STANDFIRST: Giuseppe Orsi held on charges relating to allegations company paid GBP500,000 in bribes to secure GBP480m contract in 2010

The boss of Italy's biggest defence company, Finmeccanica, has been arrested over allegations he paid bribes to secure a deal to sell 12 helicopters to India.

Giuseppe Orsi, chairman and chief executive of the defence group, was arrested on corruption and tax fraud charges during a dawn raid on his home on Tuesday (12FEB). He was remanded in custody. Bruno Spagnolini, the chief executive of the group's wholly owned

Anglo-Italian helicopter company AgustaWestland, was also arrested on the same charges and placed under house arrest.

The charges relate to allegations Finmeccanica paid 40m Indian rupees in bribes to secure a EUR560m contract to sell helicopters to India in 2010. At the time of the deal Orsi, 67, was head of AgustaWestland. Police also raided the offices of Finmeccanica and the Milan office of AgustaWestland. The high-profile arrests are the latest in a series of scandals to rock Italy less than two weeks before a general election. Finmeccanica is 30%-owned by the Italian state, and is the country's second-biggest private employer behind Fiat.

Italy's prime minister, Mario Monti, said: "There is a problem with the governance of Finmeccanica at the moment and we will face up to it." India's defence ministry has asked the country's central bureau of investigation to investigate the deal, which included "specific contractual provisions against bribery and the use of undue influence as well as an integrity pact", the ministry said in a statement.

The latest arrests follow at least two other high-profile corruption investigations involving the defence company. Former chairman Pier Francesco Guarguaglini resigned after he was targeted in one investigation that led to criminal charges against his wife, who ran a Finmeccanica unit. Orsi has previously denied any wrongdoing in the case and said he would not resign.

Finmeccanica denied any wrongdoing, and said it was business as usual, according to a statement.

India, the world's largest weapons importer, has a history of corruption in defence deals. A multi-million dollar scandal in the 1980s over the purchase of Swedish Bofors artillery guns contributed to an electoral defeat for the then prime minister Rajiv Gandhi.

Westland, originally a British helicopter manufacturer that merged with Italy's Agusta in 2000, was at the centre of a 1980s political scandal in the UK that led to Michael Heseltine quitting as defence secretary in Margaret Thatcher's cabinet. It employs more than 3,000 people at its main UK site in Yeovil.

With acknowledgement to Rupert Neate and Guardian News Service.

I wouldn't for a moment think that Finmeccanica nor AgustaWestland did not try the same in the Agusta A109 and SuperLynx helicopter acquisitions for the SANDF.

It's just that these project were substantially small than the big ones, being Gripen, Hawk, Meko 200AS and Type 209 that they fell outside the inquisitorial radar.

A proper forensic audit, and not by Shauket Fakie CA(SA), is indicated.