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I read an article years ago about the Vatican City going bankrupt and subsequently being bailed out by the CEO of a large sneaker company (Nike, Adidas or Reebok, etc. - I can't remember which). I recall this happened in the 1980's. Is this true, and if so what actually happend?

EDIT:

I've dug up some articles that indicate that the Vatican was indeed impoverished, but no articles indicating an insolvency or bankruptcy.

Here's an article from 1991 that implies a potential looming bankruptcy: POPE ASKS CATHOLICS FOR FINANCIAL BAILOUT, Date: April 15, 1991, Pittsburgh Post-Gazette

Here's another article from the Youngstown Vindicator dated August 13th, 1979, entitled "Funerals and Conclaves throw Vatican More Deeply into Debt", which states "... the most serious problem with the Vatican is ... poverty. The Vatican does not have enough money to meet its expenses."

If indeed the Vatican was in financial hardship as far back as 1979 through 1991, it stands to reason that there was a period of some insolvency or debt restructuring. I remember this being a "big deal" at the time, so I'm somewhat surprised that there are no references to it.

EDIT:

It seems I have confused the Vatican City with the Vatican Bank.

Here's a quote from the Wikipedia article Institute for Works of Religion (the Vatican Bank):

The [Vatican Bank] was involved in a major political and financial scandal in the 1980s, concerning the 1982 $3.5 billion collapse of Banco Ambrosiano, of which it was a major shareholder. The head of IOR from 1971 to 1989, Archbishop Paul Marcinkus, was under consideration for indictment in 1982 in Italy as an accessory of the bankruptcy; however, he was never brought to trial due to the Italian courts' ruling that the priest, being a high-ranking prelate of the Vatican, had diplomatic immunity from prosecution.

So for the purpose of this question, let's take it that the "Vatican" went through financial catastrophe. The question then becomes: Was the Vatican Bank bailed out by the CEO of a large sneaker company (or other such philanthropist)?

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    That's essentially the plot of Godfather III – Chris Cudmore May 12 '11 at 16:03
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    Considering the vast amounts of assets the Vatican owns, it sounds a bit far-fetched. – Zano Jun 17 '11 at 23:29
  • Vatican has many assets but they are not exactly liquid. I think many of Vatican assets are solid as a rock, I can't imagine anyone buying vatican city. But they could possibly consider telling the Pope to get a real job. – Craig Jul 14 '11 at 3:09
6

The Vatican Bank scandal is the subject of the 2015 book God's Bankers, from which this answer is derived. In the 1970s the bank was hijacked by, no joke, a Masonic conspiracy called P2, due in part to the unscrupulous attitude of the bank's Italian-American operator, Archbishop Paul Marcinkus. The bank became so bogged down in secret deals and scandals that at one point the Vatican announced, for the first time in its history, that it was $20 million in debt.1 One of the P2 conspirators had himself kidnapped to avoid investigation, and three Italian police were killed while trying to uncover the conspiracy, including one who was shot in broad daylight after finishing breakfast in a café.2 However, Mussolini had given the Vatican special legal protection and massive tax exemptions, so Italian police had no authority to audit its records at the time.3

In 1982, Marcinkus tried to limit exposure to P2's failing offshore schemes. P2's financial boss Roberto Calvi sought funding from Opus Dei and Kuwaiti oil barons before he suddenly disappeared.4 His body was found hanging from a bridge in London, in a suspected murder (charges were dropped in 2009). The Italians were able to round up all the non-Vatican conspirators, one of whom was poisoned with cyanide in prison. Marcinkus was outside Italian jurisdiction and was never arrested or defrocked. Instead, in 1990 he was reassigned as the prelate of a retirement community in Arizona, where he lived in anonymity and died in 2006.

The massive losses at the Vatican Bank were paid for in a damaging settlement. The Vatican sold stock and real estate, borrowed from various financial institutions, and made an agreement with the Italian government. Italy ceased subsidizing priests, disestablished the Church, and legalized the sale of pornography within the city limits of Rome.5 In return, the state placed a 0.8% religious income tax on Italians which was funneled back to the Church. The bank and church regained profitability not through a windfall from an angel investor, but through a difficult and slow process of cleaning out shady accounts and making its books transparent, which was completed in the papacies of Popes Benedict and Francis.6

Neither the Vatican itself nor its banking arm ever approached bankruptcy, and it was bailed out by Peter's Pence donations and public funding rather than any particular corporation, but it is hard not to conclude that The Godfather Part III actually understated the real situation of 1982.

Footnotes -- derived entirely from God's Bankers, as explained above
1 Theodora Luriealso, “$20 Million in Debt, Says the Vatican in Its First-Ever Public Disclosure,” The Globe and Mail (Canada), November 10, 1979
2 Luigi DiFonzo, St. Peter's Banker: Michele Sindona (1983), 241.
3 Although the Italians attempted to prosecute Marcinkus from within the Vatican at one point, after several failed appeals in Italian courts the Vatican referred the matter to its own court, which naturally treated itself as a sovereign state and refused extradition. “Vatican Court Reportedly Rejects Extradition of Marcinkus,” Associated Press, International, Turin, P.M. cycle, June 19, 1987.
4 Rupert Cornwell, God's Banker: An Account of the Life and Death of Roberto Calvi (1983)
5 Henry Kamm, “Italy Abolishes State Religion in Vatican Pact,” The New York Times, February 19, 1984.
6 The author of God's Bankers is extremely dissatisfied with Pope Benedict, but he does offer a source: Richard Owen, “Benedict Eager to Modernise Arcane World of Vatican Bank: Averse to Inefficiency, the Pope Is Forming His Own Team to Control Church Finances,” The Times (London), September 18, 2006.

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    "the Vatican obtained special legal protection and massive tax exemptions from Mussolini". Tricky to do in the 70s, especially since Catholics are forbidden from communing with the dead. – DJClayworth Mar 29 '16 at 21:23
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    Interesting answer but it could do with indicating some original sources for some of these points I.e. What the book references – user568458 Mar 29 '16 at 21:23
  • This might be the most fascinating read I've had in a long time. As suggested, the answer would certainly be improved by including some of the references (just citing them as the book does is fine), or some apt quotes. Thanks for this, Avery! – Brian M. Hunt Mar 30 '16 at 11:21
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    Okay, by popular demand I added some references :) – Avery Mar 30 '16 at 19:31

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