The head of the Italian aerospace company, Giuseppe Orsi was arrested in Milan on Monday connection with charges that bribes were paid to secure an Indian defence helicopter deal.

According to Italian news agency ANSA, “Giuseppe Orsi, the head of Italian defence and aerospace giant Finmeccanica, was arrested on Monday in relation to a probe into international corruption. He is suspected of involvement in the payment of bribes regarding the sale to the Indian government of 12 helicopters produced by Finmeccanica's subsidiary AgustaWestland.'

Italian prosecutors having initiated a probe into the alleged unethical dealings of M/s. Finmeccanica, Italy. The probe had been widened to include the Indian contract signed with M/s. Augusta Westland (UK).

“The contract was signed in February, 2010 for the purchase of 12 helicopters. With reports of alleged bribery appearing in the media, the Defence Ministry through the Ministry of External Affairs had sought information from the Governments of Italy and UK. No specific inputs were, however, received substantiating the allegations,” the Indian Defence Ministry in a press statement said here on Tuesday.

The contract signed with M/s. Augusta Westland includes specific contractual provisions against bribery and the use of undue influence as well as an Integrity Pact.

“Since no specific input has been received so far from the two Governments, Ministry of Defence has decided to refer the case to CBI for inquiry,” the press statement said.

The Official Spokesperson in the Indian External Affairs Ministry, Syed Akbaruddin also said that no specific information was received. He clarified : “We have heard this information from news reports. As far as we are concerned, we had through our Embassy in Italy requested the Italian Government to provide us information that they may have in connection with allegations which have been made on the matter. We have not received any response from them so far on that, the argument being that this is in Italy a judicial process. Because the prosecutors are perhaps working under judicial supervision, therefore, the executive is not able to share that information with us. That is where we stand on that.”

The 2010 deal has been under the scanner for more than a year now after Italian media reports suggested the arrest of two alleged middlemen in Europe for paying bribes to secure the deal.

The first three of the 12 AgustaWestland VVIP choppers have already arrived in India and the rest are expected to be supplied to the IAF by the middle of next year. The Defence Ministry in New Delhi is awaiting details from Rome after which it will act accordingly, sources said.

After the arrest, the Italian firm said in a statement that 'Finmeccanica expresses support for its Chairman and CEO, with the hope that clarity is established quickly, whilst reaffirming its confidence in the Judges.'

It added, 'With reference to the precautionary measures issued today towards the Chairman and CEO of Finmeccanica and the CEO of the controlled Company AgustaWestland, Finmeccanica confirms that operating activities and ongoing projects of the Company will continue as usual.' The Italian firm had pipped American Sikorsky to bag the Rs 3,600 crore deal.

In February 2010, India had inked the deal to acquire the 12 three-engine AW-101 helicopters from AgustaWestland for IAF's elite Communication Squadron, which ferries around the President, PM and other VVIPs. Despite initial objections from the Finance Ministry, the Cabinet Committee on Security (CCS) had cleared the deal in 2010.

Defence Minister A K Antony had then said, 'IAF and SPG repeatedly told us the helicopters were required because of the changing security scenario... the finance ministry also agreed later. The CCS then took a considered decision.'

As per earlier media reports, 'slush money' allegedly generated by Finmeccanica through arms contracts was used to bribe Italian political parties. The Indian VVIP helicopter deal has also come in for some mention in the reports.

After the allegations came to light, India had sought reports from the Italian investigators about their probe in the issue but no specific details were provided to it.

In Parliament, Defence Minister A K Antony had said that if any wrongdoing is found in the case, 'suitable penalty measures' will be taken by the Ministry.

Antony had said the Defence Ministry was pursuing the matter and committed to take suitable penalty measures in event of allegations being substantiated.

'However, in absence of any specific information in this regard, government has not ordered any formal inquiry into the case so far,' he said.