Frank Kokori, secretary general of the blue-collar oil union, Nupeng, disappeared on 6 June in what his family described as an arrest by secret police. General Sani Abacha's military authorities have denied knowledge of his whereabouts.
On Wednesday, government negotiators said Mr Kokori was being held by security agents, according to Folorunsho Oginni, deputy president of the 150,000- strong Nupeng.
'They are now refuting that the man is in their custody,' he told reporters in Lagos.
The talks, which Nupeng officials said they were adjourning until Monday, were part of a peace bid by the military to ease the deepening crisis in Nigeria sparked by strikes by Nupeng and the white-collar oil union, Pengassan, to demand the release of the opposition leader Moshood Abiola, winner of the aborted presidential elections in June last year.
Officials of the Nigeria Labour Congress (NLC), the trade union umbrella, met senior members of the military junta, which came to power in a bloodless coup last November, in Abuja, the capital, to discuss their threat to call a general strike on Monday if their demand for the release of Chief Abiola, a millionaire Yoruba businessman, was not met. Spokesmen for NLC branches in the northern cities of Kano and Katsina had announced previously that they would not abide by the strike call.
Chief Abiola, who was leading presidential elections on 12 June last year before they were annulled by former military president General Ibrahim Babangida, was arrested and charged with treason after he declared himself president last month.
The government has arrested dozens of pro-democracy and human rights activists in the past month. Up to eight people were confirmed dead after running clashes between pro-democracy demonstrators and police in Lagos on Monday. The Campaign for Democracy, an umbrella of human rights, women's and student groups, reported 20 fatalities. Similar clashes have erupted in Ibadan and Akure, the heart of Nigeria's cocoa-bean industry.
Previous attempts to woo the unions have failed because of the military's demand that they guarantee that any released detainees must refrain from political activities. Chief Abiola has rejected such an appeal. On Thursday, one of his wives issued a statement after meeting her husband which quoted the chief as saying 'the die is cast and there is no going back.'