There is No Business Like Vatican Business

8/3/2019 There is No Business Like Vatican Business

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There is No Business LikeVatican BusinessChapter VIII by The Vatican Empire Nino

Lo Bello

THE TALE OF the eel that one day left its

home in Lake Bracciano, some fifty milesoutside Rome, and swam all the way toVatican City to make an unscheduled"appearance" underneath the Pope's windowhas every earmark of a fish storyand yet it

happened.The eel, in swimming around the bottom ofthe lake, apparently slithered into a cementwater pipe. At a point forty-six miles fromwhere the fish started, the main forked

off in two directionsone way went toRome, and the other to Vatican City. Bearingto the right, the eel took the way that led tothe Vatican. After passing anotherunderground junction, the eel slipped into a

drain and managed to get itself stuck inside


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one of the two famed fountains in St. Peter'sSquare, just below the papal chambers.

The eel was blocking off the fountain's water.But the irreverent creature would not havemade its mark on Vatican history if it hadn'tbeen for Pope Pius XII, who had just finishedshaving when he glanced out the window

and noticed to his bewilderment that therewas no water in the fountain. At breakfast hecommented to his housekeeper on how odd itwas that there was water gushing from the farfountain but not from "our fountain."

Sister Pasqualina picked up the phone andcalled the fire department. The firemenarrived, as did some newspapermen,and when the fountain's innards wereexamined, the eel was found. When it was

removed from the tiny pipe in which it waslodged, the fountain came to life again. Theeel was carried away in a pail.A few days later, a newspaper reporter askedwhat had become of the eel. Since the Vatican

ignores all such questions, cynical Romans


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provided their own answer. The Vatican, theyclaimed, had taken the eel to one of Rome's

many outdoor fishmarkets, and sold itwhich, they said, put the Pope in the fishbusiness as well as every other.What actually happened to the aquaticintruder is, of course, not known. But the

story does indicate what Italian skeptics thinkabout the Vatican and its business interests.According to these cynics, the Vatican isinvolved in so many business enterprises thateven the selling of fish would not be beneath

its dignity. As far as anyone knows for sure,the Vatican is not presently in competitionwith Rome's outdoor fishmongers. But manyRomans are inclined to believe some of theVatican's financial operations do have a fishy

odor about them.So widespread and complex are the Vatican'smoneymaking enterprises, that it is almostimpossible to get a clear picture of all ofthem.


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In the last chapter we described Vaticanparticipation in the building and construction

industry through the Societ GeneraleImmobiliare. In this chapter we will try totrace the Vatican's participation inmanufacturing, energy, communications,banking, insurance, and other fields. The

reader is asked to take a deep breath beforeentering the maze.There is hardly a sector of Italy's economy inwhich the Vatican's "men of trust" are notrepresenting the Church's interests. Almost all

of these men hold high positions incompanies in which the Church is financiallyinvolved.They hold their responsible posts year in andyear out, sometimes on the basis of the

percentage of profit that the Holy See realizeson its investment.For many years, Bernardino Nogara servedon the board of directors of the MontecatiniCompany (now Montecatini Edison). Let us

take a look at this company. One of the


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largest corporations in Italy, and indeed, inthe world, it deals in mining and metallurgical

products, fertilizers, synthetic resins, textilefibers, and pharmaceuticals as well as electricpowerand it is bound to the Vatican withhoops of steel. The extent of Vaticanparticipation in this major corporation is not

known; probably the Vatican does not have amajority holding, but its interest is substantialindeed. Since the death of Nogara, severalVatican watchdogs have replaced him on thecompany's board and take part in all the

important decisions, such as that in 1966to merge Montecatini and the Edison

Company. For that year of the mergerMontecatini Edison reported total salesof $683.9 million and a net profit of $62.6

million. The 1967 report and balance sheetshowed substantial boosts in nearly all sectorsof the company's activities, with total saleshaving jumped to $854 million and the netprofit to $66.1 million. Montecatini's

investments in other companies amount to


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over $942 million, its real estate holdings tobetter than $22 million, and its industrial

plants to approximately $1.3 billion.Montecatini Edison has a number of foreignassociate companies, all of which are doingwell. The Novamont Corporation at Neal,West Virginia, is doubling its production

capacity to take advantage of the expandingpolypropylene market in the United States. InHolland, the Compagnie Neerlandaise deL'Azote recently modernized its plant atSluiskil and increased its daily production to

one thousand tons of ammonia and twothousand tons of nitrogenous fertilizers; italso began construction of a new plant thatwill produce six hundred tons of urea a day.In Spain, Paular, S.A., in which Montecatini

Edison has a joint holding, completed a newfactory at Puertollano for the manufacture ofpolypropylene and polypropylene products.The Madras Aluminum Company ofIndia expects to increase its production of

alumina to fifty thousand tons a year and that


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of aluminum to twenty-five thousand tons ayear. The continually expanding Brazilian

Heliogas group recently acquired 140,000new users and has increased its annual salesof liquid gas to about one hundred sixtythousand tons. And Panedile Argentinaduring 1967 brought its work on the damming

of the Rio Hondo and the construction of ahydroelectric power station at Ullun tocompletion.In Italy, Montecatini Edison owns or controlsnineteen companies. These include Societa

