Pavosevic is apparently suspected of involvement in the siphoning of funds from government ministries and state-owned companies through the privately owned marketing firm Fimi Media.

"I don't know what my client is accused of, but I assume that it's to do with the investigation of former Prime Minister Ivo Sanader and former customs chief Mladen Barisic," Miljevic told press.

Miljevic said that the police were searching the premises used by his client and that he expected her to be taken to USKOK headquarters in the afternoon for questioning. "Then we will know what exactly she is accused of," he added.

The police and USKOK would not reveal reasons for the arrest of Pavosevic, who currently serves as an HDZ member of the Zagreb County Assembly.

According to media reports, Pavosevic had served as the HDZ's head of accounting from 2003 to 2008 when she was replaced after an audit found financial irregularities in the party's transactions. She was arrested because Barisic, who had also served as the HDZ's treasurer, told the investigators that he had handed over the money siphoned off through Fimi Media to the party's head of accounting. Barisic said he had brought between 100,000 and 200,000 kuna to the party every month and that the money had been managed by Pavosevic.

The latest arrest comes ahead of Sanader's extradition from Austria to Croatia, which is expected in the coming days.