The pilot was operating a helicopter joy flight from Coolangatta to Cook Island and return. On board were the pilot and four passengers. The pilot reported that the helicopter's engine failed while flying about 50 metres off shore, at a height of approximately 500 ft. He said that at the same time he noticed the power loss, the engine-out light started flashing. During the subsequent forced landing, the helicopter landed heavily, coming to rest upright, but slightly nose down in about 30 cm of water. During the landing the main rotor blades flexed downwards and severed the tail boom. After the helicopter came to rest the pilot assisted the passengers to safely exit the aircraft. The pilot advised that the engine continued to run at a very low idle for some time before he re-entered the helicopter and closed the fuel shut-off control. Based on information provided by the pilot the helicopter's weight and balance were assessed to be within limits. The investigation revealed that the nut which secures the bleed air sensing line between the power turbine governor and the fuel control unit was loose at the fuel control end. The loss of this sensing function limited the available fuel flow. As a result, engine rpm reduced uncontrollably to a low idle. Fret marks on the mating surfaces of the nut and the male nipple at the rear of the fuel control indicated that the engine may have operated for a period of time with the nut loose. Specialist metallurgical examination was unable to determine how long the nut had been loose. After the accident, a substitute sensing line was fitted and the engine operated normally. Examination of the maintenance documentation could find no evidence of any recent work being carried out on the sensing line.