Italian PM Mario Monti assures 'correct governance' of its defence group Finmeccanica

Rome: Italian Prime Minister Mario Monti has said that his government would "guarantee the correct governance" of Italian defence and aerospace company Finmeccanica, after its Chief Executive Officer Giuseppe Orsi was arrested on suspicion of corruption.

Mr Monti said he was sure that prosecution would "do their duty" in Orsi's case.

He said that following Orsi's arrest on Tuesday, it was important that the government was "able to intervene with some measures to guarantee the correct governance of the company and the whole group."

Mr Monti referred to a statement made by his economy minister Vittorio Grilli on Tuesday, which said the ministry was working to make sure that Finmeccanica adopts a system of governance that provides management continuity, protects shareholders' interests and guarantees transparent decision-making.

The Italian PM had previously spoken out on this topic, saying that anti-corruption measures need to be reinforced at a national level.

Italian police arrested Orsi, the chief executive of Italy's largest defence and aerospace group, as part of an investigation into alleged international corruption.

He is under investigation in a case involving the payment of bribes in Rs. 3600 crore deal of 12 helicopters to India.

Prosecutors in Busto Arsizio, north of Milan, ordered a search of Orsi's home, as well as the headquarters of Finmeccanica's AgustaWestland helicopter division.

Authorities also ordered the house arrest of AgustaWestland CEO Bruno Spagnolini.

Defence Minister AK Antony has ordered a separate investigation in the case. The defence ministry, in a statement, said that the deal included provisions against bribery and "the use of undue influence".

Finmeccanica, which is 30-percent owned by the Italian government and was once considered a jewel among the country's companies, said in a statement that it will continue operating as usual and expressed support for the executives.

The statement called the measures against Orsi and Spagnolini "precautionary".

Orsi has repeatedly denied paying any bribes.

Finmeccanica shares dropped 8.4 percent in Milan trading despite an order by the market watchdog banning short-selling of the company's stock.

Short-selling is when traders sell stock they do not actually own, hoping to buy it back at a lower price.

Finmeccanica and its executives have been the target of a wide-ranging, years-long investigation into alleged corruption in the awarding of international contracts.

In 2011, Orsi took over at the helm of Finmeccanica when the previous chairman and CEO, Pier Francesco Guarguaglini, was also implicated in the bribery investigation.

Guarguaglini and his wife, who ran a subsidiary, are accused of setting up slush funds to funnel money to political parties.