Bribery trial of former Finmeccanica CEO opens

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FINMECCANICAMILAN, June 19;Giuseppe Orsi, former head of the Italian aerospace and defence giant Finmeccanica, accused by prosecutors of making bribery part of the company culture, went on trial on Wednesday for his alleged role in the payment of bribes to secure a crucial 560 million euro ($670 million) helicopter contract in India.

Mr. Orsi, who resigned in February, faces charges of fraud and corruption in a case that has tarnished the international image of the state-controlled company and jeopardised the defence contractor’s attempts to expand into the lucrative Indian military market.

Also on trial is Bruno Spagnolini, the former chief executive of AgustaWestland, the defence contractor’s helicopter division.

“A system of bribery”

Prosecutor Eugenio Fusco alleged that the two men presided a system of bribery and corruption that was part “of the company philosophy,” according to his arrest warrant for the men.

Orsi was head of AgustaWestland at the time the contract was signed in 2010, and became CEO of Finmeccanica in 2011 when a separate corruption probe led to the ouster of his predecessor. Mr. Spagnolini replaced Mr. Orsi at AgustaWestland.

The court, on the first day of trial, admitted both the Government of India and the Italian tax office as injured parties in the case. This allows them to participate in questioning witnesses and to seek damages in the event of a guilty verdict.

Mr. Orsi has denied wrongdoing, while Mr. Spagnolini has not commented publicly. Defendants in Italy are not required to appear in their own trials and neither attended the opening session. Both Finmeccanica and AgustaWestland deny any wrongdoing and have said they are cooperating with investigators.

Mr. Orsi’s lawyer, Ennio Amodio, said his client intends to attend future hearings to prove there was no illegal dealings for the helicopter contract. Mr. Amodio has said in the past that Mr. Orsi was in the process of bringing more transparency to the company.

“He is convinced that he can demonstrate that those helicopters were purchased because they are the best,” Mr. Amodio said.

Mr. Orsi was jailed for some 80 days during the investigation before being released pending trial in early May. Mr. Spagnolini was released from house arrest at the same time.

Global player

Finmeccanica, which is Italy’s second largest industrial concern and 30 per cent state-owned, is a global player in defence and aeronautics. Employing more than 60,000 people worldwide, the company focuses on designing and manufacturing helicopters, civil and military aircraft, satellites, space infrastructure, missiles and defence electronics.

In 2008, it bought the U.S. military contractor DRS Technologies Inc. in a $5.2 billion deal to boost Finmeccanica’s role as a key supplier of defence and security systems.

India, which is also investigating the corruption allegations, has stopped the delivery of the remaining nine of the original order for 12 AW1010 helicopters, citing an integrity clause in the contract against bribery or use of undue influence. Finmeccanica risks being blacklisted from India, which is expected to spend $10 billion over the next 10 years to upgrade its antiquated military and accounted for 9 per cent of global arms imports from 2006-2010.

Mr. Orsi’s strategy had targeted about half a billion euros of business in India by 2015.

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