Italy's 5 Star Movement says Leonardo CEO should resign after Monte dei Paschi ruling

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MILAN (Reuters) – Italy’s ruling 5-Star Movement called on the head of defence and aerospace group Leonardo (MI:) to step down after he was found guilty of false accounting in his previous role as chairman of Banca Monte dei Paschi di Siena. (MI:)

Alessandro Profumo was one of three former Monte dei Paschi executives convicted on Thursday of not correctly booking derivative transactions which prosecutors said helped the bank hide losses in one of Italy’s biggest financial scandals.

“In light of the conviction, we expect that Alessandro Profumo will resign as CEO of Leonardo in the interests of the company,” a message on a 5-Star twitter account said.

Leonardo, formerly known as Finmeccanica , backed Profumo on Thursday, saying “conditions did not exist” for him to resign. Shares in the state-controlled group, in which the Treasury holds a 30% stake, dropped 3.7% in early trading in Milan.

Profumo and former Monte dei Paschi Chief Executive Fabrizio Viola were sentenced to six years in jail, while former statutory auditors’ board president Paolo Salvadori was sentenced to three-and-a-half years.

However Thursday’s ruling is still subject to appeal and would not become final until the appeals process is completed.

Profumo, a former head of bank Unicredit (MI:) and one of Italy’s most prominent corporate executives, joined Leonardo in 2017.

He succeeded Mauro Moretti, who was not given a second mandate after being convicted over a train crash that occurred when he was head of Ferrovie dello Stato, the Italian rail operator, in 2009. The appeals process in that case continues.

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Before that, former CEO Giuseppe Orsi fought a long legal battle over a bribery case related to a 2010 helicopter contract with the Indian government. He was ultimately acquitted last year.

In 2011, Pier Francesco Guarguaglini resigned as chairman of Finmeccanica in the wake of a corruption probe that centred on accusations of false invoices and slush funds allegedly used to bribe politicians. The investigation was subsequently shelved.

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