Masterpiece was kept in the home of notorious Sicilian, who sliced off a piece in order to make a deal with Catholic church

A Caravaggio masterpiece stolen from a Palermo church 50 years ago and listed among FBI’s “most wanted” stolen artworks, was kept in the home of a powerful mafia boss, who sliced off a piece of the canvas in order to convince the Catholic church to make a deal for its return, according to previously unseen testimony from the priest who tried to recover it.

In an video interview filmed in 2001, but locked in a drawer and now revealed exclusively to the Guardian, the parish priest of the Oratory of San Lorenzo revealed astonishing details of the October 1969 theft of Merisi da Caravaggio’s Nativity with St Francis and St Lawrence.

Monsignor Benedetto Rocco, who died in 2013, said the painting was in the home of notorious Sicilian mafia boss Gaetano Badalamenti – a claim only confirmed for the first time by investigators last year – and said he had attempted to extort the church for its return.

“A few months after [the theft], a letter arrived at my home,” Rocco explained to film director Massimo D’Anolfi, who had filmed the interview for a documentary he was working on at the time about stolen artworks. “In the letter, the thieves declared: ‘We have the painting. If you want to make a deal, you have to submit this advert in the Giornale di Sicilia [Sicily’s daily newspaper].’”

Facebook Twitter Pinterest Caravaggio’s Nativity with St Francis and St Lawrence. Photograph: Heritage Images/Getty Images

The advert was intended to be a signal to Cosa Nostra that the Church was ready to talk. Rocco told the superintendent of cultural affairs of Palermo, who then had the advert published in the newspaper. Two weeks later, the priest received a second letter – this one with an added mafiosi threat.

“The letter was accompanied by piece of the painting, a tiny piece of the canvas, which was intended to make clear to me that they really had the Caravaggio in their possession,” Rocco told his interviewer. “I went straight to the superintendent and informed him of what was happening. I left him the letter and the piece of canvas.”

“The mafia was doing with the painting what they normally do with kidnapping victims”, says D’Anolfi, who, at 45, is now an acclaimed director and will be screening the full interview next month in Palermo. “They had sent a piece of the painting just like they normally send a finger or an ear of a kidnapping victim.”

The letter requested a second advert in the Giornale di Sicilia, but this time the superintendent refused and instead reported Rocco to the police on suspicion of having organised the theft himself. Rocco was for a short period placed under investigation.

“They even fingerprinted me. Later the superintendent apologised,” he told D’Anolfi. “[He] admitted that he had made a mistake. But at that point, the damage had been done.”

The fate of the Nativity has been the subject of speculation for nearly half a century, ever since two criminals used razors to cut it from its frame in the Palermo church where it had hung for more than 350 years.

Among theories that have captured the imagination of art history enthusiasts is that the painting may have been eaten by rats after being left to rot in a barn.

Facebook Twitter Pinterest Gaetano Badalamenti. Photograph: Bettmann Archive

Rocco’s claim of the mafia’s involvement was borne out 17 years after he spoke to D’Anolfi when Italian investigators revealed in May 2018 that a turncoat, Gaetano Grado, had told them the painting had been held by Badalamenti and that a member of the boss’s crime family he had been put in touch with an art dealer in Switzerland – where the Caravaggio could now be.

But it wasn’t until after Rocco was no longer under investigation that he had corroboration of mafia involvement when a priest in Carini, 12 miles from Palermo, called him in early 1970 to say he had seen a photograph of the stolen masterpiece.

“He said that he had had a painting restored, which had been stolen shortly afterward,” Rocco claimed. “He told me that he was convinced it was the local mafia, and that he had contacted some mafiosi in order to get it back. Then he said a young man had come to see him with two photos: one, a photo of his painting; the other, the Nativity. He then pointed to his missing painting – a work by a Tuscan artist of lesser renown – and they returned it.”

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Badalamenti was the boss of nearby Cinisi and at the time one of the most powerful mafia figures in Sicily, running a $1.65bn (£1.33bn) heroin trafficking network to the US. He was arrested in 1984 under the leadership of the then US attorney in New York, Rudy Giuliani, and died in a Massachusetts hospital in 2004.

Rocco went back to the police with his new information but told his interviewer nothing had happened. “[The police] had known for years the location of the painting. It was in the province of Palermo. The Mafiosi would use it to flaunt their power,” he said.

A mafia informer, Salvatore Cancemi, had separately told prosecutors in the late 1990s that the Nativity had been put on display for meetings among the most powerful bosses in Sicily as a symbol of their prestige. The current investigation suggests that the painting could have been transferred to Switzerland after the death of Badalamenti.

The head of Italy’s anti-mafia commission, Rosy Bindi, stated last year: “We hope to find it and bring it back to its home in Palermo.”

Facebook Twitter Pinterest A recreation of the Caravaggio hangs in the Oratory of San Lorenzo. Photograph: Reda & Co/UIG via Getty Images

D’Anolfi said Rocco’s interview provided important new information on one of the most notorious art thefts of the 20th century. “Twenty years earlier, and just two years before his death, he revealed what the authorities would only disclose last year,” he said.

In the interview he tells D’Anolfi of the mafia boss’s feared crime family: “The Badalamentis have the painting. I’m sure of it.”

Rocco, who after the theft always refused to speak to journalists, disclosed more on the circumstances surrounding it. He said a few months before the theft, he received a visit from a journalist from Italian state broadcaster Rai, who wanted to interview him about the Caravaggio for a programme called The Forgotten Masterpieces. He declined the offer. “I told the journalist that if the public learned such a painting existed, then its theft was assured because there were no security measures in place for that painting.”

Rai did however obtain permission from the same Palermo superintendent who later reported Rocco to the police, to broadcast images of the Caravaggio. The priest’s warning became prophecy – mere months later, the Nativity was stolen.

The 2001 interview lay locked in a drawer until last year, when the the Sicilian association Amici dei Musei, which is promoting the restoration of the Oratory of San Lorenzo, learned that Rocco had given an interview and got in touch with D’Anolfi. It asked him to organise an exclusive screening in Palermo on the 50th anniversary of the theft.

The director said that at the time of the interview he thought the police had already investigated Rocco’s claims. “The priest said he had informed the police about all this. To be honest, I thought that the information contained in that interview was already in the possession of the authorities.

“However, in hindsight, Benedetto’s revelations look more credible now that the recent investigation has confirmed his version of the facts. Sometimes I think that if this interview came out before, maybe people would have thought he was just a crazy priest.”

The unedited interview will be shown at Palermo’s Teatro Biondo on 15 October, during a week of cultural activities supported by the association Le Vie dei Tesori featuring other stolen artworks still missing.

• This article was amended on 17 October 2019 because an earlier version transposed the first and last names of Monsignor Benedetto Rocco, and also transposed the names in the title of the painting. This has been corrected.