Corruption-plagued defence group Finmeccanica will announce former Italy police chief Giovanni De Gennaro as its new chairman.
Shareholders at the Italian firm backed De Gennaro’s appointment, a choice designed to show the defence group aims to clean up its act after a series of corruption scandals that saw former CEO and chairman Giuseppe Orsi arrested over bribery allegations in February.
But De Gennaro, who has no track record in business, is expected to leave current chief executive and long-term Finmeccanica insider Alessandro Pansa firmly in charge of strategy.
The group, Italy's biggest private employer after Fiat and owner of Anglo-Italian helicopter company AgustaWestland, is restructuring to focus on core defence and aerospace activities and investors wanted a new chairman who would not block asset sales proposed by Pansa.
De Gennaro's remit as non-executive chairman includes "group audit, institutional relations and group security", a representative for the Italian Treasury told a shareholder meeting gathered to appoint him.
He was proposed by the Treasury, the largest shareholder in the group with a 32 per cent stake, late yesterday to succeed Orsi.
De Gennaro was most recently an undersecretary in charge of security issues in the previous government of Mario Monti. As police chief he had a reputation as a tough manager and also has high-level links with government institutions within Italy and beyond, including the US, which is a key market for Finmeccanica.
"(De Gennaro) gives the impression of being strict and has a strong set of values. He was probably brought in with a view to kitchen sinking and digging out any other rot there may be left in the company," one analyst said.
The appointment, however, was criticised by centre-left PD party, one of the two main parties in Italy's coalition government, who would have liked someone with a business record.
Investors were also concerned that Italy's leaders and trade unions would not fully support the restructuring seen as politically tricky, but crucial for Finmeccanica's turnaround.
"The news marks a reinforcement of Pansa's strategy of disposing assets," Massimo Vecchio, an analyst at Mediobanca Securities, said. "This is clearly a positive for the stock."
He said the asset sale plan could have been put at risk if Giuseppe Zampini, reported to be also in the running for chairman, had been chosen.
Zampini currently serves as chief executive of engineering group Ansaldo Energia, a Finmeccanica unit which is to be sold and has often spoken out against the sale of assets.
De Gennaro’s appointment is to be formally ratified at a board meeting later today, but it may be temporary anyway with the whole of Finmeccanica's board up for renewal in 2014.