Former Parmalat boss Calisto Tanzi has denied he was responsible for covering up an 8bn euro (£5.7bn; $10bn) hole in the food company's accounts.
Calisto Tanzi's 40-year reign at Parmalat has ended in tears
While he admitted he was aware of the losses, Mr Tanzi claims any illegal acts to hide them were carried out by top managers of their own accord.
An Italian judge earlier ruled that Mr Tanzi has to remain in jail as investigators continue their probe.
He has yet to be formally charged with any crimes.
Parmalat was declared insolvent over the weekend after a web of offshore funds and bank accounts were found to have hidden the losses.
According to court documents, Mr Tanzi made his denial during a nine-hour grilling by police on Tuesday.
He had earlier admitted diverting 500m euros from Parmalat's funds to finance other parts of the business controlled by his family.
Prosecutors also spent the day questioning Mr Tanzi's son, brother and niece.
Earlier the US market watchdog accused Parmalat of "brazen" fraud and of misleading investors.
The Securities and Exchange Commission said Parmalat offered $100m in debt to US bond investors in 2003 while misrepresenting the company's financial position.
It also accused the firm of lying when it said it had used its cash to buy back $3.6bn of debt the same year.
Inherited Parmalat age 22
Chief executive for 40 years
Handed control to son, Stefano, in 2001
Net worth estimated at $1.3bn
Now under investigation
The actions, the SEC said, amounted to "one of the largest and most brazen corporate financial frauds in history".
The Italian media has reported that Mr Tanzi is likely to face charges including market rigging, false auditing and fraudulent bankruptcy.
News agency Reuters quoted a copy of the writ issued to back up Mr Tanzi's arrest, which among other accusations charged that:
Five other people were involved in "promoting, directing and organising" the operation
Mr Tanzi issued false information about Parmalat's finances - "in crisis" since 1995 - "at various times"
Mr Tanzi had set up a Cayman Islands-based subsidiary named Bonlat and claimed it had healthy deposits to offset the parent firm's heavy debts and hide the withdrawals in his favour
Bonlat's assets were said to include a $4.621bn Bank of America account, which did not exist.
The Bonlat account was at the core of the discovery of Parmalat's troubles, after Bank of America disavowed any knowledge of the alleged account.
Mr Tanzi's defence, according to BBC Rome correspondent David Wiley, "is that he stole no money, merely kept on covering up a worsening financial situation which he hid from shareholders".
The company's shares, meanwhile, have been suspended from trading on the Italian stock market.
Parmalat itself is being run by an Italian government-appointed rescue administrator, so it can continue operations and pay its suppliers.
Among them are Italian dairy farmers, to whom the firm owes some 120m euros.
Parmalat, which employs 36,000 people worldwide, will also now be able to put financial creditors on hold, while it draws up a recovery plan within six months and two teams of Italian investigators probe its books.
Recent reports also suggest that Fausto Tonna, Parmalat's former chief financial officer, has told Italian investigators that the fraud dates back until the late 1980s.
The scandal at Parmalat, now dubbed "Europe's Enron" after the downed American energy giant, could also have grave implications for the company's auditors, the Italian branch of accountancy firm Grant Thornton.
According to reports, the international head of Grant Thornton has ordered an internal investigation into the affair.
Parmalat's troubles leave Italian farmers in the lurch
The accountancy firm has been auditor to Parmalat or some of its main subsidiaries since 1990.
Grant Thornton has so far insisted that its staff have acted correctly, and that the fake document has made them a victim of fraud as well.
Questions have also been raised about how Italy's financial regulators could have missed the problems at Parmalat.
Italy has also been forced to call on the European Union to waive its rules on state aid to prevent Parmalat's woe from creating a wider dairy sector crisis.
The government is primarily concerned to minimise any wider fall-out from Parmalat, which plays a crucial role as Italy's biggest food company, purchasing 8% of the country's milk production.
Italy's treasury has also proposed creating a powerful regulator able to prevent any future repeat of the Parmalat scandal.