A former defence minister of Ecuador has been arrested for allegedly authorising a secret deal in 1995 to buy Argentine weapons.
Jose Gallardo is accused of misusing public funds to orchestrate a $7.3m deal to purchase rifles and ammunition later found to be outdated and useless.
Ecuador was subject to a UN arms embargo at the time, because it was fighting a border war with Peru.
A former military chief and three civilians have also been arrested.
The arrests of Mr Gallardo, former Gen Victor Bayas and the three others were ordered by the Supreme Court.
Lawyers for Mr Gallardo said he was innocent.
Mr Gallardo has said through his lawyers that once he realised the arms were defective he recovered the money from arms dealers.
Ecuador eventually made a $600,000 profit on the deal.
Argentine officials broke a weapons embargo to sell rifles and ammunition to Ecuador, even though the Buenos Aires government was trying to mediate in the conflict with Peru.
The border conflict only lasted for a month.
Former Argentine President Carlos Menem remains under investigation for allegedly smuggling the arms to Ecuador.
He spent five months under house arrest in 2001 and is due in court in two weeks' time for questioning over allegations he broke arms embargos by selling arms to Ecuador and to Croatia in the middle of the Balkan conflict.