The Vatican Exposed: Money, Murder, and the Mafia (6 page)

Few individuals were more influential in the history of the Roman
Catholic Church than Nogara. He was uniquely fitted for the
moment, no less than Augustine, Leo I, Francis of Assisi, Thomas
Aquinas, and John Cardinal Newman. At the time of his death in
1959, Cardinal Spellman said: "Next to Jesus Christ, the greatest
thing that happened to the Church was Bernardino Nogara."2

But less is known about the Vatican's financial wizard than several obscure medieval saints. He was born and raised in Bellano, several miles from Lake Como. Little is known of his parents save for the
fact that they appear to have been extremely devoted to the Church.
Three of his brothers became priests, and a fourth served as a curator
of the Vatican Museum. Throughout his life, Bernardino attended
daily mass and weekly devotions, such as the stations of the cross. At
noon he paused from his work to recite the Angelus (the angel
Gabriel's announcement to the Blessed Virgin Mary), and before
retiring at night, he managed to recite all three mysteries of the rosary: the fifty Hail Marys that comprised the Joyful Mysteries, the
fifty that made up the Sorrowful Mysteries, and the fifty contained in
the Glorious Mysteries. Many who worked with him mistakenly
believed he was a cleric. In several books he is mistakenly identified
as a monsignor. But Nogara never entered Holy Orders, not even the
lay order of a religious brotherhood.

Professionally, he was trained as a mineralogist and for many years
supervised mining operations in England, Greece, Bulgaria, and
Turkey. His fellow workers recalled his fastidious dress, his skill as a
linguist (Nogara was fluent in eight languages), and his standoffish
mannerisms. They also spoke of his photographic memory (Nogara
could recite entire cantos from Dante's Divine Comedy) and his
ability to compute numbers faster than any adding machine.

Eventually, he entered the service of the Banca Commerciale
Italia, where he became a vice president and head of the bank's
branch in Istanbul. In this position he gained the trust and confidence of the occupying British forces as well as the Young Turks
under Kimal Ataturk, who were pressing for the creation of a new
Turkish republic. In his efforts to attract Western investments in
Turkey, Nogara became well known in the world of global finance
and came to serve as one of the administrators of the Inter-Allied
Reparations Committee that participated in postwar negotiations
between Austria, Bulgaria, Hungary, and Turkey. From 1924 to
1929 his financial skills came to full play in his efforts to reorganize
the Reichsbank in order to stabilize Germany's postwar financial
problems. In this capacity he performed an amazing feat of fiscal juggling by reaping the payment of 2.5 billion Deutschmark for annuities from a loan of 800 million Deutschmark.3

In Germany, Nogara came into regular contact with Archbishop
Eugenio Pacelli, the papal nuncio to the Weimar Republic, who
sought the financier's advise about the Roman Question, the question
of restitution for the Italian government's seizure of the Papal States.
In the course of their meetings, Nogara convinced Pacelli that the Vatican must abandon the old millennial idea of establishing an extensive
territorial Papal State and seek to become a powerful economic entity
through international investments. Only in this way, Nogara insisted, would worldly powers again be compelled to genuflect before the See
of St. Peter. In Rome, Archbishop Pacelli conveyed these opinions to
Pius XI, who sought the council of the financial wizard, particularly in
the preparation of the terms of the Lateran Treaty.

When asked to direct the Special Administration of the Holy See,
Nogara agreed to accept under the condition that he be granted a
free hand to make appointments without clearing them with a higher
authority, to have total control over what to buy and what to sell, and
to operate the agency in complete independence from all other Vatican bureaucracies. The headquarters for the Special Administration
were established on the fourth floor of the Lateran Palace, next to the
private apartment of the pope. Its workings were esteemed to be of
such importance that Nogara became the only Vatican official with
free and unannounced access to the Holy Father.

As the world fell into the grips of the Great Depression, Nogara's
first move as the Vatican's financier was to take over principal interest
in Banca di Roma, a firm that had many securities of no call value,
that is, securities that would pay little, if anything, if sold on the stock
market.4 He then managed to persuade Mussolini to include the bank
in the creation of the Institute for Industrial Reconstruction (IIR).
This was Italy's answer to the industrial devastation that ravaged the
country. The function of the IIR was to capitalize industrial companies to stimulate economic growth. The companies agreed to provide
one lira for every two lire raised from the private sector. All investments were secured by the government. Under this arrangement the
worthless securities of Banca di Roma were restored to their original
value and the Vatican, as the major shareholder, now boasted a fortune of $632 million.

The Banci di Roma deal draws little attention from Church historians. But it represented an important theological development
within the Roman Church. The Holy See was now involved in usury,
and usury represented one of the most grievous sins of Catholic tradition. "Usury," wrote St. Ambrose, "is whatever is added to capital." Emperor Gratian used this definition in his drafting of the
canon laws of the Church. The practice of earning interest from loans
and investments was condemned by the councils of Nicea (324), Carthage (371), Orleans (538), and Clichy (626). This ruling was
upheld by the thirty-sixth canon of the Council of Aix (789), and the
Third Council of the Lateran (1179) decreed that "usurers shall not
be admitted to communion, nor, if they die, to Christian burial; and
no priest shall accept their alms." Benedict IX condemned usurers as
heretics in his encyclical Vix Perrenit that was promulgated on
November 1, 1745. On July 29, 1836, the Holy Office issued a statement to remind Catholics that the condemnation of profits from
loans applied to the whole Church and that this fundamental principle of capitalism was anathema to all true believers.

