Sri Lankan authorities have arrested the youngest brother of former president Mahinda Rajapakse for "misappropriating" public funds, his lawyer has said.

Basil Rajapakse, a former economic development minister, was arrested on Wednesday hours after the ex-leader accused his successor of a witch-hunt.

Basil was taken into custody after being questioned for more than seven hours, his lawyer UR de Silva told the AFP news agency, adding that the charge was for a non-bailable offence.

"We are told that he will be taken before a magistrate this evening," de Silva said.

"Since he is charged under the Offences Against Public Property Act, bail is not possible."

Two senior officials who worked under Basil were also arrested on charges that the three of them were responsible for a 70 million rupee ($530,000) fraud involving the construction of public housing.

Basil, who has dual Sri Lankan-American citizenship, had fled to the United States soon after his brother lost the January 8 election to his former ally Maithripala Sirisena, who came to power on a pledge to fight corruption.

After Basil returned home on Tuesday, his lawyers had tried to resist attempts to have him immediately arrested.

He went on his own to the police Financial Crimes Investigations Department where he was questioned for more than seven hours before he was arrested, the lawyer said.

'Wild allegations'

Basil is the first member of the former first family to be arrested since Rajapakse's election defeat.

Another brother, Gotabhaya, who was the former defence secretary, is also under investigation in connection with several frauds involving the purchase of military and civilian aircraft as well as arms deals.

All the brothers have denied any wrongdoing and the former president told AFP in an interview earlier on Wednesday that the investigations amounted to a witch-hunt.

Mahinda is himself under investigation over a bribery charge and is due to be questioned by anti-graft detectives on Friday.

The new government has accused him and his inner circle of syphoning off billions of dollars by inflating the size of foreign-funded infrastructure projects.

"They have no evidence. They are making wild allegations. This is a witch-hunt," Rajapakse told AFP at his home in a suburb of the capital Colombo, where he is protected by police and military guards.

"Neither I nor any member of my family has ill-gotten money. At first, they said I had money in Swaziland, then in Dubai. Show us the money, where is the evidence?"

Source: AFP