Jim McCormick sells the hand-held detectors from his offices in Somerset
The director of a company which sold a bomb-detecting device to 20 countries, including Iraq, has been arrested.
ATSC's Jim McCormick, 53, was detained earlier in the month on suspicion of fraud by misrepresentation, Avon and Somerset police said.
He has been bailed. A BBC investigation has alleged the ADE-651 did not work.
Earlier, the British government announced a ban on the export of the device to Iraq and Afghanistan, where British forces are serving.
Mr McCormick has said the device, sold from offices in Sparkford, Somerset, used special electronic cards slotted into it to detect explosives.
But a BBC Newsnight investigation reported that a computer laboratory said the card it examined contained only a tag used by shops to prevent theft.
There are concerns the detectors have failed to stop bomb attacks which have killed hundreds of people.
The ADE-651 is in use at most checkpoints in Baghdad
The device consists of a swivelling aerial mounted to a hinge on a hand-grip. It does not operate by battery, instead promotional material says it is powered only by the user's static electricity.
The ADE-651 has been sold to a range of Middle Eastern countries and as far afield as Bangkok.
The Iraqi government has spent US$85m (£52m) on the hand-held detectors, now used at most checkpoints in Baghdad.
It is understood Iraq paid about US$40,000 for each device. No Western government uses them.
The BBC has learned the Iraqi Prime Minister Nouri al-Maliki has ordered an investigation into the bomb detectors, expected to report shortly.
The government ban, brought in by Business Secretary Lord Mandelson, starts next week.