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Editorial: Finmeccanica’s Future

Feb. 17, 2013 - 04:13PM   |  
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After three years of damaging allegations of corruption that have eroded confidence among employees and customers, Italian aerospace and defense giant Finmeccanica now has one last chance to move to a brighter future.

CEO Giuseppe Orsi was arrested on charges that, as the head of the company’s AgustaWestland division, he was involved in bribing Indian officials to win a key helicopter contract in 2010. A day later, Orsi, who has repeatedly denied any wrongdoing, resigned.

Alessandro Pansa, the company’s chief operating officer and a career finance professional, becomes the company’s third CEO in 15 months. He is a strong choice for the difficult task ahead.

Pansa knows the company well, and he has not been touched by scandal, which will be vital to restoring confidence in this key Italian and global player.

Other major companies have suffered similarly brutal management struggles, but few have been quite so unsavory nor as abetted by their home nation’s judicial system. Indeed, as in the case of Pierfrancesco Guarguaglini — who succeeded Orsi and was forced out over earlier allegations of corruption — Orsi may yet be cleared.

Making the whole situation worse: Former Prime Minister Silvio Berlusconi told reporters Feb. 14 that payoffs were justified to win orders “outside the Western sphere.”

While Berlusconi reversed himself the following day, the comments won’t help Finmeccanica earn back the trust of the Indian government, which is now moving to cancel the helicopter contract, nor win business from other developing nations.

To bring Finmeccanica back, Pansa must aggressively investigate the company’s top leadership and clean house of anyone tainted by scandal. He must repair Finmeccanica’s balance sheet. And he must guide an expansion into new markets — a strategic imperative made more difficult by a reputation now better associated with impropriety than with high-quality products.

But Pansa must get this right. Italy’s standing as a civil and military technology leader and the fate of 70,000 talented employees depend on it.

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