A Moral Duty

The Vatican settles a debt

When it collapsed in 1982, Milan's Banco Ambrosiano left behind a $1.3 billion missing-funds scandal and a stigma on the Roman Catholic Church.

Last week, after nearly two years of intense negotiation, Ambrosiano's creditors quietly circulated a 161-page agreement that called for the Vatican to pay them $244 million in recognition of its "moral involvement" in the bank failure. According to one church official, the settlement will mean that the Vatican's accountability in the matter "will finally be completely resolved."

The Holy See was linked to Banco Ambrosiano through the Institute for Religious Works, the agency that conducts financial affairs for the Vatican. The Institute owns several companies that had received loans from Banco Ambrosiano that were part of the missing $1.3 billion.

Moreover, Archbishop Paul Marcinkus, the institute's president, was a close business associate of Roberto Calvi's, Ambrosiano's president, who was found hanged from London's Blackfriars Bridge shortly before the bank failed.

In arriving at a settlement with Ambrosiano's 120 bank creditors, the Vatican negotiated a clause stating that the payment was being made solely because of moral considerations. The church has always insisted that it has no legal or financial responsibility for the Ambrosiano losses.

The $244 million the Vatican will pay represents about half of its cash and readily marketable assets and could put a severe strain on its resources. To raise funds for the settlement, which is due by June 30, the church recently sold its controlling interest in Vianini, one of Italy's largest construction companies, for an estimated $35 million. The Vatican also has borrowed heavily from London banks and may have to sell many of its foreign financial and real estate holdings to come up with the rest of the money.