November 23, 2011 / 11:30 AM / 7 years ago

Pressure mounts on Finmeccanica chairman to quit

MILAN (Reuters) - Pressure mounted on Finmeccanica Chairman Pier Francesco Guarguaglini to quit on Wednesday over a corruption probe that has engulfed Italy’s defense conglomerate and exposed a growing rift in the company’s top ranks.

The defense group, controlled by Italy’s Treasury, is involved in a long-running probe centering on accusations of false invoices and slush funds that were allegedly used to bribe politicians.

Guarguaglini and his wife Marina Grossi, who is chief executive of Finmeccanica subsidiary Selex Sistemi Integrati, are both under investigation as part of the probe.

Both deny any wrongdoing, but with new allegations leaked to newspapers on a daily basis, the case has grown into the first big test for Italy’s new Prime Minister Mario Monti, who is also finance minister and as such is responsible for the state’s 30 percent stake in Finmeccanica.

Late Tuesday, Monti called on the group’s management to take swift action to address the scandal, in what many commentators interpreted as a sign that Guarguaglini’s days at the company were numbered.

Monti, a former European commissioner, was sworn in last week to tackle a worsening debt crisis and restore confidence in Italian governance after the scandal-filled Berlusconi era. He has promised to fight crime and tax evasion as part of his program.

“Guarguaglini has to go. He still has influence inside the group and can be an obstacle to change, including in management, (and in restructuring),” a Milan-based analyst said on conditon of anonymity.

Italy’s biggest center-left party, PD, also called for Guarguaglini to quit Wednesday, while the newspaper Corriere della Sera urged Monti to replace some of the company’s managers earlier in the week.

The stock, which has lost over 60 percent since the start of the year, reobunded Wednesday from heavy losses in recent days and was up 1.1 percent at 3 euros on expectations of a shake-up at the top.

A Finmeccanica board member, Dario Galli, was asked on a television program Wednesday whether Guarguaglini would resign.

“In the next few days, the board will take appropriate measures,” he said, without elaborating. An extraordinary board meeting is expected early next week.

Guarguaglini, a 74-year old veteran manager of state-owned companies, was appointed chairman and chief executive of Finmeccanica, Italy’s second biggest industrial group after Fiat, in 2002.

But last May, the CEO job was handed to Giuseppe Orsi, and the two are known to be at odds over how to turn around the loss-making group, which has 75,000 workers worldwide and at one stage was in the frame to sell helicopters to the U.S. administration.

Finmeccanica also owns DRS Technologies, which supplies defense electornics systems to the U.S. government.

Additional reporting by Poalo Biondi and James Mackenzie in Rome, Stephen Jewkes and Nigel Tutt in Milan; Editing by Will Waterman

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