Polancec was arrested at his Koprivnica home and after he is questioned by the police, he will be transferred to the offices of the national anti-corruption investigative agency USKOK by the end of the day.

The police and USKOK did not say why Polancec had been arrested, but Justice Minister Ivan Simonovic said that according to available information, the arrest was related to the ongoing investigation in the Podravka case.

According to unofficial sources, apart from Polancec, there are four other suspects, and the media speculate that one of them is Zagreb lawyer Zoran Markovic, director of the Fima Ami company registered in Malta, to which the Fima company from Varazdin transferred a 10.6 percent stake in Podravka. One of Fima Ami's owners is Milan Horvat, who was arrested with five other people for alleged wrongdoing in Podravka in an anti-corruption operation called "Manager" in October last year.

According to the media, Markovic participated in negotiations on management rights in the Croatian oil company INA which Polancec conducted on behalf of the Croatian government. It is speculated that in exchange for control of management rights in INA, the OTP bank provided EUR 34 million deposited in it by the Hungarian oil company MOL, to help close a loan from Merrill Lynch which Fima took to buy Podravka shares.

Shortly after the arrest of people suspected of conspiring to illegally acquire a majority interest in Podravka by using the company's money and engaging in various financial transactions worth HRK 250 million, the media started linking Polancec with the case.

Nine days later, he tendered his irrevocable resignation as Economy Minister, saying that he was a victim of a lynching campaign and that he would not use his immunity from prosecution as a member of Parliament in defending himself from the accusations. He also denied any involvement in the Podravka scandal, saying that Podravka shares had never been bought for private interests.

In late January this year, USKOK launched against him an investigation for illegal brokering, on the suspicion that he incited businessman Zvonko Beljo of Krizevci to take part in an illegal transfer of money in the Podravka case. Several days later, he was also suspected of an illegal installation of lighting at a soccer field in his birthplace Djelekovec near Koprivnica. He is charged with having defrauded Podravka of HRK 10 million for that purpose.

Polancec started his career in Podravka in 1992. Five years later, he became head of a company department, and in March 2000 he was appointed to the company's management board. He left the company in February 2005 to join the government at the invitation of the then Prime Minister Ivo Sanader. However, according to the media, he continued to significantly influence Podravka's operations.

He started his political career in 2004, by becoming president of the Croatian Democratic Union (HDZ) branch in Koprivnica. In February the following year he was appointed Deputy PM and in early 2008 he was reappointed Deputy PM and appointed Economy Minister in the new government led by Ivo Sanader. He kept those positions also in the government led by Jadranka Kosor until his resignation.

The media have been speculating in recent months about Polancec's role in the Podravka case, which in the meantime has taken on an international dimension due to suspicion that the operation to illegally acquire a majority interest in Podravka had been carried out through various transactions and business relations allegedly involving MOL, the OTP bank and Merrill Lynch.

Justice Minister Ivan Simonovic said today that according to available information, Polancec was arrested in the investigation in the Podravka case.

He would not comment on any details, saying that the case was within the remit of the State Prosecutor's Office and the Ministry of the Interior.

The media also wanted to know if Zoran Markovic, who was reportedly also arrested this morning, had done any jobs for the government, to which Simonovic said that he had no knowledge of it and that Markovic definitely did not work with his ministry.