Finmeccanica tumbles as spotlight judicial probes

ROME: Finmeccanica tumbled nearly 8 percent on Monday after wiretapped conversations from judicial probes shone the spotlight on the Italian defence and aerospace company, which has already had one executive resign and another offer to step down.

References to Finmeccanica and its executives have surfaced in probes by prosecutors investigating an Italian businessman suspected of providing prostitutes to Prime Minister Silvio Berlusconi in a bid to curry political favours and win contracts, including some with the defence giant.

Finmeccanica, which has not been charged with any wrongdoing, has said it never gave out any contracts to Giampaolo Tarantini or another businessman named in the probes.

But the affair has drawn attention to figures connected to Finmeccanica, like Valter Lavitola, who prosecutors say was a consultant linked to the company, as well as the extent of links between government officials and the state-controlled company.

An arrest warrant has been issued for Lavitola, whom prosecutors accuse of working with Tarantini to extort money from Berlusconi over the prostitution scandal.

One opposition lawmaker called for a probe by a parliamentary commission into the operation of state-controlled companies like Finmeccanica, saying recent reports in major dailies were "worrying and unacceptable".

Salvatore Metrangolo, who headed Finmeccanica unit Sistemi di Software Integrati resigned last week saying he was doing so to protect the company's reputation after his name appeared in the published wiretaps.

Commercial director Paolo Pozzessere also offered last week to step aside from his role "until all relevant issues are clarified". He remains with the company and denies any wrongdoing, a company spokeswoman said.

Shares of Finmeccanica were down 8 percent to 5.22 euros in afternoon trade. One trader said the judicial probes were weighing on the stock.

The company's shares are down 33 percent this year, hammered by concerns over a slowing economy, fears it would lose its Libyan contracts and the disclosure of structural problems at two units.

But they have gained 20 percent in the last five days after a report said General Electric could be close to buying two transport units, fuelling hopes that the company would be able to better focus on its core aerospace and defence businesses.

Finmeccanica, which in a few years transformed itself from a sleepy Italian company to a global defence player with a strong presence in the US market, has had other unwelcome publicity on the judicial front over the past year.

Chairman Pier Francesco Guarguaglini was put under investigation by Rome prosecutors examining allegations of secret slush funds, legal sources said in July. The company denies making any irregular payments or creating slush funds.

Copyright Reuters, 2011