Orobia, Mineraria Prealpina, Miniere di Ravi,Sorap-Societa Raffinazione Petroli, MianaSerraglia, Ascona, Clio, Fortuna, Hermes,Immobiliare Capricorno, Melide, Parnaso,Ribolla, Sant-Agostino and Societa Mineraria

Presolana, all of Milan; and Cieli and SocietaImprese Elettriche Scrivia, both of Genoa;Societa Emiliana di Esercizi Elettrici ofParma; and Resia of Casoria.Now in its second century of existence,

Italcementi which came under Vatican


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control after the war and is run by papal"agent" Carlo Pesentiaccounts for 32

percent of the total cement production ofItaly; it is the world's fifth largest producer ofcement and the second largest in Europe. In1967, Italcementi, which employs over 6,500workers, reported a net profit of $5.5 million,

and it produced more than twenty-six milliontons. The company, which has itsheadquarters in Bergamo, has a capital of$51.2 million. Because of a crisis in Italy'sbuilding industry in the last few years,

Italcementi's profits had somewhat decreased(they were over $4.2 million in 1965, and notquite $4 million in 1966). The company hadtaken the decrease more or less in its stride,and according to Massimo Spada (speaking

for the board of directors), expects to show upeven stronger in 1969 and 1970 whenconstruction picks up again. Thus,Italcementi recently built and put intooperation a new cement plant near Brescia.

The plant, which covers an area of over two


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million square feet, produces six hundredthousand tons of cement a year. Much of this

is a new white cement known asSupercemento Italbianco which is quickdrying and highly resistant to breakage.The SNIA-Viscosa Company of Milan,which produces more than 70 percent of

Italy's artificial and synthetic textile fibers, isknown to be maneuvered by Vaticanfinanciers.It is not owned by the Vatican. It is, however,tied to the CISA-Viscosa Company, which

produces viscose fibers and rayon, and tothe Saici Company, which manufacturescelluloseand both of these companies areowned by the Vatican. Also, SNIA-Viscosaholds considerable stock in a cotton plant,

Cotonificio Veneziano, which is a Vatican-controlled company. SNIA-Viscosa, whichhas a capital of $89.6 million, has among itsshareholders the British textile groupCourtaulds, and it owns two profitable

textile companies in Spain, two in Brazil,


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two in Mexico, and one each in India,Argentina, and Luxembourg. The Vatican is a

heavy stockholder in these foreigncompanies, and in two instances holds thecontrolling shares. For 1966, when it showeda net profit of over $9.7 million, SNIA-Viscosa declared a dividend of 130 lire

on each of its 46,703,125 shares. In 1967when profits dipped substantially to only$310,000, the company nevertheless declaredthe same dividend of 130 lire but asked itsstockholders to take into consideration the

advisability of a merger with one of severalpossible companies that would providediversificationnow perhaps the most holyof words in Vatican business strategy.One of the Vatican's biggest companies,

Manifattura Ceramica Pozzi, which makessinks, wash basins, toilet bowls, bidets, andother bathroom fixtures, has been indifficult straits during the last six years,reporting substantial losses each time. At the


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end of 1967, Pozzi came up with its smallestloss in recent years, $2 million. Adding

that to the $11.9 million that Pozzi haddropped during the previous five years, thecompany's total deficits now have reached thesum of nearly $14 million. Thus it came as nosurprise during 1968 when the Vatican sent in

one of its ace troubleshooters, Count EnricoGaleazzi, to sit in on the board of directors asvice president.With its capital listed at $36.96 million, Pozziis nevertheless on a solid footing in Italy's

economy. By diversifying into refractorymaterials, paints, plastics, and chemicals, thecompanywhich is one of the oldest inItalyis reorganizing its operation. During1967 it completed the construction of a

hygienic-sanitary fixtures plant for theHungarian government and put into

operation a new plant at Bizerte for

Tunisia.


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In addition to constructing the factories, thePozzi firm trained personnel for them. Pozzi

owns 90 percent of a company in France and13 1/3 percent of another company in Brazil,both of which have shown profits in the lasttwo years. In Milan the Pozzi company holds100 percent of the stock in the new Pozzi

Ferrandina chemical plant, which went intooperation in June 1967 with a capital of$18.1 million. With Count Galeazzi nowbringing in his know-how, Pozzi officialsexpect to get back into the black again within

a few years by escalating the $43 millionexport level of previous years.One of the most ramified, fully Vatican-owned companies is Italgas, which has itsmain office in Turin. With a capital of

almost $59.9 million, Italgas controls gascompanies in thirty-six Italian cities,including Rome, Turin, Florence, and Venice.During the fiscal year 1967-8 it supplied 679million cubic meters of home fuel to its


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customers and reported a profit of nearly $3.5million.

