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Finmeccanica price plummets as links to political investigation come to light

Stock hit as state-controlled defence company crops up in inquiries into businessman’s alleged shady dealings with government

Finmeccanica tumbled nearly 8% on Monday after recorded conversations from judicial inquires shone the spotlight on the Italian defence and aerospace company and prompted two company executives to resign last week.

References to Finmeccanica, which employs 10,000 people in the UK, and its executives have cropped up in inquiries 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 contractor.

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, such as 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.

Salvatore Metrangolo, who headed Finmeccanica unit Sistemi di Software Integrati, and commercial director Paolo Pozzessere both quit last week, saying they were doing so to protect the company’s reputation after their names appeared in the published wiretaps.

Pozzessere denied any wrongdoing.

Shares of Finmeccanica were down 8% to €5.21 (£4.5) in early afternoon trade. One trader said the judicial probes were weighing on the stock.

The company’s shares are down 33% this year, hit by concerns over a slowing economy, fears it would lose its Libyan contracts, and the disclosure of structural problems at two units. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds