Paolo Pozzessere, the head of Italian defense and aerospace technology company Finmeccanica, was arrested in Rome Tuesday on charges of corruption related to the sale of helicopters and other equipment to Panama.
The Italian media reported that police are also conducting a series of searches in various locations in Naples and Rome to collect evidence in the case.
A contract involving the sale of boats to Brazil is also being investigated.
The company is under investigation for allegedly offering bribes to government officials in exchange for the contracts. The investigation is focused on contracts between Panama and the companies Selex, Telespazio and Augusta, which are controlled by Finmeccanica.
There are alleged recorded conversations in which Pozzessere discussed paying approximately $30 million in bribes, including giving President Ricardo Martinelli a helicopter. Martinelli has denied any wrongdoing.
The payments were never made, prosecutors said, because another corruption case involving the company derailed it.
Panama, Brazil, Russia and Southeast Asia Countries are involved in the investigation. Prosecutors allege that a bribe of $23.4 million had been pledged to Martinelli, and "other political representatives" in exchange for a contract to purchase helicopters and other equipment say Reuters and Efe reports
Both the company and Panama's government have denied the allegations. Finmeccanica said in a statement that "neither the group nor societies linked to it paid the government of Panama" any money "through intermediaries."