Trending upward for over two decades,Italgas also controls a number of companiesthat are related to the gas industry. TheCledca Company (tar), Iclo (anhydrides),

Funivie Savona San Giuseppe (iron ore

and phosphorus), Fornicoke (coke for steelmills), Pontile San Raffaele (coke),

Cokitalia (distillates), Societa Acque

Potabili di Torino (drinking water),

Carbonifera Chia-pello (real estate heating

plants), Propaganda Gas (gas stoves),Urbegas (gas appliances), and La S.p.A.

Forni ed Impianti Industriali Ingg. De

Bartolomeis di Milano (industrial

ovens). Of the last-named company, Italgas

owns only 20.29 percent of the stock.Not long ago I happened to mention to anAmerican visitor that the Vatican owned aspaghetti factory in Rome. My pun-lovingfriend immediately said, "The Vatican

is getting rich making all that dough!"


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Molini e Pastificio Pantanella, S.p.A., is afully Vatican owned company that packages

various types of pasta. As a profitablesideline, Pantanella also produces panettoneholiday cakes and an assortment of fifty-twodifferent types of cookies. Backed by assetslisted at $16.3 million, Pantanella reported a

net profit of $290,562 for 1966 but brokeeven in 1967. The company would have donebetter, according to board directorMarcantonio Pacelli, if it had not been forgovernment-imposed regulations in July

1967, which not only placed cumbersomerestrictions on the country's spaghettifactories but also controlled the price ofsoft and hard grains. But, as my friend mightsay, the Vatican is not at a loss for "grain"

(Italian slang for money), for it owns outright,controls, or influences by its substantialthough minority holdings all of the followingcompanies which, according to the mostrecent financial statements, are in the black:


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Societa Mineraria del Trasimeno (mining

capital: $3.2 million), LIstituto

Farmacologico Serona (pharmaceuticalscapital: $1.4 million), La Societa Dinamite

(dynamite and ammunitioncapital:

$624,000), La Torcitura di Vittorio Veneto

(yarncapital: $800,000), Fisac-Fabbriche

Italiane Seterie Affini Como (silkcapital:$3.4 million), Concerie Italiane Riunite di

Torino (furscapital: $4 million),

Zuccherificio di Avezzano (sugarcapital:

$1.6 million), Cartiere Burgo (paper

productscapital: $23.2 million),Industria Libraria Tipografica Editrice di

Torino (publishingcapital: $1.6 million),

and Sansoni di Firenze (publishing

capital: $1.08 million).

The following companies, with which theVatican has a financial association of eithermajor or minor degree, report a year-end lossor no profit as of this writing: SocietSanta Barbara (miningcapital: $4.8

million), Caffaro Societa per l'Industria ed


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unique by American standards, of the Italianeconomy that of the state as a rival and

competitor of private entrepreneurs.In the postwar period Italy's pell-melleconomic expansion has had, at times, towalk a tightrope. Coming out of itscatastrophic fascist cocoon, the Boot's

economy went from rags to Vespas to Fiatsthanks in no small part to the heavy

investments of the Vatican. Italy's grossnational product pole-vaulted 143 percent inthe period between 1953 and 1963 to $45.1

billion. Last year the G.N.P. reached over $66billion at constant prices and was expected bythe end of 1968 to boost itself another 5.5percent to over $70 billion. To understandhow Vatican money has benefited the Italian

economy, one must understand the structureand function of Italy's Istituto diRicostruzione Industriale. I.R.I., as it isaffectionately known, is a public lawcorporation to which the Italian government

assigns specific entrepreneurial functions.


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I.R.I. controls 130 firms, each of which is ashare company that is run by the same rules

as any private company in Italy.What makes I.R.I. unique is that it hasbrought under government domination a vastcomplex of industries and these include notonly television and radio, railroads, airlines,

and shipping, but also industries like steel,automobile manufacturing, and banking.I.R.I., which is therefore in competition withprivate industry, has over three hundredthousand people on its payroll. Its rate of

investment is equivalent to nearly $3 milliona day; its annual turnover, almost $3 billion;and the value of its industrial complex, about$12 billion.Established in 1933, after the 1929 Wall

Street crash set off a chain reaction in Europe,I.R.I. had two jobs: (1) to save the Italianbanks, which had acquired shares in Italianindustries that were in serious difficulty and,for that reason, were unable to guarantee the


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safety of their clients' deposits; (2) to put thefinances of Italy's industry in order.

It took almost five years to accomplish thesetasks. But, in the end, credit was restored, andindustry returned to life.The Italian government then took a secondlook at I.R.I. and, coming to realize that the

giant, state-controlled industrial complex hadbeen a daring financial experiment that hadsucceeded under the most difficult ofconditions, decided to make it a permanentinstitution.

