Originally Posted By: Turnbull
But, if Tom--who wasn't in on the muscle end of the family and was being cut out of the action--knew about Rocco's secret regime, how could Clem, who was Rocco's direct boss, not know about it?


Tom answers this: "You gave Lampone his own living, you gave him a lot of freedom. So he needs people to help him in his little empire. But everybody he recruits has to be reported to me. And I notice everybody he puts on the payroll is a little too good for that particular job, is getting a little more money than that particular exercise is worth. You picked the right man when you picked Lampone, by the way. He’s operating perfectly.”

So when Michael gave Rocco "a lot of freedom" this means that he reported to Michael directly, not to Clemenza. Clemenza wouldn't be suspicious because it was Clemenza who promised him a good reward for the killing of Paulie. My guess is that everybody thought that Rocco was a kind of bodyguard and special agent to Michael (he picked him up from the airport). But no-one except Tom who dealt with recruitments and payments could discover the formation of a new regime.

Oh, and grazie for the smilie above.