Finmeccanica looks to rebuild India ties after former head convicted

By Emilio Parodi

BUSTO ARSIZIO Italy (Reuters) - An Italian court sentenced former Finmeccanica Chairman and CEO Giuseppe Orsi to two years in jail for falsifying invoices in a corruption case linked to an Indian deal, but cleared him of more serious corruption charges.

The trial revolved around a 560 million euro ($715 million) contract awarded to Finmeccanica's AgustaWestland business in 2010 to supply 12 helicopters to the Indian government.

Public prosecutor Eugenio Fusco had accused Orsi and former AgustaWestland head Bruno Spagnolini of paying tens of millions of euros to Indian officials including a former air force head through intermediaries and falsifying invoices to win the high-profile contract.

Spagnolini was also sentenced on Thursday to two years in jail on the false invoice charges, but acquitted of the corruption accusations.

"It's the end of a nightmare," Orsi told reporters after the court near Milan passed sentence at the end of a trial lasting more than a year. "We've always known that there hasn't been any corruption."

New Finmeccanica CEO Mauro Moretti also welcomed the end of the case, calling it a positive development for Italian business and the company itself which is seeking to restore ties with India, one of the world's fastest growing defence markets.

"This removes a shadow that has caused us so much suffering," Moretti said.

The scandal has embarrassed New Delhi and tarnished Finmeccanica's reputation at a time when the Italian aerospace and defence group is carrying out a tough restructuring.

India in August banned the state-controlled Italian company from future contracts, according to a defence ministry source, after terminating the helicopter agreement in January 2013 with only three aircraft delivered.

RESETTING RELATIONS

A Finmeccanica spokesman in New Delhi said the company was open to all options to reset relations with India including paying a fine. He said CEO Moretti had asked for a meeting with Defence Minister Arun Jaitley to discuss the case following the verdict in Italy.

India is pushing ahead with a separate investigation into the scrapped contract with the Italian company.

The country's top crime-fighting agency said earlier this year the probe was "at an advanced stage" and developments in Italy did not affect the Indian investigation.

In August, the Italian prosecutor dropped a corruption case against Finmeccanica and agreed a 7.5 million euro settlement with AgustaWestland.

The sentence against Orsi and Spagnolini is suspended. In any case the two Italian executives, who have repeatedly denied any wrongdoing, will not serve any jail term until the appeal process is completed.

Judge Luisa Bovitutti said the conviction concerned invoices dating back to 2009 and 2010 and the acquittal on corruption charges was made because "there was no case to answer".

The prosecutor said he would decide on whether to appeal once the details of the ruling are released. He had requested a six-year jail term for 68-year-old Orsi, who ran AgustaWestland before taking the top job at Finmeccanica in 2011, and a five-year sentence for Spagnolini, 63.

(1 US dollar = 0.7828 euro)

(Writing by Danilo Masoni, additional reporting by Tommy Wilkes in New Delhi; editing by Keith Weir)