Analysis-Italys Meloni chose coalition unity to end spat over company chiefs

By Angelo Amante, Giuseppe Fonte and Gavin Jones

ROME (Reuters) – Italian Prime Minister Giorgia Meloni chose unity over getting her way when she realised that imposing her own candidates to lead state-controlled companies on her coalition partners would threaten government stability, politicians said.

After the raft of appointments announced on Wednesday at companies including energy majors Enel, Eni and defence group Leonardo, Meloni said the people represented “competence, not political affiliation.”

What she did not say was that she had been forced to ditch some of her favourite candidates after days of fierce negotiations in order to maintain peace with her coalition partners, Matteo Salvini‘s League and Silvio Berlusconi’s Forza Italia.

The state company nominations are traditionally crucial to the power balance in Italys governments, as coalition parties try to assert their clout and place people considered close to them in the key positions.

“You can normally tell how long a government is going to last from the outcome of the appointments process,” said a former senior minister in the previous administration led by Mario Draghi.

Investors usually prefer to talk straight to company heads rather than to the government, said the source, who is now a political consultant and asked not to be named.

Eni and Enel have a combined market capital of 109 billion euros ($120 billion) according to Refinitiv data.

The most surprising appointment was that of the new Enel chief Flavio Cattaneo, a seasoned corporate manager who leaves his role as vice president of high-speed train operator Italo to lead the countrys biggest utility.

He leap-frogged Stefano Donnarumma, the current chief executive of power grid Terna, widely seen as Melonis first choice.

Market thumbs down

The decision to replace outgoing CEO Francesco Starace with Cattaneo did not immediately win market favour.

Enel shares were down 4% on Thursday, with investors fretting over Cattaneos lack of expertise in the renewable energy sector. He will have to deal with a debt pile which amounted to around 60 billion euros in 2022.

But there was another hurdle to Donnarummas appointment.

A memo seen by Reuters that was drawn up by legal expert Sabino Cassese, a former public administration minister, alleged that it risked flouting a law which forbids people from taking up jobs at companies in sectors they previously regulated.

Contacted by Reuters about the memo, Cassese declined to say why he had written it or at whose request due to “confidentiality issues”.

The committee was poised to look into Casseses claim that Donnarumma was not eligible to make the switch from the power grid to the utility, people familiar with the matter told Reuters.

As owner of the electricity transmission grid, Terna provides a public service on the basis of guidelines set by the industry ministry and the energy authority. It therefore exercises “authoritative or negotiating power over Enel”, the memo said.

Leading politicians in Melonis right-wing coalition said this issue was a major stumbling block for Donnarumma, along with pressure from League chief Salvini, a strong supporter of Cattaneo.

Davide Tabarelli, the head of energy think-tank Nomisma Energia, said Salvini‘s backing was crucial for Cattaneo, while Enel’s new chairman Paolo Scaroni, a veteran public company manager, owed his appointment to Berlusconi.

“The tension between politics and the market has returned in Italy at this round of appointments,” Tabarelli said.

Warning shot

Earlier this week, the Leagues lower house leader Riccardo Molinari protested that it was “bizarre” that Meloni and her Brothers of Italy party seemed determined to dictate all the appointments at state-run companies.

The remark was seen as a warning shot to the prime minister that an attempt to ride roughshod over the League and Forza Italia could undermine the six-month-old government and Melonis grip on power.

“Meloni understood she could not totally dominate, especially now that things within the right-wing bloc might change depending on what happens to Forza Italia,” said Eugenio Pizzimenti, a politics professor at Pisa University.

Berlusconi, 86, has been in intensive care for the last week suffering from leukaemia and a lung infections. Although his health is improving, there is speculation over the commitment of his lawmakers towards the government without his leadership.

Besides concessions on Enel, Meloni kept a tight grip on the rest of the main appointments.

The reappointment of Claudio Descalzi Enis chief for a record fourth term was never in question, and she confirmed Matteo Del Fante as head of postal service Poste even though the League had expressed doubts, according to sources.

She also overcame resistance from Defense Minister Guido Crosetto – a co-founder of her own party – in appointing physicist Roberto Cingolani as head of defence group Leonardo.

Crosetto wanted Lorenzo Mariani, the head of the Italian unit of missile maker MBDA, but Cingolani, who was ecological transition minister in Mario Draghis the previous government built a rapport with Meloni after he agreed to stay on as an adviser on energy policy.

“She felt she had a debt to Cingolani,” one of the sources said.

($1 = 0.9084 euros)

(Writing by Angelo Amante and Gavin Jones; Editing by Raissa Kasolowsky)