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November 22, 2011 5:43 pm
Giuseppe Orsi, chief executive of Finmeccanica, is battling to restore investors’ confidence in Italy’s state-controlled defence and industrial conglomerate, which is reeling from heavy unexpected losses and a widening corruption probe involving top executives.
Mr Orsi, who is locked in a power struggle with chairman Pier Francesco Guarguaglini, is hoping to avert a downgrading of the company to junk status in meetings this week in New York with Moody’s and Standard & Poor’s rating agencies.
Also this week, Corriere della Sera, Italy’s leading daily, has called on Prime Minister Mario Monti to act decisively before the completion of the corruption probe by replacing some Finmeccanica managers. Italy’s finance ministry has a controlling shareholding of 30.2 per cent in the company.
Mr Monti issued a terse statement last night saying he was closely following events concerning Finmeccanica, and that he expected a “rapid and responsible solution”. The prime minister said he and his ministers had agreed that they would make sure that the company was taking “the necessary initiatives” but did not specify what they should be.
Finmeccanica, which is Italy’s second largest industrial group with 75,200 employees worldwide, last week reported a net loss of €324m for the nine months to the end of September.
This week its shares plunged 6.6 per cent in Milan on Monday after the resignation of Lorenzo Borgogni, director for external relations, who is under investigation by Rome magistrates probing suspected payments of bribes from slush funds to politicians and political parties. Mr Borgogni has denied acting illegally.
Finmeccanica has lost about one-third of its value since last week and 65 per cent this year. The group now has a market value of just €1.7bn.
Finmeccanica has net debt of more than €4bn, but it expects this to fall to €2.5bn by end-2012 following disposals of assets, including Ansaldo Breda, its railway rolling stock unit. Moreover, downgrading might not have an immediate impact as it does not need to refinance its borrowings until the end of 2013.
The corruption probe remains front page news, with Mr Guarguaglini reiterating he had “never created illegal funds nor ever paid or ordered anyone to pay money to politicians or political parties”.
His denial followed accusations to that effect by Lorenzo Cola, a former consultant, in court documents obtained by Italian newspapers. Mr Guarguaglini earlier said he learnt in July that he was under investigation in connection with false accounting.
Reflecting political interference in Italy’s state-controlled companies, Mr Guarguaglini confirmed in a television interview that former premier Silvio Berlusconi had called him to suggest he employ Debbie Castaneda, a Colombian beauty queen, as a consultant.
“She knew the Colombian world and government … and was very active,” Mr Guarguaglini told Report, a television documentary team. She earned just over €100,000 in 2-1/2 years but did not obtain a contract for Finmeccanica as the government and heads of armed forces changed, he said.
Mr Orsi has asked Marina Grossi, who is married to Mr Guarguaglini, to step down as head of Selex Sistemi Integrati, a subsidiary at the centre of the corruption probe along with Enav, the state-owned air traffic controller.
Ms Grossi, who is under investigation for alleged false accounting and corruption, has denied wrongdoing and declined to step down on Monday.
The divisions inside the company are also coming to a head. Earlier this month, Mr Guarguaglini, 74, refused to chair a board meeting that approved the restructuring plan of Mr Orsi, his successor.
On Sunday, Mr Guarguaglini reacted to the resignation of Mr Borgogni by calling an extraordinary board meeting, which could take place next week.
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