Italian police have arrested Giuseppe Orsi, the head of Italian state-controlled defence group Finmeccanica.
He faces charges of paying bribes to secure the sale of 12 AgustaWestland executive helicopters to the Indian government.
The alleged corruption occurred when Orsi was head of Finmeccanica’s helicopter unit.
A judicial source said three other people had been placed under house arrest as part of the probe.
The company’s shares were briefly suspended from trading after plummeting.
Highlighting the political sensitivity of the case less than two weeks before elections, Prime Minister Mario Monti said the Italian government would deal with management issues at the company.
“There is a problem with the governance of Finmeccanica at the moment and we will face up to it,” Monti told RAI state television.
In a brief statement, 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 in the meantime, the company 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 series of scandals have become an issue in Italy’s campaign for parliamentary elections to be held on February 24 to 25.