This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ROME 003008 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EIND EAIR PINR EAIR PINR IT ITEIND
SUBJECT: CHANGING CHAIRS IN ITALY 
 
SUMMARY 
------- 
¶1.  (U) THE GOVERNMENT OF ITALY, SPECIFICALLY THE MINISTRY OF 
ECONOMY AND FINANCE, RECENTLY CHANGED ITS SENIOR LEADERSHIP 
IN THREE OF THE CORPORATIONS IN WHICH IT HAS A MAJOR 
INTEREST:  ENI (ITALIAN HYDROCARBON AGENCY), ENEL (NATIONAL 
                       UNCLASSIFIED 
 
PAGE 02        ROME  03008  01 OF 02  191507Z 
ELECTRICITY COMPANY), AND FINMECCANICA (A GROUP OF DEFENSE, 
AVIATION AND AEROSPACE INDUSTRY COMPANIES).  THESE ARE THE 
THREE LARGEST INDUSTRIAL GROUPS REMAINING CONTROLLED BY THE 
GOI.  THE APPOINTMENTS WERE WELL RECEIVED BY THE FINANCIAL 
MARKETS WHICH PERCEIVED THEM AS A WELCOMED SIGN OF CONTINUITY. 
 
FINMECCANICA 
------------ 
¶2.  (SBU) PIERFRANCESCO GUARGUAGLINI, FORMER PRESIDENT OF 
FINCANTIERI (ITALIAN SHIPBUILDERS' ASSOCIATION) IS THE NEWLY 
APPOINTED CHAIRMAN OF FINMECCANCA.  GUARGUALINI, BORN IN 
1937, HOLDS A PH.D. IN ELECTRONIC ENGINEERING FROM THE 
UNIVERSITY OF PENNSYLVANIA.  IN ADDITION TO HARMONY WITH THE 
GOVERNMENT, CONTINUITY AND MARKET CONFIDENCE, GUARGUAGLINI 
MAY HAVE A MANDATE TO INCREASE INTERNATIONALIZATION OF THE 
COMPANY.  FINMECCANICA IS A PARTIALLY STATE-OWNED COMPANY 
(37.4 PERCENT OWNED BY THE GOI) HOLDING THE MAJOR ITALIAN 
AEROSPACE PLAYERS (ALENIA AERONAUTICA, ALENIA DIFESA, ALENIA 
SPAZIO, 50 PERCENT OF ALENIA MARCONI SYSTEMS, AND 25 PERCENT 
OF AERMACCHI).  ALTHOUGH THERE IS SPECULATION ABOUT CONTINUED 
PRIVATIZATION WHEN THE MARKETS STRENGTHEN, GUARGUAGLINI SAID, 
AT A RECENT LUNCH WITH AMBASSADOR SEMBLER THAT THE GOVERNMENT 
DOES NOT WISH TO PRIVATIZE ANY MORE OF FINMECCANICA, THUS 
PROTECTING ITALY'S STRATEGIC AND DEFENSE INDUSTRIES.  HE 
ALLOWED THAT THE GOVERNMENT MAY DECIDE TO SPLIT SOME OF THE 
COMPANIES INTO CIVIL AND DEFENSE COMPONENTS AND PRIVATIZE THE 
CIVILIAN ELEMENTS, BUT EVEN THIS HAS NOT BEEN DECIDED. 
GUARGUAGLINI ALSO CONFIRMED RUMOR THAT FINMECCANICA WILL BE 
EXPECTED TO TAKE OVER FINCANTIERI, THE CORPORATION HE 
PREVIOUS HEADED.  STILL OWNED 100 PERCENT BY THE GOI, 
ALTHOUGH IT HAS BEEN SLATED TO BE PRIVATIZED, FINCANTIERI 
                       UNCLASSIFIED 
 
PAGE 03        ROME  03008  01 OF 02  191507Z 
EMPLOYS ROUGHLY 10,000, HAS A TURNOVER AROUND TWO BILLION 
EUROS/YEAR, AND HAS SUBSTANTIAL ORDERS FOR ITS SPECIALTIES -- 
CRUISE AND NAVAL SHIPS.  FINCANTIERI AND FINMECCANICA HAVE 
TRADITIONALLY WORKED CLOSELY TOGETHER, AND COULD SHARE MORE 
THAN FIVE BILLION EUROS IN CONSTRUCTION IF THE NAVY SPENDS 
THIS ON A NEW CLASS OF FRIGATES. GUARGUAGLINI ALSO NOTED 
THAT, ALTHOUGH FINMECCANICA HAD DROPPED ITS BID TO BUY 
MARCONI COMMUNICATION FOR THE TIME BEING, THEY FULLY EXPECT 
MARCONI TO BE WILLING TO PURSUE THE DEAL A LITTLE LATER. 
 
