The Octopus at the Vatican

# 6 - Credit Suisse takes a dive

April 1977 - Zurich

Ernst Kuhrmeier, director of the Credit Suisse (CS) of Chiasso, had set up Texon sixteen years earlier. After flourishing for years, it was now bringing ruin to the CS. The loss stood at around 2.5 billion Swiss francs. Kuhrmeier was summoned to Zurich before the directors of the bank. 'Close' to the CS, Texon laundered suspicious Italian funds. Texon's investments, recycled through Italian firms, had become sour. The oil crisis had created a chain reaction of bankruptcies. Kuhrmeier talked for a long while.

"I have received explicit death threats against you, my colleagues and myself. They come from people hurt by this fiasco. If the CS does not reimburse them fully. Those who have come out of the woodwork are not being fair, it is not their style. The godfathers have squeaky clean intermediaries. They present well and are smart looking. The threat must be taken seriously. It is not only the Swiss financial system which is at risk. It is your lives."

He paused, then started again.

"The public will remain convinced that you knew nothing. My close guard and myself are the only targets. We are not complaining about that. I have set up this business, I'll deal with it. You, the general directors and members of the Administrative Council, you will just be officially responsible. But not guilty.

You were aware of Texon's operations from the start. That was fourteen years ago. You kept your eyes closed. You let it happen. Year after year, you cashed in the huge profits Texon was transferring to the CS. You have encouraged, congratulated and rewarded us.

I am giving you a warning and know that I'm well informed. If you don't return the money, you are all condemned to death. It is not very Swiss-like to say that, particularly in high finance. But it's the law in the Mezzogiorno. It's impossible to sort out whom to reimburse and not reimburse. It's too untidy. One doesn't know who's who. The only solution is to pay ALL the clients. And soon. If one started to nitpick in order to save a few hundreds of millions here and there, it would just take one omission, even worth only 50,000 francs, for a contract to be arranged against you. For those not in the know, a contract is an order given by a chief mafioso to killers to take out one or several people. We have reached, you have reached an invisible, virtual barrier. Like it or not, we have entered the world of organized crime. And that world is implacable."

A leaden silence fell around the huge meeting table.

"In short? You need to monopolize your internal reserves. You need to accept the three billion bridging loan, offered by the SNB about which you are being picky. You need to accept the offer of help from our big competitors; without maneuvering or delaying any further. If you wait a day longer, and I mean one day, the withdrawals of clients, already substantial, will become a whirlwind.

And you and I, our wives and our children, will have nowhere in the world to hide. Act before tomorrow! It's a warning."

Then Kuhrmeier went quiet. Members started to whisper in small groups. Then the president thanked Kuhrmeier for his candid words and asked him to withdraw. The police escort which had brought him in, met him at the door.

The next day, the CS gave in. It committed all its reserve stock. It accepted every bit of help from the SNB and its competitors. It dealt with everything, the entire short-changed client base. All would be reimbursed, in full and quickly. The shares of the CS, which had been shot from the top to zero, bounced back.

After this, Swiss banks passed an agreement with the central bank, the SNB, that they had to know their clients. An elementary principle pompously called 'know your customer'. They also had to abstain from laundering criminal money. Such an elementary principle that one didn't know what to call it formally. 

May 1977 - Venice

Cardinal Albino Luciani, archbishop of Venice, hugged his nephew Vittorio Petri.

"What a pleasure to welcome you, what news are you bringing from Rome? You look as fit as a fiddle. You're no longer in pain?"

"No, Uncle", said Vittorio, "happy to see his smiling, simple and warm relative despite his elevated position. I am cured. Thanks to your support, to your affection."

"You would have recovered without me, don't be silly! Shall we go to the Lido, we can hire bikes? We could stop at a café."

"With pleasure. In Rome it's not easy to get out into the countryside."

Albino Luciani took off his cassock, donned shorts and a shirt. They set off to catch a vaporetto.

"What about your friend Nancy, is she getting used to life in Rome?"

"Yes, and she likes the work. We are happy to be together again."

"Can you see how the light plays on the waves? Ah, here we are. You coming?"

They pedaled towards Chioggia. At the end of the Lido, they stepped into a vaporetto. Swordfish was always skillfully prepared at the Albergo di Chioggia.

"You're still happy with your work?" asked Albino to Vittorio.

"Yes, and I am grateful that you introduced me to the IOR. I am respected and well paid; it's not about me. But the higher I go, the more I am surprised at what I see. Rome is the capital of Catholicism, but there are some pretty 'unorthodox', shady things going on there."

"Are you allowed to tell me about this?"

"I am held to confidentiality. But some transactions do surprise me. You know what I did in Switzerland and how much it cost me. I'm not going to do it again, don't worry."

"Don't tell me anything. But I got you into this, perhaps I shouldn't have. Beware of Bishop Marcinkus and of Roberto Calvi, from the Ambrosiano bank. Don't put your nose in things that could harm you. There are plenty of jobs in your field."

"Thank you."

"Long before you arrived in Italy, Michele Sindona had built a global financial empire. He worked closely with Marcinkus and Calvi. Three years ago, his empire collapsed in a fraudulent way. He escaped to the United States. The other two are still there and still powerful. Be careful now you have been promoted. Before, as a junior, you were invisible. Now, you need to take care."

On the way back, Vittorio Petri pondered that his uncle was extraordinarily simple and authentic. The more he was immersed in the Vatican's pretentious pomp, the more he admired him. That man in front, pedaling in shorts and shirt, with just a distinctive Roman collar, that man is the archbishop and cardinal of Venice. He looks as though he doesn't care. He doesn't only look like it, he really doesn't care. What a man!

Vittorio was thinking about all the things he couldn't say. The suitcases full of cash brought to the counters. Big transfers into and out of the Banco Ambrosiano. The enormous losses the IOR had nearly sustained in the Texon/CS affair.