MILAN (Reuters) - An Italian appeals court sentenced former Finmeccanica SIFI.MI chief executive Giuseppe Orsi to four and a half years in prison on Thursday for corruption and falsifying invoices, overturning a previous lower court ruling.

Giuseppe Orsi poses in a helicopter during the opening ceremony of the new Terminal of Vertiporto dell'Urbe in Rome January 19, 2009. REUTERS/Remo Casilli

The decision is a setback to the Italian defense group at a time when current Chief Executive Mauro Moretti is looking to restore the company’s reputation, streamline its operations and cut its debt.

The trial concerned alleged bribes in a 560 million-euro ($638 million) contract awarded to Finmeccanica unit AgustaWestland in 2010 to supply 12 helicopters to India.

Bruno Spagnolini, former head of AgustaWestland, was sentenced to four years in jail.

The court also ordered the two executives to pay 7.5 million euros ($8.5 million), a sum related to the amounts deemed to have been allegedly paid in bribes.

The case against Finmeccanica itself was dropped by prosecutors in July 2014. AgustaWestland, which was treated separately, agreed on a 7.5 million-euro settlement with the court a month later.

Ennio Amodio, a lawyer for Orsi, said both defendants will appeal to Italy’s Supreme Court against Thursday’s judgment.

The men will not be detained until a final verdict is handed down.

In October 2014 a lower court had convicted Orsi and Spagnolini of falsifying invoices but acquitted them of corruption. Both appealed against the conviction, while the prosecution appealed against the acquittal on the corruption charge.

Meanwhile the helicopter contract in issue is currently suspended and the subject of international arbitration in Paris after AgustaWestland opposed the decision in 2014 by New Delhi to cancel it.

A separate investigation over corruption and money laundering is still open in India and involves individuals who allegedly worked as intermediaries in striking the deal.

The Milan verdict comes as the Italian group seeks to restore its relations with India, one of the world’s fastest growing defense markets.

Finmeccanica’s unit Wass last June won a tender for the supply of Blackshark torpedoes to the Indian government but the signature of the contract is still pending.

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