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1982 08 09 * Time * Investigators at the Vatican * Delving Deeper

One of the biggest Italian bank scandals of modern times last week got bigger. Struggling to unravel the mystery surrounding $1.2 billion to $1.4 billion missing from Milan's Banco Ambrosiano, Italy's eleventh largest bank, and the apparent suicide in June of its president, Roberto Calvi, Italian authorities tried to serve notice on three of the top officials of the Vatican bank that they were under investigation for possible bank fraud. Among them was American-born Archbishop Paul Marcinkus, 60, the president of the bank, which is officially known as the Institute per le Opere di Religione (I.O.R.), or Institute for Religious Works. Earlier, the Vatican's top banker had served as both a papal bodyguard and aide to Pope Paul VI. The other two bank officers are Luigi Mennini, 71, the bank's managing director, and Pelligrino de Strobel, 70, the chief accountant. Though the notification did not necessarily mean that the men would be indicted, it was a great embarrassment to the Vatican.

The Holy See jealously guards its status as a sovereign state. When Italian officials sent letters to the three bankers, informing them of the investigation, the Holy See's Secretariat of State refused to take delivery of the documents. Instead, it insisted that the letters be passed through formal diplomatic channels via the Italian embassy to the Holy See. Italian officials are expected to resend the notifications this week, perhaps through the foreign ministry.

The specific focus of the probe remains a matter of speculation. But Vatican observers believe that it involves evidence of a plot, in which the deceased Calvi may have been implicated, to transfer a large amount of Banco Ambrosiano's stock outside of Italy, in secret, where Calvi could have control of it but not have "to worry about the scrutiny of Italian banking authorities. The investigation is also looking into Calvi's use of the Vatican bank in the scheme, especially Marcinkus and Mennini's agreement to issue certain "letters of patronage" for Calvi. Such letters are sometimes used by banks to attest to the financial credentials of a borrower. The Vatican bank wrote letters of patronage at Calvi's request, saying the I.O.R. had controlling interest in about a dozen Panamanian companies and in effect vouching for those companies' reliability. But Calvi had also secretly written Marcinkus that the letters would not make I.O.R. liable for any of the Panamanian companies' debts. Italian officials have said this double-dealing might constitute a fraud in itself.

The Panamanian companies were the ultimate recipients of between $1.2 billion to $1.4 billion raised in the Euromarket by Banco Ambrosiano and two of its subsidiaries. The firms, presumably under orders from Calvi, subsequently used some of the borrowed funds to buy up perhaps as much as 10% of the stock of Banco Ambrosiano. The missing funds were discovered during a special audit of the bank's books in May.

While Italian officials tried to untangle Vatican ties to Banco Ambrosiano, about 200 of the bank's European creditors gathered in London last week to salvage what they could of the loans taken out by the bank. Half of the $1.2 billion to $1.4 billion has been guaranteed by seven Italian banks, and will apparently be repaid. The other half, though, is owed to creditors by Ambrosiano's subsidiaries in Nassau and Luxembourg. But the Luxembourg affiliate has been declared in default, and operations by the Bahamian subsidiary have been suspended by banking authorities in that country. Italian government officials and foreign creditors are arguing that the Vatican bank has at least a moral responsibility to honor the entire debt, since its two top officials signed the letters of patronage.