¶3.  (U) ROBERTO TESTORE IS THE NEWLY APPOINTED MANAGING 
DIRECTOR AND DIRECTOR GENERAL OF FINMECCANICA.  GIVEN THAT HE 
WAS A FIAT EMPLOYEE (SINCE 1976) AND THE MANAGING DIRECTOR OF 
FIAT AUTO (SINCE 1996), SOME THINK THAT HE MAY BE LOOKING TO 
CONSOLIDATE FIAT'S DEFENSE BUSINESS INTO FINMECCANICA.  HIS 
NEW RESPONSIBILITY HOWEVER FOCUSES ON THE GROUP'S OPERATIONAL 
MANAGEMENT AND ON THE INTERNAL REORGANIZATION OF THE 
FINANCIAL STRUCTURE OF THE GROUP. 
 
¶4.  (SBU) COMMENT:  SENIOR MANAGEMENT'S VIEW ON PRIVATIZING 
FINMECCANICA IS AT VARIANCE WITH WHAT WE HEAR ELSEWHERE.  IT 
IS POSSIBLE THAT, AFTER HAVING MET THE EU'S MINIMAL 
PRIVATIZATION REQUIREMENTS, THE GOI WILL NOT PRIVATIZE ANY 
MORE OF FINMECCANICA.  THERE IS ALSO THE VIEW THAT SELLING 
OFF THE COMMERCIAL ELEMENTS LEAVES THE WEAKER COMPONENTS IN 
GOI HANDS, WITH A NEED FOR LONG-TERM SUPPORT.  MARCONI 
COMMUNICATION IS NOT PRIZE, BUT IF THE GOVERNMENT IS LOOKING 
TO 'PROTECT' WEAK DEFENSE PLAYERS, MARCONI MAY EVENTUALLY BE 
ASSIMILATED INTO FINMECCANICA.  OUR VIEW ON FINMECCANICA'S 
ACQUIRING FIAT'S DEFENSE INDUSTRIES IS THAT IT WOULD NOT LEAD 
TO ANY NET SYNERGIES, BUT JUST BE TRADING ONE FORM OF 
                       UNCLASSIFIED 
 
PAGE 04        ROME  03008  01 OF 02  191507Z 
POLITICAL POWER WITH ANOTHER.  END COMMENT. 
 
ENI 
--- 
¶5.   (U) THE GOI OWNS MORE THAN 30 PERCENT OF ENI WHICH IS 
MORE NARROWLY FOCUSED ON ENERGY AND ENSURING ITALY'S ENERGY 
SECURITY.  ENI ONLY HAD A PARTIAL CHANGE IN THE BOARD BECAUSE 
VITTORIO MINCATO, THE MANAGING DIRECTOR, HAS BEEN 
RECONFIRMED. MINCATO HAS ONLY BEEN IN PLACE FOR SEVERAL 
YEARS, AND IS WIDELY REPUTED AS SHOWING STRONG LEADERSHIP. 
HE WILL BE SUPPORTED BY A NEWLY NAMED CHAIRMAN, ROBERTO POLI, 
WHO IS A WELL-KNOWN EXPERT IN CORPORATE FINANCING.  FROM 1978 
TO 1998 HE TAUGHT CORPORATE FINANCE AT CATHOLIC UNIVERSITY OF 
MILAN.  POLI HAS IN THE PAST BEEN CHAIRMAN OF PUBLITALIA OF 
THE BERLUSCONI GROUP AND A MAIN CONSULTANT OF THE BERLUSCONI 
FAMILY IN THE RESTORATION OF FININVEST, BERLUSCONI'S ASSET 
HOLDING COMPANY. 
 
ENEL 
---- 
¶6.   (U) TO THE SURPRISE OF MANY THERE WAS A COMPLETE 
OVERHAUL AT ENEL WHERE THE GOVERNMENT OWNS ABOUT 70 PERCENT. 
 PAOLO SCARONI WILL BECOME THE NEW MANAGING DIRECTOR. HE HAS 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ4659 
 
