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After Micheal becomes head of the Family in The Godfather, right after Tom was removed from consigliere, Micheal says that Carlo would be the right hand man in his business in Nevada. Vito also says he is happy for Carlo.
Now my question. if Don Vito is smart enough to figure out it was Barzini all along then he would have also known that Carlo is the one who lured out Santino out of the house so that Barzini's henchmen can murder Santino.
My question is did Vito know this and ignore it?
It's not explicitly stated either in the movie or the novel.
Perhaps this extract is telling though...
“You fingered Sonny for the Barzini people,” Michael said, his voice flat. “That little farce you played out with my sister, did Barzini kid you that would fool a Corleone?”
The Godfather - Mario Puzo
Vito had never trusted Carlo but he was well aware that "keeping your enemies closer" is a sound strategy...and that..
“Revenge is a dish that tastes best when it is cold”
He would have been willing to put his desire for immediate revenge aside until such time as the Family was more secure and could take it's revenge en masse.
So, there is no direct evidence either way but Don Vito was a very smart man.
I've asked myself the question and while there is no direct evidence, upon reflection I vote yes, because all the circumstantial and psychological evidence points to yes.
There is, first of all, the extract cited by Paulie_D, where Michael insinuates that his father had (or ought to have) known:
“You fingered Sonny for the Barzini people,” Michael said, his voice flat. “That little farce you played out with my sister, did Barzini kid you that would fool a Corleone?”
Second, again as Paulie_D says, Vito had never trusted Carlo, but knew he had to play his mistrust smart. Carlo was a small-time petty criminal, so initially he had hoped to keep Carlo on the fringes of the family, just enough so that his daughter could live comfortably and stay in the family orbit whenever she'd need him. Yet he refused to intervene in Carlo's physical abuse of Connie not because he was unaware or didn't care but because he was fiercely aware of the dangers of intervening between a husband and a wife (something Sonny never understood, so much the worse for his life).
This same cunning and wisdom must surely have shown elsewhere: if he had wanted Carlo distant, why did he not seem to make any attempt to stop Michael from making Carlo consigliere? The simplest explanation in my mind is that he was aware (and approved) of the Machiavellian strategy behind this move. (And by the way, it is a solid testament to Carlo's credulity - whether from stupidity of breeding or rudeness of education or both - that he did not see anything suspicious in this falsely magnanimous gesture on the part of men whose previous actions had indicated clear and unambiguous contempt for him. It's also proof of Vito's wisdom in mistrusting Carlo not only for his bad character but also because frankly Carlo is a moron: unreliable on every front.)
Third, as soon as Vito was aware of Barzini's ploy, he put his confidants - Michael and Tom - on high alert. They had the means, the smarts and the motive to gather and connect all the pieces.
TL;DR: it would be extremely surprising if something like his son-in-law's involvement at the behest of his known mortal enemy in the murder of his eldest son could slip past such a man as Don Vito Corleone.
