, but the sheer disproportion between the imprisonment order and the dubious, highly technical nature of the supposed offence suggested that Sarcinelli was being deliberately punished.

Italy's postwar constitution had given the judiciary both independ­ence and great discretionary powers. But that absence of control presupposed that magistrates would use their authority to investigate and arrest with responsibility, and remain free from political con­ditioning. Instead, and inevitably, the magistrature, too, was dragged into the thickening fray. So-called
magistrati d'assalto,
literally "assault judges", emerged, not averse to publicity, and liable on occasion to put political convictions, left-wing or right-wing, ahead of judicial neutrality. And it was Sarcinelli's misfortune that the Rome public prosecutor's office, which handled the Bank of Italy affair, was notoriously the most politically conditioned of any. If the Bank of Italy had entrusted Milan with the penal investigation against Ambrosiano, it was fitting that the banker or his protectors should fight back through Rome.

The opportunity was an investigation already under way into presumed irregular Government subsidies to SIR. Nino Rovelli, who combined Clark Gable's looks with keen political antennae, had swiftly understood the chance of aggrandisement offered by the Government's well-intentioned, but misguided, strategy of the 1960s of developing new primary industries in the backward Italian South. He chose to expand in Sardinia, remote and poor even by the standards of the South. Rovelli borrowed very large sums from the
Credito Industriale Sardo
(CIS), a state-owned bank set up specially to help Sardinia. He bankrolled Cagliari's football team, local news­papers and national politicians. But the chemical plants Rovelli promised took a long while to materialize. Between 1973 and 1974 "oil prices quadrupled. SIR began to sink in an ocean of debt and Rovelli disappeared to Switzerland as magistrates began to examine just where the money had gone.

The Bank of Italy inspected CIS in 1977/78, but its internal committee decided that the report, whatever the injudicious lending to Rovelli, warranted no legal action. It was, therefore, put on file. Meanwhile, in 1978 the magistrates had questioned Baffi about CIS and SIR, but showed little interest in the report.

Their attitude changed abruptly in early 1979. Alibrandi and another magistrate on the SIR case, Luciano Infelisi, suddenly descended on the central bank, and seized documents on the affair, including its report on CIS. No matter that the offence in question was disputed (for whereas the penal code obliges a public official to disclose knowledge of a crime, Italy's banking law permits the governor and its vigilance department not to pass on findings to the judiciary if
they
deem that no offence has been committed). On March 24 Sarcinelli was arrested, on the charge that by failing to hand on the CIS report, he had served "a private interest" in the course of his official duties. But well before that, he had begun to suspect that something was afoot.

The first straws in the wind were vicious articles in a few right-wing papers, attacking Sarcinelli over Italcasse, and intimating that he and Baffi were Communist sympathizers. OP, a scandal sheet run by a journalist called Mino Pecorelli who on occasion worked closely with Gelli, described Sarcinelli as "the Red functionary". Pecorelli was to be shot dead in Rome a few days before the Bank of Italy affair began, in circumstances still a mystery today. Then in February, Sarcinelli was phoned by his lawyer during a skiing holiday, to be warned that some sort of attack was being prepared. Alibrandi and Infelisi, the two magistrates involved, were both of the political right. Afterwards one was even quoted as saying that he had wanted to teach Sarcinelli a lesson.

But if arrest was only a partial surprise to its victim, it astounded and outraged everyone else. Most Italian politicians, as well as bankers, economists and public figures were bewildered and indignant.

Were the circumstances not so serious, it would have been laugh­able to suppose that Baffi and Sarcinelli, of uncontested integrity, could have been party to a corrupt cover-up. But while the Bank of Italy's horrified staff proclaimed the first strike in their history, the Government was mindful of the possible damage to Italy's standing in the outside world, which held the central bank in such regard.

That Saturday evening Filippo Maria Pandolfi, the Treasury Minis­ter, went on television to declare his confidence in the Bank, and its honesty and impartiality. As nearly as he could, Pandolfi stated that the magistrates had behaved recklessly and that the Bank of Italy was blameless. Central bank Governors from several European countries made exceptional public statements to the Italian press, expressing their own solidarity with Baffi and Sarcinelli, and their conviction that the charges were groundless.

There was one contrasting voice, however. The
Corriere della Sera,
funded by Ambrosiano's support for Rizzoli and conditioned by Gelli, was notably cool to Sarcinelli's plight.

Sarcinelli was to leave prison a fortnight later, hurt and confused, but already suspicious of the origin of the attack. In Milan the word was going around that Calvi in some way was connected with the attack on the central bank; while Sindona from New York was soon boasting that he had secured his revenge on the institution respon­sible for his persecution and downfall. Even after his release, the magistrates remained opposed to Sarcinelli's reinstatement. Giulio Andreotti, the caretaker Prime Minister until elections were held in June, stayed largely aloof from the controversy, an attitude which aroused some speculation over his own motives. Not for the first time Andreotti was being oddly ambiguous.

With Sarcinelli's removal, the
vigilanza
lost many of its teeth and some of its nerve. In June he was allowed to resume his post at the Bank of Italy, but had been moved by then to the harmless—as far as the politicians were concerned—international monetary side. Only many months later was the slate rubbed clean, when the charges against both Baffi and himself were dismissed for the trumped-up nonsense they were. But by then the desired effect had long been achieved—and a new Governor had taken over from Baffi.

The annual meeting of the Bank of Italy, held every May 31, is by tradition the foremost financial occasion of the year, akin to Budget Day in Britain. But in 1979 it acquired an unusually emotional overtone. As was his custom, Baffi read aloud the bank report's key "final considerations," of his report in his clipped, staccato fashion. Normally that would have been all, but not in 1979. The audience of bankers, industrialists and economists interrupted the speech twice with loud applause, first when Baffi defended the Bank's right to discretion in discharging its task, and then when he emphasized his and Sarcinelli's respect for the law. And then, quite exceptionally, Baffi read out to a hushed audience a statement of his own.

He spoke for the first time in public of the trials of the bank. With Biblical dignity he declared his hope that its detractors "would find pardon in remorse for the ill they have done, fuelling a campaign based on a tissue of false and tendentious arguments, and motivated by who-knows-what obscure design". Baffi then announced that he would resign before the end of the year, as soon as a stable Govern­ment had been formed after the election.

Baffi insisted that at 67, and after 43 years at the Bank of Italy, he had never intended to stay in office beyond 1979. In fact, pain and disillusion at the concocted scandal by which he had been smeared were decisive factors. An attack in its way as destabilizing of Italy's financial structure as the Red Brigades' murder of Moro had been of the country's politics, had been carried through successfully.

Over the next three months soundings took place on the choice of Baffi's successor. Distinguished names were mooted, as the best guarantee of preserving the bank's independence; so were some less distinguished ones, a clear sign of a desire to bring the Bank of Italy politically to heel, once and for all. In the end the internal solution, as usual, prevailed. Baffi resigned in mid-September, to be replaced by his deputy, the general manager Carlo Ciampi. If his name was less familiar, Ciampi was highly respected. But the Bank's unknown assailants had succeeded in relegating Sarcinelli to the sidelines. The new general manager to replace Ciampi was to be Lamberto Dini, brought back to Rome after twenty years' service at the International Monetary Fund in Washington, the last three as Italy's executive director on the IMF's board. The Bank of Italy was to be sadder, perhaps wiser—and certainly badly shaken.