For every lira received from the state, I.R.I.companies have to raise another twelve fromprivate investors. Since none of the I.R.I.companies could possibly finance itsoperations with its own capital, I.R.I. issues

bonds on the open market. To date, nearly ahalf million Italian investors have put theirmoney into I.R.I.'s issues. The biggestsingle investor has been the Vatican. Thereis no way of pinning down how much money

the Vatican's financial advisers have tossed


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into I.R.I. operations, but the areas into whichthe Vatican has plunged most heavily are now

known. Strictly for the record, let it be statedthat in no case has the Vatican managed tobecome a majority shareholder in an I.R.I.company, despite the fact that in certaincompanies it is the largest single investor. It

must be remembered, however, that since theVatican's political party (the ChristianDemocrats) has been in control of the Italiangovernment for over twenty years, themoving parts of the Italian state and its I.R.I.

operation are well lubricated by Churchmoney.Critics of I.R.I. have accused it of being oneof the main bottlenecks of Italy's economy.The criticism actually extends beyond I.R.I.

to the Italian government and to the Vaticanitself. Lack of business confidence duringthe middle sixties has held down privateinvestment. In fact, in recent years, privatecompanies have only been able to raise very

small amounts through stock issues.


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Today I.R.I. and other government enterprisesaccount for 40 percent of all Italian

investments. Private enterprise is keenlyaware of the competition. I.R.I. has longmaintained, howeverand the Vatican hasbacked it all the waythat it has never keptprivate industry from doing anything it has

wanted to, either by absorbing all availablecapital or in any other way. But often, whereprivate industry has been reluctant, I.R.I. hasnot.I.R.I. has been carrying on a flirtation with

U.S. business in recent years. Several ofAmerica's largest industrial concerns are tiedin with I.R.I. subsidiaries. The U.S. SteelCorporation holds a 50 percent share in twoI.R.I. steel plants. Armco International has a

half interest in another.Raytheon and the Vitro Corporation have

a stake in two of I.R.I.'s most calculated

ventures in electronics.


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Siderexport, an I.R.I. trading subsidiary, hasa 50 percent holding in Dalminter of New

York.The Vatican owes its current favorableposition in I.R.I. to Bernardino Nogara, whoforesaw a high return on the enormousinvestment he made in the state's industries. It

is said that Nogara was considerablystimulated by the report of the governor of theBanca d'Italia at the end of the war.The report included the words, "We havereached a turning point. There is an arduous

and fatiguing road that goes upward, andanother, flat and easy, which leads to ruin."Bewildered as Italy may have been by theextensive destruction of its factories and otherindustrial installations, Nogara's sights were

clear. Italy would have to choose the firstroad and start on reconstruction immediately.What better place to invest the Vatican's

money than the government's Finsider

steel group? Although its plants were

smouldering in ruins, Finsider gave promise


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of exceptional development once a rebuildingprogram was under way.

At the beginning of the postwar period,Finsider had an annual output of less than amillion tons of steel. Today it produces tenmillion tons a year. By contributingdecisively to making Italy self-sufficient as

far as iron and steel requirements areconcerned, Finsider has made an essentialcontribution to Italy's development, and hasbecome one of the pillars of the nation'seconomy. With over 76,000 employees, and

with an annual payroll of over $285 million,the company reports an annual profit of morethan $24.1 million.Finsider's objectives were given effective

stimulus when the European Coal and

Steel Community was set up. TheVatican and the Christian Democratic partyboth recognized the advantages to be gainedby joining this organization.By putting an end to the protectionism that

had characterized Italy's steel industry, the


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country entered into direct competition withthe biggest steelmakers in the world, and is

now the world's seventh largest steelproducer.Finsider's great strength today comes throughits ownership of subsidiary companies. Itowns, for instance, 51.6 percent of the

Italsider Company, which produces pig iron,steel ingots, hot and cold rolled products, andwelded pipes. Finsider is also a majorityshareholder in the Dalmine Company, whichspecializes in steel ingots and seamless

and welded pipes. Ninety-seven percent ofthe Terni Company stock is held by

Finsider. Terni produces steel ingots, hot andcold rolled products, castings, forgings,and drop forgings. In addition, Finsider holds

full or controlling interests in some twentyother connected or related companies.The greatest amount of Vatican money in anyI.R.I. company is probably in the AlfaRomeo automobile company (capital: $72

million). Italy's second largest producer


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of motorcars, Alfa Romeo makes aboutseventy-five thousand vehicles a year; by

1971, with the help of a new $500 millioncomplex at Naples, it hopes to be produc-110 ing more than a quarter of a million carsannually. Alfa Sud, the new plant in Italy'ssouthland, had been a point of contention

between Fiat, which controls about threefourths of the Italian car market, and I.R.I. Itpitted Fiat president Gianni Agnelli squarelyagainst I.R.I., the Italian government, theChristian Democratic party, and the Vatican,

which are jointly trying to encourage thebuilding of new industrial plants in Italy'sdepressed economic regions. Fiat termed theAlfa Sud factory "an economic error." Insteadof putting up a new auto plant at Naples,

Agnelli said, Alfa Romeo and its parents(I.R.I. and the Vatican) should join Fiat inother undertakings, such as building up anaircraft industry. The major growth phase ofthe European auto market was coming to an

end, he argued, and there would be danger of


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overproduction in the nineteen-seventies.Agnelli lost his war.