Pius XI, in sanctioning the investment in Banca di Roma, was
making a significant break with tradition that would have ramifications for other dogmas and doctrines of the Church-ramifications
that would result in the aggiornamento (the modernization process)
of Vatican II. Prior to this dramatic departure from the rigid dictates
of canon law, the Church held that its teachings were semper eademteachings that were changeless and immutable-teachings that
bound its adherents to a certain way of life and bestowed upon them
a clearly defined Catholic character. But with the creation of the Special Administration of the Holy See, something remarkable happened. The changeless changed. A practice that had been condemned
as the "most grievous manifestation of wanton greed" was now being
sanctioned by Holy Mother Church-not for the good of the
faithful, but for the cause of its own gain.

With the windfall from Banca di Roma, Nogara purchased IIR
stock in the open market so that the Vatican, by 1935, would become
the largest shareholder of state-secured businesses in the country, and
from holding these shares it would accrue millions in interest. One
such company that the Vatican came to control was Italgas, which
became the sole supplier of natural gas to many Italian cities.5
Another was the Societa Generale Immobiliare, one of Italy's oldest
construction companies.6 In time, Immobilaire would become an
international conglomerate that would serve to topple governments,
wreak financial havoc throughout the world, and embroil the Vatican
in a host of sensational scandals.

By the outbreak of World War II the Vatican acquired major interests in textiles, steel, mining, metallurgical products, fertilizer
plants, farming products, timber, ceramics, railroads, timber mills,
pasta products, and telephone and telecommunication companies.
The list of such holdings filled over seventy pages of accounting
ledgers. Several of these firms produced items that were antithetical
to Catholic teachings, including bombs, tanks, and even contraceptives.7 But what was condemned from the pulpit served to enhance
the portfolio. In 1935, when Mussolini needed armaments for the
invasion of Ethiopia, a substantial proportion of the weapons came
from a munitions plant that Nogara had purchased for the Holy See.

After gaining majority control of leading Italian companies,
Nogara handpicked trusted laymen to serve as directors of the various
boards and financial managers of the various banks. Many of these
trusted individuals were members of the "Black Nobility," members
of aristocratic families that had opposed the merger of the Papal
States with Italy for the creation of a national government under
Giuseppi Garibaldi. The black nobles supported clerical rule by papal
officials who customarily wore black cassocks. For his purposes,
Nogara turned to such patricians as Massimo Spada, Count Enrico
Gellazi, Carlo Pesenti, Antonio Rinaldi, Luigi Mennini, Luigi Gedda,
Count Paolo Blumenstil, and Count Francesco Maria Oddesso.8
Nogara also recruited friends and relatives of Archbishop Eugenio
Pacelli, including the Archbishop's brother Francisco and his
nephews Carlo, Giulio, and Marcantonio Pacelli.9 Through these
appointees from these uomini di ficucia ("men of faith"), Nogara
could engage in policy-making decisions of every company so that
they would work in tandem to achieve the same objective. To avoid
any semblance of impropriety, Nogara's own name remained absent
from the lists of officers and board members of the Vatican-owned
companies.lo

As Italy remained clutched in the grip of the Great Depression,
Nogara began to acquire vast tracts of real estate within and around
Rome. By 1935 land possessed by the Vatican measured over 40 million square feet. After the government, the pope, thanks to the success
of his new administration, became the single largest landowner in Italy.

But Nogara inevitably returned to his first love: banking. Along with the highly lucrative Banca Di Roma, he acquired for the Vatican
outright ownership of a host of medium-sized and small rural banks
in southern Italy, along with controlling interest in such major
banking firms as Banca Commerciale Italiana, Credito Italiano, Banca
Provinciola Lambarda, and Banco Ambrosiano.ll He understood the
most basic principle of capitalism, namely, that control of the flow of
revenue determines the success of economic enterprises. Through the
banks Nogara could channel the flow of cash to Vatican-owned companies and away from the concerns of all competitors. For this reason
the Roman Church managed to prosper and thrive through the lean
years of the 1930s.

Money poured into the Vatican from all corners of the countryso much cash that Nogara was faced with the problem of concealing
the enormous holdings and vast earnings from public scrutiny. The
money no longer flowed into the Special Administration for investment in private sector business or deposit in Vatican-controlled
banks. The excess revenue was now diverted from the Church's corporations, which were tax-exempt and closed to audit, into Swiss
bank accounts so that the money trail would lead to closed books and
concealed records.12 The true wealth of the Roman Church would be
known to the pope and his trusted advisors. For everyone else the
figure would remain a matter of conjecture.

But the "donation of Mussolini" and the financial wizardry of
Nogara within Italy would become only one source of the Church's
fabulous wealth. A second and equally lucrative source would come
from another Fascist dictator. Adolf Hitler, the new chancellor of
Germany, was waiting to make a deal with Archbishop Eugenio
Pacelli. And Pacelli was on his way to becoming Pope Pius XII.