India on Tuesday launched 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," Indian defence ministry spokesman Sitanshu Kar told AFP.
Separately, India's defence ministry in a statement said it had sought the CBI inquiry because it had received no information from the Italian and British government about the allegations.
"Since no specific input has been received so far from the two governments, the ministry of defence has decided to refer the case to the CBI for inquiry," the defence department statement said.
An Indian defence ministry source told AFP that the reported arrest of Orsi and the Indian CBI investigation may not have any immediate impact on the helicopter deal.
"The ministry will wait and see before taking a final call on taking delivery of the remaining helicopters," the source said.
The Press Trust of India said the ministry has decided to "put on hold the receipt of the remaining nine of the 12 helicopters."
Defence ministry spokesman Kar declined comment on the report.
Orsi has denied any wrongdoing in the $748-million deal, signed in February 2010 for the delivery of the choppers between January and July of this year.
India's defence minister A.K. Antony told parliament last year the Congress-led government, which has been buffeted by a string of corruption scandals, would slap "suitable penalty measures" in the event of wrongdoing by Finmeccanica.
Antony said after reports of alleged kickbacks surfaced in the Indian media, the defence ministry, which is spending billions of dollars in upgrading its outdated military equipment, sought details from the Italian government.
But he said Rome had replied it had "no official position... in view of the independence of the (Italian) judiciary".
An Indian foreign ministry spokesman reiterated Antony's statement on Tuesday.
India's main opposition Bharatiya Janata Party said there "many Indian names" allegedly involved in the sale and accused the government of dragging its heels in seeking to identify them.
"That is why it is finding excuses in the Italian government not supplying information," BJP spokesman Prakash Javadekar told reporters.
In the 1980s, a previous Congress government led by then-prime minister Rajiv Gandhi collapsed over charges of kickbacks paid to Indian officials by the Swedish group Bofors to clinch a $1.3-billion artillery deal.
While there was no evidence Gandhi received a bribe, he was voted out of office in 1989 largely over the Bofors deal. He was slain in 1991 by ethnic Tamil extremists.
His Italian-born wife Sonia today heads the ruling Congress, which is again battling a host of corruption accusations, including an enormous telecom scandal.
India banned middlemen in defence deals following the Bofors scandal.
The Italian magistrate in the case also issued an order for the head of AgustaWestland, Bruno Spagnolini, to be put under house arrest, Italian reports said on 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".