Giuseppe Orsi arrest highlights Italian politics' odd relationship with business

Finmeccanica chief arrested.

Giuseppe Orsi, the chairman of Italian giant defence and aerospace group Finmeccanica, was arrested on Tuesday on suspicion of corruption.

The investigation relates to the sale of 12 helicopters to the Indian government by AgustaWestland, the high tech helicopter unit of Finmeccanica back in 2010, at which time Orsi was at the division’s helm.

He now stands accused of bribing the Indian government to secure the sale. And he is not alone: the current managing director of AgustaWestland is under house arrest, an option not considered for Orsi, who judges said could potentially pervert the course of justice.

Unsurprisingly, Finmeccanica shares have tanked after initially being suspended, falling by more than 9 per cent to €4.236.

And this is merely the first layer of a complex story. According to the judge, bribery was “part of the firm’s philosophy” – hardly a compliment, but definitely less flattering considering the fact that the State is a 30 per cent shareholder in the business.

Finmeccanica has expressed solidarity with Mr Orsi, but Prime Minister Mario Monti declared, in his understated manner, that “there is a problem with respect to Finmeccanica governance that we will have to tackle”.

That’s certainly a good idea. But it is worth considering that it was Monti himself that appointed Mr Orsi as chairman at the end of 2011, following investigations into the practices of previous chairman Pier Francesco Guarguaglini and his wife, then head of another Finmeccanica subsidiary.

Orsi’s arrest comes just one day after the resignation of the Pope and it is possibly one of the few stories capable of pushing that news down to second place on Italian newspapers… Primarily because there is an election around the corner, and the German-born Vatican resident tends not to be active in local politics.

It’s election time, which has proven to be during the years intense and tiring time for the judiciary.

Investigations are still ongoing on Monte dei Paschi di Siena, the oldest bank in the world and the third largest in Italy by assets.

Not to be outdone, the head of State-owned energy company Eni Paolo Scaroni has received notice that he is under investigation for bribery.

And let’s not forget, that Italy’s technocrat saviour, and whose appointee is under arrest - Mario Monti - is running for office, as is the man most synonymous with Italian political intrigue - Silvio Berlusconi.

So, are we likely to see major changes and a clean up as a result of these elections? God knows! Or does he… It’s hard to tell now his spokesperson has thrown in the towel.

Giuseppe Orsi. Photograph: Getty Images

Sara Perria is the Assistant Editor for Banking and Payments, VRL Financial News

Photo: Getty
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How a small tax rise exposed the SNP's anti-austerity talk for just that

The SNP refuse to use their extra powers to lessen austerity, says Kezia Dugdale.

"We will demand an alternative to slash and burn austerity."

With those few words, Nicola Sturgeon sought to reassure the people of England, Wales and Northern Ireland last year that the SNP were a party opposed to public spending cuts. We all remember the general election TV debates, where the First Minister built her celebrity as the leader of the anti-austerity cause.

Last week, though, she was found out. When faced with the choice between using the powers of the Scottish Parliament to invest in the future or imposing cuts to our schools, Nicola Sturgeon chose cuts. Incredible as it sounds the SNP stood shoulder to shoulder with the Tories to vote for hundreds of millions of pounds worth of cuts to schools and other vital public services, rather than asking people to pay a little bit more to invest. That's not the choice of an anti-austerity pin-up. It's a sell-out.

People living outside of Scotland may not be fully aware of the significant shift that has taken place in politics north of the border in the last week. The days of grievance and blaming someone else for decisions made in Scotland appear to be coming to an end.

The SNP's budget is currently making its way through the Scottish Parliament. It will impose hundreds of millions of pounds of cuts to local public services - including our schools. We don't know what cuts the SNP are planning for future years because they are only presenting a one year budget to get them through the election, but we know from the experts that the biggest cuts are likely to come in 2017/18 and 2018/19. For unprotected budgets like education that could mean cuts of 16 per cent.

It doesn't have to be this way, though. The Scottish Parliament has the power to stop these cuts, if only we have the political will to act. Last week I did just that.

I set out a plan, using the new powers we have today, to set a Scottish rate of income tax 1p higher than that set by George Osborne. This would raise an extra half a billion pounds, giving us the chance to stop the cuts to education and other services. Labour would protect education funding in real terms over the next five years in Scotland. Faced with the choice of asking people to pay a little bit more to invest or carrying on with the SNP's cuts, the choice was pretty simple for me - I won't support cuts to our nation’s future prosperity.

Being told by commentators across the political spectrum that my plan is bold should normally set alarm bells ringing. Bold is usually code for saying something unpopular. In reality, it's pretty simple - how can I say I am against cuts but refuse to use the powers we have to stop them?

Experts - including Professors David Bell and David Eiser of the University of Stirling; the Resolution Foundation; and IPPR Scotland - have said our plan is fair because the wealthiest few would pay the most. Trade unions have backed our proposal, because they recognise the damage hundreds of millions of pounds of cuts will do to our schools and the jobs it will cost.

Council leaders have said our plan to pay £100 cashback to low income taxpayers - including pensioners - to ensure they benefit from this plan is workable.

The silliest of all the SNP's objections is that they won't back our plan because the poorest shouldn't have to pay the price of Tory austerity. The idea that imposing hundreds of millions of pounds of spending cuts on our schools and public services won't make the poorest pay is risible. It's not just the poorest who will lose out from cuts to education. Every single family and business in Scotland would benefit from having a world class education system that gives our young the skills they need to make their way in the world.

The next time we hear Nicola Sturgeon talk up her anti-austerity credentials, people should remember how she did nothing when she had the chance to end austerity. Until now it may have been acceptable to say you are opposed to spending cuts but doing nothing to stop them. Those days are rapidly coming to a close. It makes for the most important, and most interesting, election we’ve had in Scotland.

Kezia Dugdale is leader of Scottish Labour.