Although the Vatican's biggest I.R.I.investment may be in Alfa Romeo, aconsiderable amount of papal money isalso at work in Finmeccanica, the I.R.I.holding company that coordinates and

finances I.R.I.'s engineering activities.There are thirty-five companies inFinmeccanica. In addition, Finmeccanica hasa minority participation in thirty-two othercompanies, whose activities are ancillary;

the Vatican holds the controlling interest in afew of these.With all its affiliated companies,Finmeccanica is the biggest industrial concernin Italy, operating in almost every branch of

the engineering industryautomotive andelectrical engineering, electronics, design ofaircraft and of railway cars, of heavy machinetools and of precision instruments, of heatingequipment and of modern armaments

(especially armored vehicles and tanks).


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Aided by heavy Vatican investments, theFinmeccanica group has shown remarkable

progress since 1959, when its annualprofits began to rise from $185.6 million tothe present day figure of over $420 million(and its exports from $41.6 million a year tonearly $100 million).

Vatican money has also found its way intoFinmare, another I.R.I. holding company,which is responsible for the country's mostimportant passenger shipping lines (likethe well-known Italian Line, and the Lloyd

Triestino, Adriatica, and Tirrenia lines). Withits ancient seafaring tradition and large touristindustry, Italy has never undervalued theimportance of its ships. Accounting foralmost 70 percent of the nation's passenger

service, Finmare ships rank second in thenumber of passengers carried on theEuropean-North American run and first onthe South American route. With a capital of$28.8 million, Finmare, which has over ninety


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ships, totaling more than 700,000 tons,transports nearly two million passengers

annually and carries more than 1.9 milliontons of freight a year; the gross income isapproximately $150 million per year. TheFinmare-controlled Italian line has two ships,the 45,933-ton Raffaello and the 45,911-ton

Michelangelo, crossing the Atlantic betweenNorth America and Europe, and it is certainthat Vatican funds went into the total amountof money needed to finance the constructionof these two luxurious liners.

The extent of the Vatican's investment in andcontrol of Italy's main telephone companycannot be accurately ascertained, but it is safeto say that both are considerable and thatVatican influence has made S.T.E.T.

(Societa Finanziaria Telefonica) therespected and solid organization it is. At itslast stockholders' meeting in July 1968,S.T.E.T. closed out its books with a declarednet profit of $20 million for the second year

in a row. Having recently increased its capital


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by $16 million, S.T.E.T. today is worth $304million. With more than six million

telephones, double the number in operation in1958, S.T.E.T. today employs fifty-eightthousand persons. By 1970 it expects to haveinvested a total of $1.12 billion in newfacilities and equipment and to have increased

the number of its employees to sixty-eightthousand.S.T.E.T. has also managed to spread itselfinto other companies. It is the sole or majoritystockholder in many of these. In SIP-Societa

Italiana per l'Esercizio Telefonico(telecommunications), it holds 53 percent ofthe shares; in Societa ItalianaTelecommunicazioni Siemens, 98 percent

of the shares; in Italcable (cables and

telegrams), 60 percent of the shares; inSETA-Societa Esercizi Telefonici

Ausiliari, 99.99 percent of the shares; in

FONIT-CETRA (phonograph records),

99.99 percent of the shares; in EMSA-

Societa Immobiliare per Azione, 52 percent


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of the shares; in SAIAT-Societa Attivita

Immobiliari Ausiliarie Telefoniche, 100

percent of the shares; in CSELT-CentroStudi e Laboratori Telecommunicazioni,

100 percent of the shares; in SAGAS-

Societa per Azione Grandi Alberghi e

Stazioni Climatiche, 100 percent of the

shares; in SEATSocieta Elechin, Ufficialidegli Abbonati al Telefono, 100 percent of

the shares. The S.T.E.T. group is also a

minority stockholder in RAI

radiotelevisione Italiana (22.9

percent), Telespazio (33.33 percent), Ates-Componenti Elettronici (20 percent),

SIRTI-Societa Italiana Reti Telefoniche

Interur-bane (10 percent), GEMINA

Geomineraria Nazionale (33.33 percent),

SIEO-Societa Imprese Elettriche d'Ol-tremare (11.09 percent), and SAGAT-

Societa Azionaria Gestione Aeroporto

Torino (4.5 percent).


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The Vatican is also involved in Italianbanking. The country's three leading banks

Banca Commerciale Italiana, Credito Italiano,and the Banco di Romathough belonging tothe I.R.I. group, are closely tied to theVatican.Together with a Vatican-owned bank, the

Banco di Santo Spirito, they hold more than20 percent of all bank deposits in Italy, havefinanced 50 percent of all foreign tradetransactions, and placed two thirds of the newshare and bond issues on the Italian stock

exchange.Two years ago, the Banca CommercialeItaliana, Credito Italiano, and the Banco diRoma decided to double their capital, byissuing shares against new money, so as

to improve the ratio between their ownresources and deposits. In the case of theBanca Commerciale Italiana, this raised thecapital from $32 million to $64 million;in the case ofCredito Italiano, from $24

million to $48 million; and in the case of the


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Banco di Roma, from $20 million to $40million. In the last few years the time deposits

and clients' current accounts of these threebanks rose by hundreds of millions of dollarsto a total that surpasses $6 billion (nearly 20percent of the national total).As for the Banco di Santo Spirito, which

was founded by Pope Paul V in 1605, andwhich is one of the oldest banks in the world,its social capital is set at $12.8 million.From a 1966 total of $667 million, the bankhiked its total deposits last year to $729

million and reported a net profit for 1967 of$1.24 million, an increase of $226,000over the previous year.Although the four aforementioned banks havetheir main offices in Rome, the Vatican's real

banking strength lies in the north of Italy.Cumulatively the Vatican's northern banksparticularly in the provinces of Lombardy,Veneto, and Emiliaare in even better healththan the thriving four in the Eternal City.


