God's Banker by Rupert Cornwell Page A

in 1975. But by then, his basic design had been realized. Not only was Banco Ambrosiano an orthodox commercial bank, with 1,800 billion lire of deposits, but in practice a merchant bank as well—whatever the Italian banking laws might say.
    Not until 1978 was the Bank of Italy to expose, in an outstandingly perceptive report, the most questionable side to some of those dealings in Toro and Credito Varesino. But Calvi's methods were already attracting criticism. Cesare Merzagora, head of Assicurazioni Generali, Italy's biggest insurance company, and something of a patriarch himself of Italian finance, wrote to the Bank of Italy complaining of Calvi and the unsatisfactory nature of the Pacchetti affair. Ambrosiano, he pointedly observed, had the reputation until recently of being well-run. Guido Carli, the Governor of the central bank, also publicly criticized the inadequacies of the Milan Market. But Sindona's generosities to the politicians had helped ensure that they were in no hurry to strengthen its rules.
    In fact, the Bank of Italy did carry out two earlier inspections of Ambrosiano, in 1971 and 1973, proof that it already had its misgivings about Calvi. But the smokescreen proved too thick to penetrate, and nothing came of them. Meanwhile events at home and abroad were making Calvi's dubious activities a less pressing concern. For a series of upheavals in the international monetary system coincided with the beginning of the end for Michele Sindona.
    The Sicilian had wasted no time in using the $40 million received from Calvi for Pacchetti. That same 1972, he bought control of Franklin National, the twentieth largest American bank. Franklin was to be used as the platform for a speculative extravaganza, made all the easier by the then liquid state of international capital markets. The
    Vietnam war was at its height, and thousands of millions of dollars were leaving America, as the Nixon administration, under its much- criticized policy of "benign neglect", countenanced a succession of payments deficits.
    Sindona, and his top foreign exchange specialist Carlo Bordoni, thus could borrow money to speculate on everything: from lire, dollars and Deutschmarks to gold, silver and commodities of many kinds. As far as the lira was concerned, Sindona speculated on its decline. Alas, however, it was the dollar which weakened, devalued by ten per cent in February 1973, and undermined further by Middle East war and the sharp rise in the price of oil which followed. The mark, which Sindona was expecting to fall, instead rose almost without interruption. As his losses accumulated, he was forced to resort to ever riskier expedients to recover them. Payments to the politicians in Italy multiplied; the Christian Democrats admitted receiving $3 million from him, but the true figure probably was considerably higher. During this period too the shadow of the Mafia lengthened over his affairs.
    But both Sindona and Calvi suffered another misfortune at about that time: the appointment as Treasury Minister of the redoubtable and uncompromising Ugo La Malfa.
    La Malfa was one of the founders of the postwar Italian republic; by background and instinct he was a part of that "lay" establishment whose financial embodiments were the Banca Commerciale and bankers such as Enrico Cuccia, Sindona's great foe. Like both of them, La Malfa was Sicilian by birth; but despite, or perhaps because of that, his lifelong ambition was to haul Italy northwards to the modern mainstream of Western Europe, to let daylight into the confessional booth.
    The story of Roberto Calvi would demonstrate how hard that task would be. But until his death in 1979, the name of La Malfa was synonymous with an intellectual honesty and determination unusual in Italy. In that summer of 1973 he lost no time in proving where his sympathies lay. Calvi, Sindona and the Bonomis he branded as golpisti della Borsa, or "coup-makers of the stock market". More important, he raised interest rates,