THE head of Italian state-controlled defence group Finmeccanica has been arrested in a corruption probe centred on the sale of helicopters to the Indian Government, a judicial source said.

Finmeccanica chief executive and chairman Giuseppe Orsi was arrested for alleged bribes paid to secure the sale of 12 Agusta-Westland aircraft when he was head of the Finmeccanica helicopter unit, the source said.

Police were searching the defence contractor's offices in Italy's financial capital Milan, police sources said.

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Highlighting the political sensitivity of the case less than two weeks before elections, Prime Minister Mario Monti said the government would deal with issues at the company. He said: "There is a problem with the governance of Finmeccanica at the moment and we will face up to it"

Finmeccanica expressed its support for Orsi and said it hoped his legal position could be clarified as soon as possible. Its business was operating as normal, the firm added.

The Italian business world has been shaken in recent weeks by a series of corruption cases, notably a derivatives scandal at Banca Monte dei Paschi and an alleged bribery case involving oil service group Saipem.

The latest scandals have become an issue in Italy's campaign for parliamentary elections planned for February 24 to 25.