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Foremost of these banks in the thigh part ofthe Boot is the Banco Ambrosiano

in Milan, which was founded in 1896 and hasa capital of $6.24 million. At the end of 1967the Banco Ambrosiano reported a net profit of$1.4 million, which was virtually the sameamount (give or take pennies) it had declared

for the preceding period, and paid a dividendof 220 lire for a total of $1,056 million onthree million shares, a repeat of the previousyear.The Banco Ambrosiano recently bought

interests in three foreign fiscal organizationsthe Banca del Gottardodi Lugano (Switzerland), the KredietbankS.A. Luxembourgeoise (Luxembourg), andInteritalia (Luxembourg).

Because the Italian parliament has not at thiswriting passed a bill to set up Italianinvestment funds (one such bill wasintroduced in 1964), the aforementionedVatican-controlled fiscal societies have been

providing a service whereby Italians can


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acquire shares of foreign mutual funds. At theend of 1967, foreign mutual funds from

Italian investors through over-the-borderholding companies totaled close to $4.5million. Now two more Vatican ownedbanking organizationsthe La Centraleholding company and the Banca Provinciale

Lombardahave joined the lucrativebusiness of purchasing shares fromforeign investment trusts in the Swiss andLuxembourg markets. In addition, the BancaProvinciale Lombarda has recently joined

with the Dutch Robeco and the GermanConcentra investment trusts to help Italiansacquire shares of foreign mutual funds. Untila common investment-fund law is passed bythe government, the foreign companies tied to

the Vatican banks and investment companieswill continue to operate profitably on theItalian market.

The Vatican's northern banking affairs have

become so intricate today that it's almost


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impossible to explore their manyramifications. In an effort to provide some

kind of clarity, we will not refer to thosebanks that have a capital of less than $80,000,and we'll divide the others into threecategories. In the first are seven large banksthat are owned outright by the Vatican: the

Banco Ambrosiano of Milan, the BancaProvinciale Lombarda, Piccolo Credito

Bergamasco, Credito Romagnolo, Banca

Cattolica del Veneto, Banco di San

Geminiano e San Prospero, and Banca San

Paolo. In the second category are thirteenbanks in which the Church holds a heavyinterest but not necessarily a controlling one:the Banca Nazionale dell'Agricoltura,

Banca di Credito e Risparmio di Roma,

Banca Popolare di Bergamo, BancaPiemonte di Torino, Banca del Fucino di

Roma, Banca Romana, Banca Torinese

Balbis e Guglielmone, Banca dei Comuni

Vesuviani, Istituto Bancario Romano,

Banca di Trento e Bolzano, Credito


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Mobiliare Fiorentino, Banca del Sud, and

Credito Commerciale di Cremona. In the

third category are sixty-two banks in which,although the Vatican interest is minimal, thatinterest is protected by one or more Vaticanagents on the board or at the policy-makinglevel; among the bigger banks in this category

are the Banca Popolare Cooperative diNovara, Credito Varesino, Credito di

Venezia e del Rio de La Plata, the Banca

Agricola Milanese, the Banca Toscana, the

Banca Popolare di Milano, the Banca

Emiliana, the Banco di Chiavari e dellaRiviera Ligure, Credito Bresciano, and the

Banca Popolare di Verona.Finally, it must be mentioned that thousandsand thousands of small rural banks spread all

over Italy are owned 100 percent either by theVatican or by the local parish church, whichsubmits to Vatican controls and regularaudits by a peripatetic Vatican financier.Many of these small banks are located in the


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south and on Italy's two major Mediterraneanislands, Sicily and Sardinia. As far as

is known, the Vatican has control of only twolarge banks in this areathe Banco diNapoli and the Banco di Sicilia.

During 1967 eight banks bought byItalmobiliare, a financial institution owned

by the Vatican's Italcementi cementcompany, merged to give life to a newIstituto Bancario Italiano (I.B.I.).

