A South Korean man accused of accepting cash from Saddam Hussein has been held in the US as part of the probe into the United Nations oil-for-food programme.
The scandal over the oil-for-food programme has grown steadily
Tongsun Park, a businessman and lobbyist, is accused of conspiring to subvert the scheme, which was misused by the former Iraqi leader.
Mr Park received at least $2m (£1.13m) from Baghdad for influencing the programme, according to charges.
The scheme was set up to help Iraqis, but was tainted by corruption.
FBI agents arrested Tongsun Park in Houston, Texas, officials said.
The charges against him were first published in April 2005, but were amended ahead of his arrest to include accusations that he worked directly as an Iraqi agent.
Mr Park also faces charges of fraud and money laundering.
"Saddam Hussein's government paid off Tongsun Park to corrupt the oil-for-food programme from its inception," US attorney Michael Garcia said in a statement.
"Park's arrest is an important step in the federal government's efforts to bring justice to those who broke US law in undermining the humanitarian purpose of that programme."
Paul Volcker issued a damning report into the UN programme
The head of the FBI in New York, Mark Mershon, said Mr Park "actively lobbied" UN officials to set up the oil-for-food scheme, while ensuring he was handsomely rewarded for doing so by Iraqi officials.
He is alleged to have met a senior UN official at his Manhattan apartment in 1993 to discuss the establishment of the programme.
A second meeting in Geneva, with Iraqi officials, was also judged crucial to winning UN backing.
The programme was "a cash cow masquerading as humanitarian aid", said Mr Mershon.
The scandal surrounding the oil-for-food programme has dogged the UN since it was first revealed in 2004.
An Iraqi newspaper linked some 270 people to the deposed Iraqi regime of Saddam Hussein, which is alleged to have made about $13.6bn out of the scheme.
Iraq's deposed regime diverted oil-for-food funds
A UN-sponsored inquiry led by former US Federal Reserve Chairman Paul Volcker uncovered extensive bribery and widespread corruption in the programme.
The investigation has touched UN Secretary General Kofi Annan, whose son was implicated in the scandal.