Former Tabasco Gov. Andres Granier was detained yesterday by federal prosecutors based on a request from state prosecutors, the Attorney General's Office said in a statement.
Federal prosecutors have opened an investigation into allegations that USD 156 million (2 billion pesos) were embezzled during his term, but they have not charged him.
Granier, of the ruling Institutional Revolutionary Party, or PRI, left office last year and abandoned Mexico shortly after. He returned on Tuesday to talk to federal prosecutors. Granier has denied any wrongdoing and said he had to leave Mexico because he was threatened by organised crime.
Current Tabasco Gov. Arturo Nunez, of the opposition Democratic Revolution Party, has repeatedly accused his predecessor of plunging the state into debt by squandering and embezzling millions of dollars and of representing Mexico's corrupt, old-style politics.
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Those claims have been strengthened by reports of extravagant spending by Granier and his inner circle, who have become subjects of a federal investigation.
Local media recently made public an audio in which Granier boasted about owning hundreds of suits and pairs of shoes and of only shopping at the best stores in Beverly Hills.
Granier's former treasurer, Jose Saiz, was detained last Saturday after he attempted to cross from the city of Reynosa into McAllen, Texas. Days before his arrest, local media published photos of him allegedly buying a Ferrari.
State prosecutors said last month that they found 88.5 million pesos (about USD 7 million) in cash in an office used by Saiz.
Granier's party, the PRI, governed Mexico for 71 years during which it was widely criticised for corruption and authoritarian practises. It lost the presidency for the first time in 2000 but returned to power on December 1 with the election of former Mexico State Gov. Enrique Pena Nieto, who has said he will not stand for illegality.
Elba Esther Gordillo, the head of the powerful teachers union, was arrested in February on charges of diverting millions of dollars of funds from the organisation for her personal use.
"The Teacher," as she is known, was widely photographed wearing designer clothes and handbags worth thousands of dollars.