Italmobiliare, claiming reservesof close to $9 million and showing a 1967-8

profit of $642,000, is headed by CarloPesentisometimes viewed as Italy's mostknowledgeable banker, and certainly one ofthe Vatican's most trusted captains in thefield. Serving also as Director General of

Italcementi, Pesenti bought the banks forItalmobiliare one at a time over a five-yearperiod. In what some consider one of the mostbrilliant financial maneuvers in Italy'sdopoguerra economic history,


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Pesenti almost singlehandedly created theIstituto Bancario Italiano by having the

Credito di Venezia e del Rio de La Plata(which he had acquired)its capital islisted at $4.8 millionincorporate Pesenti'sother seven banksnamely, Banca TorineseBalbis e Guglielmone (capital: $2.4 million),

Banca di Credito e Risparmio di Roma(capital: $2.4 million), Istituto BancarioRomano (capital: $800,000), Banca di CreditoGenovese (capital: $1.12 million), BancaRomana (capital: $2.4 million), Credito

Mobiliare Fiorentino (capital: $1.12 million),and Banca Naef-Ferrazzi-Longhi of La Spezia(capital: $640,000). Ranking among the firsttwenty in the fist of Italian bankinginstitutions, thanks to cumulative deposits

surpassing $512 million and a capital andreserve sum of $22 million, the new I.B.I.made quite an impact for an "infant" byreporting a profit of $800,000 duringits first year of operation (1967).


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Pesenti, who has control over two otherimportant banking establishments (the Banca

Provinciale Lombarda and the CreditoCommerciale di Cremona) is serving aspresident of the newly founded bank, whileMassimo Spada takes on the duties of vicepresident. The creation of I.B.I. will be only

the first in a complex series of mergersof Vatican banks. The next merger will bethat of the Banca Provinciale Lombardaand the Credito Commerciale di Cremona;it will result in the creation of a banking

combine that will have over $1.28 billion indepositsmaking it the largest privatebanking concern in Italy and one of thelargest in all Europe, including Switzerland.Vatican banking, however, is not confined to

Italy.Funds managed by the Vatican's Prefecture ofEconomic Affairs are deposited in numerousnon-Italian banks.


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Swiss banks, unlike American banks, can actas stockbrokers; they hold large numbers of

shares belonging to clients but not in theclients' names. The Vatican, like any otherdepositor, can have a Swiss bank buy sharesin a company in the bank's name and can thusobtain control of the company in full

anonymity. The "Gnomes of Zurich"a petname pinned on Swiss banking officialsby the Britishpoint out, however, that thetotal number of shares their banks hold inU.S. companies is less than 1 percent of

America's outstanding stock. Anyspeculation about how much the Vatican mayhave silently invested in the U.S. economy, atleast at the corporation level, must take thisfigure into account.

Since Helvetian banking practices are basedon secrecy, a style to which Vaticanfinanciers are indeed no strangers, the Vaticanand I.R.I., acting as major shareholders,operate the Banque de Rome Suisse, a Swiss

offshoot of the Banco di Roma. This bank


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lists a $15.2 million capital stock; subject toSwiss laws, it keeps the names of its

depositors clad in the impenetrable armor oflegality.A significant part of the Vatican's calculateddiversification program is concerned with therarely publicized activities of its various

special credit institutes. The precisedetermination of the Vatican's stake in Italy'scredit system would require an enormousamount of time and digging. But it can becalculated that of the some 180 medium- and

long-term special credit institutions operatingin Italy, at least a third are fed by Vaticanmoney.

It should be noted that long-term loans

constitute a highly important source offinancing for expansion programs, and in thisrespect Vatican money has done much toshore up small and medium-sized businesses,which have the greatest difficulty in raising


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funds directly on the financial market, andhas served the cause of a balanced growth

of Italy's postwar economy. In thisconnection, mention should be made, albeitbriefly, of two important aspects of thisactivity: (1) the significant financial supportthe Vatican's special credit institutes have

been extending, particularly in recent years,to the process of industrialization in thedepressed southland, and (2) the considerableassistance the Vatican's credit program isproviding for the penetration of Italian

industries into foreign markets.The special credit institutes extend medium-and longterm credit. Each serves a particularsector of the economy, providing credit forindustry, for example, or for public utilities

companies or real estate companies orfarmers or motion picture producers. Some ofthese institutes operate on a national scale,while others are limited to individual regions;some extend both medium- and long-term

credit, while others specialize in medium-


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term transactions. Together with Italy's banks,the special credit institutes are the major

source of new capital, and they provide mostof the loans and the capital for the acquisitionof securities.One of the largest of these financial societiesis La Centrale.

Just what percentage the Vatican has of theequity of La Centrale is not known. It isknown, however, that La Centrale is weddedto the Pirelli rubber company, which nodoubt exercises direct controls over the

agency.Just how much influence the Vatican has onits operations has not yet been made clear,though its control is widely accepted in theItalian business community.

The area in which La Centrale has beenmost prominently engaged is that of

electric power, but since the time the Italiangovernment nationalized the powercompanies, La Centrale has successfully


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sought to shift its strength into agriculture,mining, engineering, and trade organizations,

both in Italy and abroad. Today its capitaltotals $107.3 million. La Centrale's assets are$276.8 million, of which $116.16 million areinvested in the shares of some fifty-fivecompanies and almost $60 million are out

in loans to these companies. In addition, $156million have been extended in credits to

E.N.E.L., the national electric agency of

Italy. La Centrale closed out 1967showing a net profit of over $16.5 million.

