The British newspaper said that foreign investors had so far largely escaped probes over their deals in Croatia, and quoted Orco Group as saying that Ott's detention pointed to growing pressures on foreign investors.

The article quoted Croatian police as saying that Ott was released on Tuesday evening after he had been detained earlier in the day for questioning on suspicion of alleged crimes relating to Suncani Hvar hotels, Orco's joint venture with the Croatian state.

Ott was questioned by police the day after a bitter shareholders meeting, where Ott proposed a value for shares far lower than government privatisation fund officials had hoped, the FT said, adding that Orco representatives said that Ott had not been charged but that he had simply been asked to answer some questions by police as a witness.

The incident comes during Croatia's high-profile anti-corruption drive, which led to the arrest of the former prime minister, Ivo Sanader, in Austria last month on suspicion of corruption, the newspaper said.

Clamping down on corruption – although essential for Croatia's bid to join the European Union in the next two years – has slowed down business in the short term, it added.

Several local businessmen have been arrested and charged for corrupt dealings with state employees in the crackdown led by Jadranka Kosor, prime minister for the past year and half. Seven privatisation fund officials were arrested for corruption in 2007, when Sanader still headed the centre-right government, the FT said.

In conclusion, the article says that Orco, which has real estate investments in Germany and much of central Europe, emerged from court protection from its creditors last year, as it recovered from near-bankruptcy following rapid expansion during the region's property boom.