by Larry Smith
The area between Lightbourne Lane and Brown's Boat Basin was once a collection of modest wooden homes, periodically flattened in the early part of the 20th century by one hurricane or another. But in the spring of 1982 an impressive new building rose from these ruined lots along East Bay Street.
At the time, Banco Ambrosiano's multi-million-dollar, four-storey office building overlooking the harbour (now owned by Colina Insurance) was said to be the island's biggest non-hotel investment ever. It represented an ostentatious display by one of the top players in the international financial sector - a bank with close ties to the Vatican.
Tribune reporter Athena Damianos was suitably impressed following a guided tour at the gala opening: “The wealth and power of Banco Ambrosiano of Milan – the largest private bank in Italy and parent of the Nassau bank – is strongly evident,” she wrote, describing a vast marble stairway, an impregnable security system, and luxurious penthouse apartments for visiting directors.
Back then, Banco Ambrosiano's Nassau subsidiary was led by a flamboyant Swiss banker named Pierre Siegenthaler. He was a well-known man-about-town who won international regattas on behalf of the Royal Nassau Sailing Club, where his custom-built catamaran was berthed.
When Banco Ambrosiano opened the doors of its plush new offices on East Bay Street in April, 1982, Siegenthaler joked about the lavish appointments: “We don’t have gold telephones, but the style of this organisation is to do things with taste and to do it well...We’re going to be here a long, long time.”
Banco Ambrosiano's chairman was a 62-year-old Italian named Roberto Calvi, who himself had a luxury villa at Lyford Cay. In 1982 Calvi was implicated in a massive scam involving the bank, and soon after an investigation was launched by the Italian authorities, his body was found hanging from a London bridge.
Calvi's death was one of the defining events in a complex web of intrigue that stretched from Vatican City to the Bahamas and Latin America, forcing a global crackdown on offshore finance that is still ongoing. The investigation also spawned a multitude of conspiracy theories.
At the time, the collapse of Banco Ambrosiano was described as "the gravest crisis in the history of Western banking". And the Bahamas was a key link in a global puzzle that took years to unravel.
The scandal began to unfold when Italian auditors uncovered more than a billion dollars in questionable loans made through the bank’s Bahamas subsidiary to dummy companies in Latin America that were secretly owned by the Vatican bank, which was a principal shareholder of Banco Ambrosiano.
Banco Ambrosiano's Bahamas subsidiary had obtained the money for these questionable loans from other international banks, including Deustche Bank, Bank of Brazil, ENI, European Arab Bank, and the Bank of Ireland. Also on the list were local creditors like SFE Banking, UBS Bahamas, and RoyWest.
Calvi was also said to have skimmed funds that he was laundering for the Mafia. And he was found to have bribed Italian president Bettino Craxi, who was forced to resign and became a fugitive from justice.
For political reasons, Banco Ambrosiano channeled Vatican money to the Contras in Nicaragua and to Solidarity in Poland during the 1980s. And the bank’s managers also siphoned off funds to personal shell company accounts in Switzerland, the Bahamas, Panama and other offshore havens.
In August, 1982 the Nassau subsidiary went into voluntary liquidation. And lawyer Geoffrey Johnstone, accountant Clifford Culmer and banker Jack Smith presided over one of the longest and most complex wind-ups in history, sorting through more than $230 million in claims.
Calvi was also connected to a decades-long covert operation of the Western alliance called Gladio (from the Latin for sword). Gladio was set up by the British and Americans after the Second World War as a network of clandestine cells designed to be activated in the event of a Soviet invasion of Western Europe.
Reports say Calvi helped finance the Italian secret resistance group by siphoning money from Banco Ambrosiano and using the Vatican bank to launder the funds. Whether as a result of blackmail or ideology, he funneled huge sums to a secretive Masonic lodge known as P2, which was run by one of the Italian coordinators of Gladio.
The election of the Polish cardinal, Karol Wojtyla, as Pope John Paul 11 in 1978 led the Vatican bank to send money in support of the Polish trade union, Solidarity, which eventually brought down that country’s communist regime. Much of this money was provided by the Americans as part of their Cold War campaign against the Soviet union.
And, of course, there is the decades-old rumour that Pope John Paul I - who died in 1978 after just 33 days in office - was murdered because he planned to investigate the Vatican's shady financial deals.
Calvi's death was initially ruled a suicide, but later investigations determined he was murdered to ensure he could not blackmail "politico-institutional figures and [representatives] of freemasonry, the P2 lodge, and the Vatican bank with whom he had invested substantial sums of money, some of it from Cosa Nostra and Italian public corporations".
In 2005 Italian prosecutors charged five individuals with murder, but they were acquitted three years later due to insufficient evidence. However, the court ruled that Calvi was in fact murdered.
According to the local liquidators, the Bahamian claims were mostly from legitimate banks that had deposited funds with Banco Ambrosiano in Nassau to earn better interest. The recovery effort was described as "a massive operation" requiring the co-operation of liquidators and receivers in several jurisdictions.
"In the Bahamas, the local liquidators have exhausted every effort to trace and recover all of the funds transferred through the Bahamian subsidiary and return those funds to the creditors," according to a recent statement. To date 94.5 cents in the dollar has been recovered and distributed to creditors of the Bahamas subsidiary, and the liquidation will be finalised this year.
In 2008 Italian magistrates initiated a proceeding before the Bahamas Supreme Court under the Criminal Justice (International Co-Operation) Act and obtained an Order for the examination on oath of the liquidators regarding the disappearance of the assets of the Bank and its related entities.
According to the liquidators, "no evidence was produced which would suggest that there were any funds remaining in this jurisdiction, or indeed any other funds which were not pursued by the Bahamian liquidators."
In 2010 a request for further information was made to the attorney general in Nassau, which the liquidators said amounted to a "fishing expedition" that could not succeed under Bahamian law.
The two surviving Bahamian liquidators - lawyer Sir Geoffrey Johnstone, and accountant Clifford Culmer - are both now in their 70s, and are only now nailing down a final settlement after almost 30 years work. Their partner, banker Jack Smith, died a few years ago. Colin Callender remains the group's lawyer.
"If I knew then what I know now I never would have accepted the job," Sir Geoffrey told Tough Call a few years ago. "It took a helluva lot of our time."
Even more time has elapsed since he made that comment. And while the liquidation may finally be coming to an end, it is unlikely that the mystery of Calvi's death will ever be resolved.