During 1967, the Vatican-controlledRomana Finanziaria Sifir, S.p.A., fused

with La Centrale and brought with it a stockcapital of $72 million. Sifir's total assets were$168 million, of which $17.6 million were

invested in the shares of thirty-six othercompanies and $22.4 million were out inloans to these organizations. Add to that the$70.4 million that have been extended incredits to E.N.E.L. and one gets a better

picture of La Centrale's new associate.


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One credit institution that is owned fully andoutright by the Vatican is the Societ

Finanziaria Industriale e Commerciale,with a capital of $480,000. Other specialcredit institutes owned partially or controlledby the Vatican are La Societa CapitolinaFinanziaria (capital: $400,000), Credito

Fondiario (capital: $16 million), SocietaMineraria del Predil (capital: $384,000), IlFinanziario Investimento Piemonte (capital:$182,800), Societa Finanziaria Italiana diMilano (capital: $400,000), Fiscambi di

Roma e di Milano (capital: $1.6 million),Efibanca-L'Ente Finanziario Interbancario(capital: $16 million), and La Sind di Milano(capital: $1.6 million).A number of insurance companies are

Vatican owned; others are merely controlledby the apostolic financiers.Two important companies that fall into theformer group are the Assicurazioni Generalidi Trieste e Venezia (capital: $23.2 million),

which turned a profit in 1967 of over $4.67


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million, and the Riunione Adriatica diSicurt (capital: $6.9 million), which

reported a profit of better than $1.27 million.Tied to the Banca Commerciale Italiana(which the Vatican controls), AssicurazioniGenerali has a large portfolio of shares in

Montecatini Edison, while Montecatini

Edison has a large portfolio of sharesin Assicurazioni Generali. Similarly, theRiunione Adriatica di Sicurt, which is tiedto the Credito Italiano bank (under Vaticancontrol), has a working relationship with

the La Centrale and Bastogi specialinvestment institutes, both of which are underVatican influence, and works closely with theVatican's Italcementi cement company.In violation of Italian laws, which prohibit

members of the country's parliament fromhaving business ties with any commercialenterprise, four senators (all ChristianDemocrats), one of whom was a ministerseveral times, are on the board of directors of

Assicurazioni Generali.


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Far from being unduly disturbed by this, thecompany and its associate Riunione

Adriatica di Sicurt have calmly conductedtheir affairs, and have done well. Overthe years, they have profited from largeinsurance contracts involving governmentindustries that deal in foreign trade, from

indemnification against damage by nuclearbombardment and losses due to foreignnationalizations and confiscations ofindustries, and from various insuranceprograms written, with close state

cooperation, for customers abroad. Over theyears, Assicurazioni Generali and RiunioneAdriatica, two companies that apparentlydo not see any ethical problems raised byhaving state officials represent their private

interests, have become the two leadinginsurance companies in Italy.Following is a list of other Italian insurancecompanies that are connected with and to theVatican; in parentheses is each company's

capital.


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La Compagnia di Roma, also known asRiassicurazioni e Partecipazioni

Assicurative (capital: $960,000);L'Unione Italiana di Riassicurazione (capital:$960,000); Assicurazioni d'ltalia (capital: $2million); Fiumeter (capital: $1.68 million);Compagnia Tirrena di Capitalizzazioni

e Assicurazioni (capital: $2.4 million);L'Unione Finanziaria Italiana (capital:$640,000); Finanziaria Tirrena (capital:$160,000); Lloyd Internazionale (capital:$800,000); Fata-Fondo Assicurativo Tra

Agricoltori (capital: $1.2 million).The foregoing details provide anuncomfortably sharp realization that theVatican and its men have indeed carved aniche for their firm in the world of big

business.This is no small accomplishment. After yearsof soulsearching,it has been decided, infallibly, that theaccumulation of money is no more


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reprehensible, no more sinful, than thecollecting of coins. True, the Vatican pays

ad perpetuum lip service to poverty. But itdoesn't practice it.The Vatican apparently does not subscribe tothe thesis that the enrichment of one mannecessarily impoverishes another. Indeed,

taken in its proper perspective, the Vaticandrive to make money has been highlybeneficial to Italy. It has spurred Italy'smaterial progress and helped the countryrecover from the battered state it found itself

in after the war. It has produced capital forinvestment.It has generated wealth from which nearlyeveryone has gained. In a free society, whichneeds concentrations of private wealth to

counterbalance the power of the state,the Vaticanwhich is no longer seekingterritorial aggrandizement has rendered aservice to the theories of capitalism andprovided impressive guidelines for those


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who believe in money and who worship at thealtar of big business. The Apostolic Palace

and Wall Street are singing a remarkablysimilar tune.Because of the secrecy of the Church'scomplex business operations, the publicimage of the Vatican still remains

ecclesiastical. The revelation of the Church asa big business often upsets people who shouldknow better. Former Rome correspondentBarrett McGurn once reported theastonishment of U.S. Secretary of Labor

James Mitchell after a visit with Pope PiusXII. McGurn interviewed Mitchellimmediately after the visit. "The Popeknew all about the International LaborOrganization," Mitchell said, surprised, "and

he was already aware that the recession in theUnited States is over. Why, we've justlearned that ourselves!"

There is No Business Like Vatican Business

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