1. Archive

U.S. archbishop central to Vatican scandal retires

A scandal-scarred era came to an end for the Vatican on Tuesday when Archbishop Paul Marcinkus, former head of the Vatican Bank, retired from papal service to do parish work in his home archdiocese of Chicago. Marcinkus, who comes from Cicero, Ill., acknowledged the notoriety he has received in a continuing banking scandal will remain one of "a couple of crosses" he must bear. But he said he left the Vatican voluntarily after 40 years and still had unquestioned support from Pope John Paul II.

For two decades, the 68-year-old archbishop controlled the Holy See's finances as president of the Vatican Bank, formally the Institute for Religious Works.

Few figures in the modern Roman Catholic Church have been more controversial. In 1987 the Italian authorities issued a warrant for his arrest, and had the courts not ruled that he enjoyed immunity as a Vatican employee, he probably would have joined 35 defendants now standing trial in Milan on charges of fraudulent bankruptcy.

His troubles stemmed from his involvement with Banco Ambrosiano, this country's largest private bank before it collapsed in 1982, leaving $1.3-billion in debts.

The Vatican Bank had a small stake in Ambrosiano. It later turned out most of those debts represented loans to shell companies in Panama and Luxembourg that were owned directly or indirectly by the archbishop's institute.

Matters worsened in June 1982 when Roberto Calvi, Ambrosiano's president, was found hanged under Blackfriars Bridge in London, a still-disputed death officially ruled a suicide.

The scandal set loose a stream of questions about the secrecy in which the Vatican had conducted its finances. Those doubts deepened in 1984 when the institute paid nearly $250-million to Ambrosiano's creditors in what the Holy See called a goodwill gesture.

It was definitely not an admission of culpability, the Vatican said, and Marcinkus says he personally felt the payment should not have been made. To this day he insists that he knew nothing of the complicated affairs of Calvi, who some called "God's banker" because of his Vatican connections.

But the archbishop, who has been the governor of Vatican City since last year, concedes that the scandal still dogs both him and the pope for having stood by him.

"I have no doubt," he told Reuter, "that I will be remembered as the villain in the Calvi affair."

One result of the controversy was an overhaul of Vatican Bank operations. A commission of cardinals supervises it, but daily management has passed from clerical hands to a board of five lay professionals and a recently appointed director general, an Italian banker. The presumption is that experts will avoid the indiscretions that muddied the church's reputation.

Although the bank's financial arrangements are technically separate from the Vatican's day-to-day operations, the scandal is believed to have worsened stubborn budget deficits that materialized in the 1980s.

Most of each year's deficit is covered by "Peter's Pence," a collection from the Catholic faithful that goes to the pope's personal use. But since 1982 public contributions have dropped.

As a consequence, the Vatican has begun to leave vacancies unfilled, forgo salary increases and watch expenses more closely.

The economizing has paid off, according to the Vatican, which reported this month that the 1989 deficit was $23-million less than had been forecast. Even so, it came to nearly $55-million, and officials warn that unless similar savings are achieved the 1990 deficit will reach a record $86-million.