Judge Kresimir Devcic and representatives of the anti-corruption agency USKOK and Sanader's defence lawyers arrived in the Remetinec prison shortly before 0930 hours, when the hearing started.

The judge is expected to consider arguments from both Sanader's defence lawyers, who believe that Sanader should be released, and USKOK which insists on keeping the ex-PM, accused of white-collar crimes, behind bars for two more months.

Sanader has been in the Remetinec prison facilities in Zagreb since 18 July when he was extradited from Austria.

One of Sanader's defence lawyers, Cedo Prodanovic, said the defence for now would not ask that Sanader be released on bail but that they "will consider house arrest once we see the outcome of today's hearing."

Prodanovic said the hearing is held in the Remetinec prison because Sanader's condition, as the law stipulates that the defendant must attend a hearing at which a decision on investigating custody is expected to be handed down.

Judge Devcic said he would announce his decision this afternoon.

Investigating detention was set against Sanader in December 2010 as he is considered a flight risk. Detention was also set because the court believes that Sanader could tamper with witnesses.

About a month ago Sanader's defence contested the claim that their client was a flight risk, explaining that Sanader left Croatia for Austria last December for a previously scheduled business meeting. Sanader was arrested in Salzburg after he was stripped of parliamentary immunity. Considering the matter pertaining to Sanader's detention, the court turned down this claim in late July, describing the suspect as a flight risk.

Sanader, who is also former president of the ruling Croatian Democratic Union (HDZ) party, is the prime suspect in the Fimi Media case. He is suspected of conspiring together with other suspects in the case, including former head of the Customs Administration Mladen Barisic, and of abuse of office to siphon funds from government ministries and state-owned companies through the private company Fimi Media. Some HRK 100 million is believed to have been siphoned off this way and some of the money ended up in the HDZ's slush fund.

Apart from the Fimi Media case, Sanader is suspected of illegal operations between the Croatian Power Company (HEP) and the Dioki petrochemical company, owned by Robert Jezic. He is also suspected that in 1995, in his capacity as Deputy Minister of Foreign Affairs, he abused his office by arranging with Hypo Alpe Adria Bank a commission of HRK 3.5 million in exchange for a loan the bank approved to the Croatian government.

USKOK has widened the investigation against Sanader and Dioki owner Jezic on the suspicion that they attempted to gain an illegal profit of 10 million euros for Dioki at the expense of the state-owned oil pipeline operator JANAF. In mid-June, an investigation was launched on suspicion that he received EUR 10 million in kickbacks for awarding Hungary's MOL with management rights in Croatia's oil and gas group INA.

Austria is also investigating him and his involvement in money laundering, however no indictment has been issued yet.