Ivo Sanader, the former Croatian prime minister who is wanted in connection with an anti-corruption investigation, was arrested in Austria yesterday.
Mr Sanader left the country on Thursday shortly before parliament lifted his immunity from prosecution. Prosecutors suspect him of being behind a plan to create slush funds for his conservative HDZ party during his 2004-09 tenure in power.
Mr Sanader has denied the accusations, saying they are politically motivated. He is the highest Croatian official investigated for corruption to date. Mr Sanader was taken into custody in Salzburg by police acting on an international arrest warrant.
Analysts said legal action against the man who dominated local political life for a decade would help Zagreb's bid for European Union membership. Croatia hopes to conclude EU entry talks next year, but before that it has to convince Brussels of its determination to stamp out corruption.
Mr Sanader resigned unexpectedly and with no explanation in July 2009.