He is reported to be undergoing questioning over a withdrawal of nearly $2.5bn from the Nigerian central bank during the rule of the former leader, General Sani Abacha.
Reports of his arrest were published in Tuesday's This Day newspaper. It said he was detained when security men stormed his house near the city of Kano.
Millions missing
Correspondents say Mr Gwarzo is believed to have illegally channelled millions of dollars into pro-Abacha campaigns.
Millions had been reportedly set aside to finance Nigeria's bid to get a permanent seat on the UN Security Council, said This Day.
Diplomats say Mr Gwarzo has already been made to pay back $250m collected from government coffers during the Abacha regime.
Years of corruption
The BBC's Lagos correspondent, Hilary Andersson, says Nigeria has been destroyed by years of corruption in high levels of government.
The new leader, General Abdulsalam Abubakar, has moved to distance himself from the former regime.
Members of the informal "kitchen cabinet" of General Abacha, like Mr Gwarzo, are now out of the circle of power .
Our correspondent says by investigating the Abacha government's misdemeanours, the new administration is setting a badly needed example.
|
1998 Contents |
|
|
- | Balloon race |
|
- | Care in the community |
|
- | Sri Lanka |
|
- | Drugs in sport |
|
- | Millennium Dome |
|
- | WEF Davos |
|
- | Health |
|
- | Diana |
|
- | 04/98 |
|
- | Karla Faye Tucker |
|
- | EU Enlargement |
|
- | Five Nations |
|
- | Asian economic crises |
|
- | London Referendum |
|
- | Water Week |
|
- | Romanov |
|
- | Pope in Cuba |
|
- | South Korea |
|
- | Chinese New Year |
|
- | Harley Davidson |
|
- | Woodward |
|
- | Car Crash |
|
- | Northern Ireland |
|
- | Elgar |
|
- | Super Bowl XXXII |
|
- | Kosovo |
|
- | Gulf War Syndrome |
|
- | Hooligans |
|
- | Bloody Sunday |
|
- | Food Agency |
|
- | Encryption |
|
- | Bon Appetit |
|
- | Eurasia 98 |
|
- | US abortion rights |
|
- | liberal democrats |
|
- | Valentine |
|
- | Welfare Reform |
|
- | Australian Republic |
|
- | PNG |
|
- | 1970s |
|
- | India Elections |
|
- | Viagra |
|
06/98 Contents |
|
|
- |
Nigeria |
|
- |
Queens Birthday Honours |
|
- |
Hong Kong Handover Anniversary |
|
- |
Cardiff summit |
|
- |
Clinton in China |
|
- |
After Abacha |
Nigeria: a history of coups and countercoups
(07 Jul 98 | After Abacha)
Analysis: What next for Nigeria?
(09 Jul 98 | After Abacha)
Text of Abubakar's address to Nigerian nation - for Online
(08 Jul 98 | Monitoring)
Obituary: Abacha leader with an iron grip
(08 Jun 98 | After Abacha)
Nigeria Media Monitor
NigeriaWEB
The BBC is not responsible for the content of external internet sites.
Special report: Nigeria in transition
Abiola: Millionaire turned politician
Profile: How General Abubakar emerged from the shadows
Obituary: Abacha leader with an iron grip
Abiola's death captures world headlines
Nigeria's ethnic divisions
From Our Own Correspondent
Analysis: What next for Nigeria?
Abacha's uniting shadow