Police in Dubai have arrested James Ibori, a former governor of the oil-rich Niger Delta, on corruption charges, the head of Nigeria's anti-fraud agency has said.
Ibori was taken into custody on Thursday on the orders of the Nigerian government for allegedly laundering hundreds of millions of dollars during his eight years in office.
Faridi Waziri, chairwoman of Nigeria's Economic and Financial Crimes Commission (EFCC), said Ibori was detained after an arrest warrant was issued by Interpol, the international police agency.
He is wanted for questioning in both Britain and Nigeria.
"We are consulting on the next line of action, whether the Metropolitan police will want him to stand trial there in London," Waziri told reporters in Abuja, Nigeria's capital.
"We also have a case here pending against him."
Yvonne Ndege, Al Jazeera's correspondent in Abuja, said: "I just spoke to his [Ibori] spokesman and he denies all the money laundering allegations and he claims that Ibori has been granted bail in Dubai.
"He (the spokesman" said Ibori was arrested in Dubai for some type of credit card fraud.
"But given the amount of money he is accused of stealing in Nigeria, it seems impossible that one could launder hundreds of millions of dollars through credit cards."
Ibori is a member of the Elders' Committee of the ruling People's Democratic Party (PDP) and was instrumental in the rise to power of Umaru Yar'Adua, the late president, in 2007.
Yar'Adua died last week after a long bout of heart and kidney ailments.
His deputy Goodluck Jonathan has since taken over as president, pledging to tackle corruption in the country.
Ndege said: "This arrest is the first sign that Goodluck Jonathan's efforts to fight corruption are to be taken seriously.
"This arrest happened at the behest of the Nigerian authorities.
"The man is accused of stealing hundreds of millions of public money, in oil money and laundering it through a complex web of companies and properties mainly in the world's major cities including New York, London, Washington DC, Paris."
Nigeria's anti-corruption police last month tried to arrest Ibori to question him over allegations that $290m was looted from Delta state government coffers while he was governor.
However, a crowd of hundreds of Ibori's supporters prevented police from arresting him.
"He was so powerful and remains so powerful in Nigeria," said Ndege.
"He was able to get court orders in Nigeria to actually stop any kind of investigation into him.
"One of the reasons is because he was considered very close to the late Umaru Yar'Adua and in many people eyes that relationship made them feel that he was untouchable.
"Now some Nigerians will welcome the news, but on the other hand he does have supporters in the Niger Delta."
The EFCC charged Ibori in 2007 with looting more than $85m during his eight-year tenure as governor of Delta, one of the three main oil-producing states in the southern Niger Delta region, but a court dismissed the charges.
The EFCC has said it will appeal.
Several of Ibori's associates are facing money laundering charges in Britain, where a court froze $35m worth of his assets in August 2007 on suspicion they were the proceeds of corruption.
Ibori has not been charged in that case.