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Ex-Monte Paschi Chairman, CEO Convicted of False Accounting

Sonia Sirletti
·2-min read

(Bloomberg) -- Alessandro Profumo and Fabrizio Viola were convicted on charges of false accounting and market manipulation during their time as chairman and chief executive officer of Banca Monte dei Paschi di Siena SpA.

A Milan judge ordered Viola and Profumo, who is currently CEO of aerospace conglomerate Leonardo SpA, to serve jail sentences of six years, according to lawyers attending the hearing. The managers were accused of improperly booking transactions dubbed Santorini and Alexandria as repurchase agreements instead of derivatives.

Profumo and Viola were also given fines of 2.5 million euros ($2.9 million) each, according to newswire Ansa.

The two executives made an “ambiguous and incomplete” accounting of the derivatives transactions between 2012 and the first half of 2015, according to the indictment request submitted by prosecutors. The managers accounted for the deals as repos during the period, and indicated in a supplementary report the impact that the deals would have had if they had been booked as derivatives.

“We will carefully read the reasons of sentence and for sure will present appeal against a sentence that we judge wrong,” Adriano Raffaelli, one of the lawyers of Profumo and Viola told Ansa.

Leonardo expressed in a statement “its full confidence in the actions” of Profumo, adding that it wishes he continue serving as CEO of the company.

The convictions, if confirmed, may affect the estimated 10 billion euros of legal risks Monte Paschi faces, a hurdle for the government to overcome as it tries to find a buyer or partner for the nationalized bank.

“We are happy justice to prevail, as it was clear that these operations were derivatives” said Giuseppe Bivona, founder of investment firm Bluebell Capital Partners Ltd., a civil claimant in the trial. “The real problem for the bank, looking forward, is the lack of provisioning for legal risks.”

Last year, a judge sentenced 13 people to jail in connection with the transactions, including Giuseppe Mussari, Profumo’s predecessor as Monte Paschi chairman, and advisers on the transactions from Deutsche Bank AG and Nomura Holdings Inc. The two advising banks face fines and seizures totaling about 160 million euros for their roles.

(Adds Leonardo statement in sixth paragraph)

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