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New CEO Shakes Up Finmeccanica Leadership

Feb. 23, 2013 - 11:35AM   |  
By TOM KINGTON   |   Comments
Days before an Italian election that could lead to further management changes at Finmeccanica, Alessandro Pansa, the company's brand-new CEO, has reshuffled leadership in a bid to calm things down after the Feb. 12 arrest of the firm's previous CEO on suspicion of corruption.
Days before an Italian election that could lead to further management changes at Finmeccanica, Alessandro Pansa, the company's brand-new CEO, has reshuffled leadership in a bid to calm things down after the Feb. 12 arrest of the firm's previous CEO on suspicion of corruption. (Finmeccanica)
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ROME — Days before an Italian election that could lead to further management changes at Finmeccanica, the company’s brand-new CEO has reshuffled leadership in a bid to calm things down after the Feb. 12 arrest of the firm’s previous CEO on suspicion of corruption.

Alessandro Pansa, who relieved Giuseppe Orsi as CEO a week earlier, named three new Finmeccanica chiefs:

• AgustaWestland. Daniele Romiti replaces Bruno Spagnolini, who is under house arrest as part of the same probe that cost Orsi his job.

• WASS. Alessandro Franzoni replaces Renzo Lunardi at the torpedo maker. Lunardi is a former AgustaWestland executive and the move is seen as a pre-emptive effort in case Lunardi is implicated in the corruption probe that has already ensnared Orsi and Spagnolini.

• Telespazio. Luigi Pasquale replaces Carlo Gualdaroni as CEO of the satellite services unit. Like Spagnolini, Gualdaroni is under house arrest, but in connection with a separate corruption probe.

A Finmeccanica spokesman said the board “fired the three CEOs from their positions.”

Still to come: A new Finmeccanica chairman, a decision that won’t come until after a new Italian government is formed following Italian general elections Feb. 24 and 25.

In addition to personnel moves, Pansa said he would delay release of Finmeccanica’s 2012 financial results while the company tries to calculate how Orsi’s arrest might affect performance.

In the wake of Orsi’s arrest on suspicion that bribes were paid to win a 560 million euro ($749.5 million) deal to sell 12 AW101 helicopters to India in 2010, the Indian government has indicated it may cancel the agreement.

Orsi, who remains in a jail outside Turin, has repeatedly denied any wrongdoing and argues that the allegations are part of a concerted bid to force him from leading the world’s eighth largest defense and aerospace contractor.

The reshuffling came as Indian government officials visited Italy to learn details of the probe into suspected kickbacks paid to sell the AW101 helicopters to New Delhi.

The team, which includes investigators from India’s Central Bureau of Investigation — India’s top national investigating agency — headed for Milan and were reportedly seeking a meeting with Eugenio Fusco, the magistrate who ordered Orsi’s arrest.

Indian Prime Minister Manmohan Singh said he has raised the issue with David Cameron, prime minister of the U.K., where the AW101 helicopters are assembled. “I have sought full assistance from the U.K. in this case,” he said. “Prime Minister David Cameron has assured me of the cooperation of his government in the investigation.”

Finmeccanica has publicly claimed that its sale of 12 helicopters to India was above board and bribes were not paid to facilitate the deal.

“Finmeccanica highlights that it has acted correctly throughout the 40 years it has operated in India,” the company said in a Feb. 19 statement.

The company added it was confident that AgustaWestland would “demonstrate that it has fully complied with Indian law.”

The Indian delegation in Italy met with Pansa on Feb. 21 in Rome. Pansa called the meeting “positive.”

Indian officials have reportedly been frustrated by the refusal of Italian officials to hand over details of their probe, which meanwhile have been widely reported in Italy.

In such cases, magistrates are not formally allowed to release such documents to the press, but they do circulate them to people involved in the probe, including lawyers. As happens frequently in Italy, the document was swiftly leaked.

The 64-page arrest order for Orsi, which contains the key evidence in the case, has since been posted on the Internet.

The documents center on allegations of corruption first made by Lorenzo Borgogni, a former Finmeccanica manager who was fired by Orsi for ethical violations. The documents show his allegations have been supported by Guido Ralph Haschke, a Swiss-based consultant with U.S. and Italian citizenship who worked on the India deal for AgustaWestland.

Borgogni’s allegations, the document states, “largely correspond to reality.”

The magistrates contend that at least 100,000 euros were paid out to three relatives of retired Air Chief Marshal S.P. Tyagi, the head of the Indian Air Force from 2005 to 2007, with some of the money reaching the former air chief himself, allegedly fixing the competition in favor of AgustaWestland over American helicopter supplier Sikorsky Aircraft Corp.

Tyagi denies the allegations, stating the specifications in the tender were changed in 2003, before he became head of the Air Force in January 2005.

The requirement for the helicopter’s maximum altitude was reduced from 18,000 feet to 15,000 feet, while the capability to fly with an inoperative engine was introduced, favoring the three-engine AW101.

Magistrates also contend that part of the payments made to consultants were channeled back to an Italian political party, the Northern League, which allegedly helped Orsi get promoted from head of AgustaWestland to CEO of state-controlled parent company Finmeccanica in 2011. AgustaWestland is headquartered in Turin; magistrates allege Orsi was close to Northern League officials because AgustaWestland’s head office is in the party’s heartland.

Ennio Amodio, a lawyer representing Orsi, challenged Haschke’s statements, claiming he has “radically” changed his story since first speaking to investigators.

He suggested that Borgogni and Haschke were part of a group looking to bring down Orsi. The group, he claimed, also included Giuseppe Zampini, the CEO of Finmeccanica unit Ansaldo Energia, who has been interviewed by magistrates. Zampini was a contender to become CEO of Finmeccanica in 2011, eventually beaten out by Orsi.

Last week, Italian Prime Minister Mario Monti again suggested he had hoped Orsi was set to resign as the probe rumbled on last year, well before his arrest.

“Finmeccanica is a quoted company, there are rules to respect and if a certain person doesn’t resign you can try to use persuasion, but you cannot force them,” he said.

A judicial source said the magistrate investigating the case would now schedule another interview in jail with Orsi before Orsi’s lawyer could ask a judge to consider freeing him while the investigation continues.

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