Italian police on Tuesday arrested the chief executive of aerospace and defence giant Finmeccanica for corruption and embezzlement in relation to alleged bribes given to the Indian government, Italian media reported.

Giuseppe Orsi had been under investigation for months and had denied any wrongdoing in the deal for the sale of 12 AgustaWestland helicopters to India in 2010.

The magistrate in the case also issued an order for the head of AgustaWestland, Bruno Spagnolini, to be put under house arrest.

Two suspected intermediaries in the bribes who reside in Switzerland have also been targeted with extradition requests, the reports said.

Finmeccanica is not the only Italian industrial giant under investigation.

Prosecutors last week announced they were looking at Paolo Scaroni, chief executive of energy major ENI, over allegations of bribes paid to Algerian officials to win contracts there.

Italy's third largest bank, Banca Monte dei Paschi di Siena, has also been shaken by a series of investigations over mismanagement that has forced it to seek a public bailout.

India orders probe into alleged Italy bribe allegations
New Delhi (AFP) Feb 12, 2013 - India on Tuesday ordered an inquiry into reports of alleged bribery of government officials by Finmeccanica after the Italian aerospace giant's chief was said to have been arrested by Italian police.

Giuseppe Orsi was reportedly arrested earlier in the day on charges of corruption and embezzlement in relation to alleged bribes given to the Indian government in the sale of 12 AgustaWestland helicopters to India in 2010.

"A probe by the CBI (Central Bureau of Investigation) has been ordered and further details will be given soon," Indian defence ministry spokesman Sitanshu Kar told AFP.

Orsi has denied any wrongdoing in the deal which was valued at $748 million last November by the government. Delivery of the choppers was set for January and July of this year.

India's defence minister A.K. Antony told parliament last year the government would slap "suitable penalty measures" in the event of wrongdoing by Finmeccanica.

"The defence ministry is constantly pursuing the matter and committed to take suitable penalty measures in event of allegations being substantiated," he said.

Antony said after reports of alleged kickbacks surfaced in the Indian media, the defence ministry sought details from the Italian government.

But he said the Italian government had replied it had "no official position... in view of the independence of the (Italian) judiciary".

An Indian external affairs ministry spokesman reiterated Antony's statement on Tuesday.

India's main opposition Bharatiya Janata Party accused the government of being unwilling to start its own investigation "into the many Indian names" allegedly involved in the sale.

"That is why it is finding excuses in the Italian government not supplying information," BJP spokesman Prakash Javadekar told reporters.

The magistrate in the case also issued an order for the head of AgustaWestland, Bruno Spagnolini, to be put under house arrest, Italian reports said Tuesday.

Two suspected intermediaries in the bribes who reside in Switzerland have also been targeted with extradition requests, the reports said.

Separately, Finmeccanica issued an emailed statement saying its operations "will continue as usual".

It said it was issuing the statement "with reference to the precautionary measures issued today towards the chairman and CEO of Finmeccanica and the CEO of the controlled Company AgustaWestland".

In addition, the company said it "expresses support" for Orsi and hoped "clarity is established quickly."

India is spending billions of dollars in upgrading its outdated defence equipment.

In the 1980s, an Indian government led by then-prime minister Rajiv Gandhi collapsed over charges of kickbacks paid to the Indian officials by the Swedish group Bofors to clinch a a $1.3 billion artillery deal.

While there was no evidence that Rajiv Gandhi received a bribe, he was voted out of office in 1989 largely over the Bofors deal. He was assassinated in 1991 by ethnic Tamil extremists.

His Italian-born wife Sonia today heads the Congress party, which is again embroiled in a host of corruption scandals.

India banned middlemen in defence deals following the Bofors scandal.