It’s that time of year when the nativity paintings in Europe’s churches and museums get their month in the glow of fairy lights. Printed on Christmas cards, these religious masterpieces might make us pause and think for a moment about their serious themes of life, death, change, hope – and loss.

One of the most moving of all such scenes of reverence for a newborn child is about to mark its 50th year in limbo. Michelangelo Merisi da Caravaggio’s Nativity With Saints Lawrence and Francis was painted in Palermo, capital of Sicily, in 1609 and stolen 360 years later. It hasn’t been seen since, at least not by any honest citizen. Yet as the anniversary of its disappearance approaches, it may be about to resurface.

Caravaggio landed in Sicily when he was on the run, after killing a man in Rome and getting into another scrap on Malta. Given that his life was a negroni cocktail of high art and street crime, if he had lived in a different century Caravaggio could easily have been one of the criminals who broke into the Oratory of San Lorenzo in Palermo on 17 October 1969. In the depths of a stormy night, they proceeded to cut the canvas of his Nativity With Saints Lawrence and Francis from its place in the stucco-laden altar wall.

How long would it take with a Stanley knife? “You’d need two people with a ladder – you’d do it in an hour,” says Adam Lowe who, with his studio Factum Arte, created the hi-tech replica of the vanished Nativity that is now installed in the Oratory.

Missing masterpiece … the Oratory of San Lorenzo. Photograph: Ufficio Stampa/ANSA

Bernardo Tortorici di Raffadali, president of Friends of Sicilian Museums, was instrumental in commissioning Lowe’s replica and has taken a lead in restoring the long-neglected Oratory. He disagrees. “To steal that painting, which is three by two metres, between all of Serpotta’s stucco, you had to plan it and study. The cut didn’t leave an inch of paint, so it is perfect. It seems to me a very professional work, and if it is professional, it has been studied, and must have been commissioned.”

There the sad story might end. No one has seen the Palermo Nativity since 1969. But earlier this year, Rosy Bindi, president of Italy’s parliamentary Antimafia Commission, announced a major breakthrough in the case. New testimony from some inside the Sicilian mafia has led investigators to believe the Nativity can be recovered, and soon. They have followed leads to Switzerland and – it emerged in the autumn – to eastern Europe. But are they on a wild goose chase?

If the Nativity came back to Palermo, says Tortorici di Raffadali, it would be “a kind of miracle”. He and others who have thought long and hard about this case are deeply sceptical about this year’s widely reported breakthrough. “It’s bullshit,” says art detective Charles Hill, whose exploits include recovering The Scream after it was stolen in 1994 and who has spent years trying to find the Nativity.

The problem with the evidence of repentant mafia members is how to tell the truth from self-serving lies

To understand their scepticism, we must enter the shadowy world of Cosa Nostra, the criminal organisation Sicily has been synonymous with since the 19th century. Though for decades it has been in crisis, for more than a century it held huge power. It also apparently took Caravaggio’s painting. For the first 24 years of the Nativity’s disappearance, there was no clue to its fate. Then members of Cosa Nostra started talking about it. They haven’t stopped since.

The Nativity’s strange afterlife as a criminal conversation piece began when one of Italy’s bravest prosecutors, Giovanni Falcone, sat face to face with a pentito, a member of Cosa Nostra who decided to turn against the organisation. Falcone trusted Francesco Marino Mannoia as a witness. He was one of the key pentiti whose testimony led to the Sicilian mafia’s near collapse. He also claimed to be one of the hoods who stole Caravaggio’s Nativity on the orders of a mafia boss.

By the time Mannoia said this in a courtroom in 1993, Falcone was dead, killed by a bomb outside Palermo. Yet his undermining of Cosa Nostra has led to the hopefully terminal decline of Sicily’s dark alternative state. Today, mainland mafia like the Camorra in Naples and Calabria’s ’Ndràngheta are more powerful. “Cosa Nostra is in the weakest state in its history,” says John Dickie, professor of Italian history at University College London, whose books on Italy’s criminal networks include Cosa Nostra and Mafia Republic. In the 30 years of its disarray, one witness after another has mentioned the magic name Caravaggio. It’s a charm with which pentiti are guaranteed to get judges, politicians and the media to prick up their ears. Stolen works of art, says Hill, are “talismanic” for gangsters. The name Caravaggio has become a kind of touchstone for repentant mafiosi.

