“President Rupiah Banda has been formally charged and arrested in connection with the procurement of oil which did not benefit the country,” Namukolo Kasumpa, a spokeswoman for government investigators, told reporters.
He was immediately freed on bail and is due to appear in court on Tuesday.
Parliament earlier this month lifted Banda’s immunity. The former leader who ruled Zambia between 2008 and 2011 was promptly questioned about allegations of corruption, money laundering and fraud.
He lost power in an election to the current President Michael Sata.
Banda’s lawyers claim the accusations are part of a ploy by Sata to silence opposition.
Sata’s government says Banda engaged in corrupt activities in the procurement of crude oil from a Nigerian firm.
He is also accused of funnelling taxpayer cash into his election campaigns.