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The disgraced ex-chairman of Britain's Co-op Bank, Paul Flowers, was arrested on Friday in a probe into the supplying of drugs in a scandal that has fast become a political row.
Flowers, a 63-year-old Methodist minister, was filmed allegedly talking about buying crystal meth, crack cocaine and ketamine by the Mail on Sunday tabloid newspaper.
The former local councillor for the opposition Labour party apologised after the story was published last weekend and was subsequently suspended by the church and Labour.
"Late yesterday evening, officers from West Yorkshire police arrested a 63-year-old man in the Merseyside area in connection with an ongoing drug supply investigation," the force said in a statement on Friday.
"He has been taken to a police station in West Yorkshire where detectives will continue their enquiries."
Reverend Flowers was chairman of the Co-operative Bank, which prides itself on ethical investments, from 2010 until June earlier this year, and the lender and financial regulators face serious questions over his appointment.
Flowers has been engulfed in a highly damaging series of allegations over illegal drug use, questions over expenses claims at a drugs charity, sex with rent boys, and drink-driving.
The scandal further damages the reputation of the Co-op just weeks after it unveiled a drastic restructuring that will hand control to US hedge funds in order to plug a £1.5-billion ($2.4-billion, 1.8-billion-euro) hole.
The revelations also sparked the resignation of Len Wardle, the current chairman of parent firm the Co-operative Group and who led the board that appointed Flowers three years ago. He will be replaced by his deputy Ursula Lidbetter.
The BBC reported on Friday that Flowers -- who was paid £132,000 a year -- resigned from the Co-op in June after being confronted by "lavish" expense claims, and growing doubts over his competence.
The Co-op Bank is meanwhile seeking to recover contractual payments made to Flowers, and he has been told to hand back £31,000.
The Co-op bank has its roots in the co-operative movement of the 19th century based on principles of self help by working people for working people, and the Methodist movement is a branch of Christianity based on rigorous standards of personal behaviour and on help for ordinary people.
Conservative Prime Minister David Cameron said on Thursday he would order a formal inquiry into the finances of the bank, which faces a big recapitalisation to cover bad loans and the costs of its failed expansion plan.
Cameron has also blasted Labour leader Ed Miliband over his centre-left party's close links with the bank and its parent company Co-operative Group.
"Why was Rev Flowers judged suitable to be chairman of a bank? Why weren't alarm bells ringing earlier, particularly by those who knew?" Cameron said.
The bank "has been giving soft loans to the Labour Party, facilities to the Labour Party (and) donations to the Labour Party", the prime minister said.
"And yet, now we know, all along they knew about his past. Why did they do nothing to bring to the attention of the authorities this man who has broken a bank?"
Miliband defended Labour's links with the bank, arguing that it had acted with "utmost integrity" and accusing Cameron of smear tactics.
Last weekend, the Mail on Sunday published video footage of Flowers handing over £300 in order to obtain illegal drugs.
The paper added that the event had occurred just days after Flowers bungled an appearance before lawmakers on parliament's Treasury Select Committee, where he sought to explain the Co-op Bank's dire finances.
At his appearance on November 6, Flowers said that the Co-operative Bank's balance sheet had £3.0 billion of assets when in fact the figure was £47 billion. He also appeared confused about its loans and investments.