Courtroom testimony … Francesco Marino Mannoia. Photograph: Mondadori via Getty Images

The latest pentito to tell a story about Caravaggio’s Nativity is Gaetano Grado. His testimony has made the Antimafia Commission optimistic about finding the Nativity, or at least parts of it. He claims not only that he helped steal the painting but that it came into the hands of the mafia boss Gaetano Badalamenti, who took it to an art dealer in Switzerland. To Badalamenti’s amazement, the dealer wept to see it, then suggested they cut it into pieces in order to sell them discreetly.

The problem with pentito evidence is how to tell the truth from self-serving lies. “You don’t just believe a pentito who shoots his mouth off,” warns Hill. It is a subtle game, insists Dickie. The formidable secret rules of Cosa Nostra place a high value on truth. “There’s a rule in Cosa Nostra that you’ve got to tell the truth to your boss and other mafiosi. Lying is a tense business in the mafia.”

What’s certain is that not all the stories told by pentiti can be reliable. In order to believe Grado, the Italian police have to disbelieve previous witness statements that Caravaggio’s Nativity no longer exists in any recognisable form. Mannoia, the first to speak of it, said he and his colleagues had wrecked it by cutting it from its frame. Another pentito, Gaspare Spatuzza, claimed a Cosa Nostra boss had told him that Caravaggio’s Nativity had been stashed in a barn where it was “ruined, eaten by rats and hogs and burned”.

Ruthless … Mafia don Gaetano Baldalamenti. Photograph: Bettmann Archive

Who wants to believe this lovely painting is lost for ever? Even in reproductions it is touching. To create a respectful copy – he calls it a “performance” – Lowe and his team photoshopped the 1968 colour transparency, painted on that, then digitally manipulated it again, repeating the process until they had something that looks alive. “I think we will be significantly wrong in some areas and partially right in others.”

Yet no reproduction can replace a lost Caravaggio. Even though Tortorici di Raffadali doubts the new evidence – Grado describes the Oratory interior as full of paintings, when it only ever had this one big canvas – he’s delighted that “now they start to believe that Caravaggio is still alive, somewhere”. Hill thinks “it’s likely to be a cadaver of a painting but I believe it still exists”.

According to Hill’s investigations, which involve talking to informants, the Nativity is still in Sicily. He operates on the theory that gangsters use stolen art as collateral in making drug deals and ultimately, perhaps, see it as a bargaining chip with the law. This theory got a boost when two Van Goghs turned up in a Camorra boss’s house in 2016. Hill thinks the painting may surface when the last Cosa Nostra boss is finally caught. “I suspect the man who has the final say on this is the man who’s still on the run, Diabolik.” That’s the nickname of fugitive mafioso Matteo Messina Denaro.

How it could look … the recreated work in Oratorio di San Lorenzo. Photograph: Reda & Co/UIG via Getty

Personally I can’t help wondering why, in all its defeats since Falcone took it on, Cosa Nostra wouldn’t have already used the Nativity as a bargaining chip. Perhaps that is evidence in favour of the theory that they sold or traded it long ago, or even Tortorici di Raffadal’s belief that it must have been taken by professional art thieves with the mafia only marginally involved.

Dickie is a student of Cosa Nostra, not art crime, so he has no personal theory to vindicate. He says the two pentiti who claimed the Nativity has been destroyed are serious witnesses: “Mannoia and Spatuzza are considered reliable.” The new witness is a lot less established as a source. Moreover, “if you want to spin a tale and you are a mafia witness, Badalamenti might be a good one to pick”.

Badalamenti, the man who’s said to have taken a Caravaggio to a Swiss art expert, died in prison in the US in 2004. He used his power base near Palermo airport to expand into the US and play a leading role in Cosa Nostra’s conquest of the transatlantic heroin trade. He was a brutal man. A local thorn in his flesh was a young socialist called Giuseppe Impastato who campaigned courageously in the 1970s against what was still an all-powerful force in Sicily. Badalementi had him tortured, tied to a railway track and blown up.

“I’ve not got a lot of faith in Rosy Bindi as the head of the Antimafia Commission,” says Dickie. “Put it this way: they’re not experts at evaluating the evidence of mafia turncoats.”

Whatever the truth, Caravaggio has become entangled with the violence and mystery of modern Italy’s organised criminal underworld. In October, the Vatican staged a conference about the missing Nativity. It was dedicated to the memory of Father Pino Puglisi, murdered by Cosa Nostra in 1993. The man who confessed to killing him is the very same Gaspare Spatuzza who says Caravaggio’s Nativity was eaten by rats and hogs.