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Finmeccanica names interim CEO

Source : AP
Last Updated: Wed, Feb 13, 2013 20:45 hrs

The board of Italian defense and aerospace company Finmeccanica on Wednesday named Chief Operating Officer Alessandro Pansa as interim chief executive following the arrest of Giuseppe Orsi on suspicion of corruption.

The board decided in an emergency meeting Wednesday that Pansa would take over running the company until the next shareholders' meeting on April 15. Admiral Guido Venturoni, the senior-most board member, was named vice chairman.

Orsi, the company's chair and CEO, was arrested Tuesday for the alleged payment of bribes to secure a €560 million ($755 million) contract to sell 12 helicopters to India. Orsi, who has been jailed, denies wrongdoing. The chief of Finmeccanica's unit AgustaWestland has been placed under house arrest.

Premier Mario Monti said on state television that he expects the government to propose removing Orsi from his post at the shareholders' meeting.

"We have exercised all the pressure compatible with the company's statutes," Monti said.

Shares in Finmeccanica, which is 30 percent state-owned, dropped 4 percent to €4.23 in Wednesday trading.

The company has shed over half of its market value in the last three years as scandals have shaken up its management, forcing out Orsi's predecessor amid allegations of a slush fund, and seeing the arrest also of the company's former commercial director.

Once considered a jewel among Italian companies, Finmeccanica risks losing contracts as the corruption allegations weaken its credibility. Already, the Indian Defense Ministry has announced that it would cancel the helicopter orders if it is proven it won the deal with bribes. Three helicopters have been delivered to date.

Guy Anderson, a senior defense industry analyst at IHS Jane's, said in a note to clients on Wednesday that Finmeccanica risks losing access to the Indian defense markets, which Orsi had named as one of its main objectives.

"Long-term suspension from the Indian defense and security markets would have significant consequences for Finmeccanica in general and its aerospace units in particular, given that the Italian company is pursuing opportunities valued at more than $12 billion as of 2013," Anderson said.

In the period from 2007-2011, Finmeccanica won an average of €250 million in orders a year from the Indian government, and aimed to double that by 2015. Anderson said that target "could be potentially in jeopardy."

The business daily il Sole 24 Ore also reported Wednesday that Finmeccanica could be suspended from doing business with Italian public entities, including the Defense Ministry, one of its most important customers, if corruption is proven against its executives.

During his tenure, Orsi, formerly the CEO of AgustaWestland, moved to sell off subsidiaries to reduce debt and focus on the core defense business. His goal of €1 billion in asset sales last year was missed, as he succeeded only in selling 14.3 percent of Avio for €230 million. The board is expected to consider offers for Ansaldo Energia later this month.

Finmeccanica is Italy's second-largest industrial concern, with nearly 70,000 employees worldwide and revenues in 2011 of €17.5 billion. The company is burdened by high debt, which reached €4.8 billion at the end of the third quarter of 2012 — more than the company's market capitalization.




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