Italian police arrested the chief executive of Italy's largest defense and aerospace group on Tuesday as part of an investigation into alleged international corruption.

Finmeccanica CEO Giuseppe Orsi is under investigation in a case involving the payment of (EURO)500 million ($670 million) in bribes for the sale of 12 helicopters to the government of 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.

Finmeccanica, which is 30-percent government owned and was once considered a jewel among Italian 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 to (EURO)4.36 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.

Premier Mario Monti, whose technical government has wrestled with the Finmeccanica case, said the governance issues at the aerospace company would be dealt with `'as soon as possible." Monti said that anti-corruption measures need to be reinforced on a national level.

`'It is important not only morally and civilly, but also economically because it facilitates economic investment in our country," Monti said on state radio.