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Guarguaglini Cleared Of Accounting Charges

Jan. 26, 2013 - 02:09PM   |  
By TOM KINGTON   |   Comments
After three years of seeing his storied name tied to a scandal that clouded the end of a five-decade career in which he engineered the rise of Finmeccanica to the ranks of global defense titans, Pierfrancesco Guarguaglini has been cleared of false accounting by Italian magistrates.
After three years of seeing his storied name tied to a scandal that clouded the end of a five-decade career in which he engineered the rise of Finmeccanica to the ranks of global defense titans, Pierfrancesco Guarguaglini has been cleared of false accounting by Italian magistrates. ()
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ROME — Pierfrancesco Guarguaglini — after three years of seeing his storied name tied to a scandal that clouded the end of a five-decade career in which he engineered the rise of Finmeccanica to the ranks of global defense titans — has been cleared of false accounting by Italian magistrates.

The former chairman’s wife, Marina Grossi, who headed Finmeccanica unit Selex Sistemi Integrati, and who also was accused of corruption, has separately plea-bargained a year’s suspended sentence while maintaining her innocence.

The clearing of Guarguaglini’s name comes a year after he resigned from his post as chairman of Finmeccanica while under the shadow of a corruption probe.

Guarguaglini, who has always denied wrongdoing, was placed under investigation by a Rome magistrate following accusations leveled by Lorenzo Cola, a consultant who worked with Guarguaglini. Cola was convicted of money laundering in deals involving Finmeccanica.

After deciding Cola’s claims about Guarguaglini were unreliable, the magistrate requested last year that the investigation into Guarguaglini be dropped, a request granted by a pretrial judge in December and recently made public.

The probe helped precipitate Guarguaglini’s resignation from Finmeccanica in December 2011 as he battled with CEO Giuseppe Orsi over strategy and powers. After running the firm as CEO since 2002, Guarguaglini became chairman at the end of his mandate in April 2011, with Orsi, the former head of Finmeccanica unit AgustaWestland, stepping in as CEO. At the end of 2011, Orsi obtained powers over strategy that Guarguaglini once had.

“[The investigation] weakened me externally, although the [Mario] Monti government said it was up to me to decide what to do,” Guarguaglini said in an exclusive interview with Defense News.

“I resigned when Orsi took over the responsibility for strategy that I had held as chairman,” he added. “I could have stayed on as chairman with no powers, but I am not the type of person to sit around doing nothing, and I would have needed to accept decisions I did not agree with.”

Guarguaglini said he did not share Orsi’s decision to merge the firm’s Selex units.

“We had three Selex units with little overlap. By merging them you risked creating a large mass in which you would then lose sight of some operations that have significant strategic relevance for Finmeccanica.”

At the time, Guarguaglini was facing scrutiny over his relationship with Cola, who plea-bargained a conviction in 2011 on money laundering offenses connected to the firm Digint, in which Finmeccanica bought a controlling stake.

In the interview, Guarguaglini also explained how he came to know Cola, and how he played a key role in Finmeccanica’s $5.6 billion acquisition of DRS.

“Cola had been around Finmeccanica for a long time, I spoke to him for the first time during the Digint deal,” Guarguaglini said. “In 2007 he spoke to me about buying L-3 because I wanted to buy a U.S. firm. I said it was too big, better [to buy] DRS or Telephonics. He then came back to me and said ‘If you call [then-DRS CEO] Mark Newman, he will meet you.’

“Cola introduced me to a retired U.S. government official who then connected us to the [U.S. legal] firm Arnold & Porter and one of its senior partners, Jeffrey Smith. A&P was hired by Finmeccanica to successfully coordinate the legal aspects of the transactions.”

Italian media reports have speculated that Cola was working for the Italian security services. When asked, Guarguaglini responded, “He knew people in the services.”

Cola also plea-bargained over his role in an alleged corrupt relationship between Finmeccanica unit Selex Sistemi Integrati and Italian Air Traffic Control body ENAV, under which investigators allege politicians appointed to the ENAV board were paid to hand over contracts to Selex SI. Marina Grossi, Guarguaglini’s wife and the CEO of Selex SI, resigned over the matter, and after a probe, judges ordered her to stand trial.

She has now plea-bargained a year’s suspended sentence, but told Defense News she was not guilty.

“The affair has been split into more than five cases in which I am involved as ex-CEO of Selex SI, and I will plea-bargain on all of them. I am not guilty, but I am concerned about my health and the suffering of my family if I have to face five years of trials. It was a difficult decision, but Italian justice is slow,” she said.

“ENAV had a close relationship with Selex SI long before I was

appointed CEO and someone low down may have profited. If I had found out, I would have intervened.”

A probe continues into the 180 million euro ($239 million) sale of helicopters, homeland security systems and satellite services to Panama in 2010 by three Finmeccanica units. Investigators are looking at whether bribes were paid and are focusing on Walter Lavitola, then a Finmeccanica consultant hired for his contacts in the region.

“The three Finmeccanica firms gave contracts to consultancy agencies in Panama through Lavitola,” Guargualini said. “I read about that in the papers. It was a government-to-government deal. I must have spoken to Lavitola two times. He was a friend of the Panamanian president and [former Italian Prime Minister] Silvio Berlusconi.”

Berlusconi resigned in November 2011 as Italy risked being caught up in the financial crisis then engulfing Europe.

“Berlusconi always supported us around the world,” Guarguaglini said. “I have no regrets about that. In Russia, in Libya, in Turkey, we were supported, just as [former Italian Prime Minister] Romano Prodi supported us, or as [former French President Nicolas] Sarkozy supported French industry.”

The launching and subsequent dropping of the investigation into Guarguaglini reflects Italy’s legal system, under which magistrates are obliged to launch a probe into any suspected crime and may automatically place any possible suspect under investigation. The length of time before cases then come to trial, or are dropped, and the Italian media’s habit of reprinting wiretap transcripts well before then, often put pressure on the suspects to resign.

Orsi is being investigated over claims by a former employee that he was connected to bribes paid to secure the sale of helicopters to India in 2010, an accusation Orsi denies.

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