March 24, 2014 1:56 pm

Italian police make arrests in Finmeccanica waste probe

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Police in Naples have arrested two former managers of Finmeccanica, Italy’s state-controlled defence and industrial group, in connection with a long-running corruption investigation into its Sistri waste-tracking system.

Naples prosecutor Francesco Greco said Lorenzo Borgogni, Finmeccanica’s former head of external relations, and Stefano Carlini, former operating manager of Selex Service Management, a Finmeccanica subsidiary running the Sistri project, were placed under house arrest on Monday. Two businessmen, including a former centre-right member of parliament, were also arrested.

The Naples investigation is one of three big corruption cases involving former Finmeccanica senior managers. Giuseppe Orsi, former chief executive, and Bruno Spagnolini, former head of subsidiary AgustaWestland, are on trial charged with corruption involving the sale of helicopters to India, while another former manager is to stand trial over alleged corruption in the sale of helicopters to Panama. All the accused deny the charges.

Finmeccanica declined to comment on the latest arrests in Naples. Last week Alessandro Pansa, appointed chief executive after the arrest of Mr Orsi, told the Financial Times that he had restored Finmeccanica’s “reputation and credibility” during his 13 months in office by tightening governance procedures and restructuring the group.

The Naples prosecutor said investigations had revealed a system of false billing and overcharging involving the Sistri project, that had been used to create slush funds for bribery, including the setting up of companies in the “tax haven” of Delaware and accounts in Switzerland. Mr Greco said one episode involved the delivery of cash in two gym bags to Finmeccanica’s offices.

Mr Greco said police were also carrying out various searches on Monday. Italian media reported police were searching the home of Pier Francesco Guarguaglini, former Finmeccanica chairman who resigned amid a corruption investigation in December 2011 while denying wrongdoing. He could not be reached for comment.

The Sistri project, which was repeatedly delayed and only reached a pilot stage, was awarded to Finmeccanica by Silvio Berlusconi’s centre-right government in 2009. The government did not release details of the tender, citing reasons of state security.

A system of electronic tagging of waste and trucks was intended to stop mafia involvement in illegal waste dumping, estimated by prosecutors to be worth billions of euros a year for organised crime. Police arrested 22 people in connection with their investigation in April 2013 and said they had identified false accounting for fictitious operations amounting to €40m.

Italian companies were obliged to pay waste-disposal fees to Selex even before the Sistri system was fully operational. Confartigianato, an association representing small businesses, estimated in 2012 that Finmeccanica had received up to €100m in revenues through the project.

Finmeccanica shares closed down 1.1 per cent at €6.95 on Monday, slightly outperforming a falling Milan bourse.

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