PAGE 01        ROME  03008  02 OF 02  191508Z 
ACTION EUR-00 
 
INFO  LOG-00   NP-00    AID-00   AMAD-00  ACQ-00   CIAE-00  COME-00 
      CTME-00  DODE-00  ITCE-00  DOTE-00  DS-00    EB-00    EXME-00 
      FAAE-00  FBIE-00  UTED-00  TEDE-00  INR-00   ITC-01   NSAE-00 
      OMB-01   OPIC-01  STR-00   TEST-00  TRSE-00  DSCC-00  G-00 
      SAS-00     /003W 
                  ------------------BF850B  191520Z /38 
R 191435Z JUN 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 4340 
INFO AMCONSUL FLORENCE 
AMCONSUL MILAN 
AMCONSUL NAPLES 
 
UNCLAS SECTION 02 OF 02 ROME 003008 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EIND EAIR PINR EAIR PINR IT ITEIND
SUBJECT: CHANGING CHAIRS IN ITALY 
 
BEEN CHIEF EXECUTIVE OF PILKINGTON AEROSPACE, A BRITISH 
MULTINATIONAL, AND HE IS ALSO A CONSULTANT OF BAE.  AS 
MANAGING DIRECTOR OF TECHINT, HE WAS CONDEMNED TO ONE YEAR 
AND FOUR MONTHS FOR PAYING BRIBES TO THE PSI (PARTITO 
SOCIALISTA ITALIANO) PARTY FOR ILLEGAL BIDS IN ENEL'S POWER 
PLANTS. 
                       UNCLASSIFIED 
 
PAGE 02        ROME  03008  02 OF 02  191508Z 
 
¶7.  (SBU) PIERO GNUDI WILL BECOME THE PRESIDENT, AND LEAVE 
HIS POSITION AS CHAIRMAN OF IRI (THE FORMER STATE HOLDING 
COMPANY FOR GOVERNMENT ENTERPRISES), WHICH IS REACHING THE 
END OF ITS NATURAL LIFE.  GNUDI IS VIEWED AS A FAMILIAR FACE 
AND GIVEN HIS EXPERIENCE AT IRI WITH LIQUIDATING ITALIAN 
PARASTATALS HE SHOULD BE ABLE TO MOVE FORWARD WITH THE NEXT 
STEP IN THE PRIVATIZATION OF ENEL WHEN THE TIME IS RIGHT. 
 
¶8.  (SBU) FERNANDO NAPOLETANO, NEWLY APPOINTED TO THE BOARD 
OF ENEL, CONFIRMED IN HIS INTRODUCTORY MEETING WITH THE 
AMBASSADOR REPORTS THAT MINISTER OF PRODUCTIVE ACTIVITIES 
MARZANO HAS GIVEN ENEL THE MANDATE TO CONTINUE TO EXPAND 
ABROAD IN ITS MAJOR SECTORS:  ENERGY AND TELECOMMUNICATIONS. 
THE GOVERNMENT ENVISIONS A MULTI-SECTOR CORPORATION ALONG THE 
LINES OF A GE TYPE OF OPERATION.  NAPOLETANO, THE HEAD OF 
BOOZ, ALLEN, HAMILTON ITALIA, EMPHATICALLY SAID EXPANSION WAS 
THE ONLY REASON HE HAD BEEN APPOINTED TO THE BOARD AND THE 
ONLY REASON HE HAD ANY ADDED VALUE FOR ENEL. 
 
COMMENT 
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¶9.  (SBU) WE DO NOT ANTICIPATE THAT THE CHANGES IN THE 
LEADERSHIP OF THESE GROUPS WILL HAVE A MAJOR EFFECT FOR U.S. 
CORPORATIONS.  THE TOP MANAGERS ARE ALL CITED AS COMPETENT 
AND AUTHORITATIVE IN THEIR RESPECTIVE FIELD.   WHAT IS 
HAPPENING HOWEVER IS THAT THIS GOVERNMENT IS STAMPING ITS OWN 
BUSINESS ORIENTED STYLE ON THE LEADERSHIP.  THE OUT-GOING 
GOVERNMENT HAD SALTED SENIOR POSITIONS WITH CLOSE ALLIES; 
WHAT IS INTERESTING ABOUT THESE CHANGES IS NOT THAT THEY 
OCCURRED BUT THAT THEY TOOK SO LONG TO OCCUR.  THIS 
                       UNCLASSIFIED 
 
PAGE 03        ROME  03008  02 OF 02  191508Z 
GOVERNMENT IS NOT NECESSARILY PUTTING IN PARTY FAVORITES, BUT 
RATHER THEY APPEAR TO BE SEEKING THOSE WHO ARE WELL-KNOWN TO 
THEM WHO ALSO HAVE A STRONG AND SUCCESSFUL BUSINESS 
ORIENTATION. 
SEMBLER 
 
                       UNCLASSIFIED 
 
> 
 2002ROME03008 - Classification: UNCLASSIFIED