Maputo  - The chief executive of Mozambique's state-owned airport management company Aeroportos de Mocambique (AdM) was being held by police Wednesday on suspicion of defrauding the company of millions of dollars.

Diodino Cambaza, 44, was arrested late Tuesday, after an investigation by the attorney general found evidence that Cambaza and several other board members, including the chief financial officer, had swindled company funds since 2005 when he was sworn in as the new chairman.

The financial officer was also arrested.

The investigation was ordered on the foot of a series of allegations against the executives by company staff in local media over the past two months.

Cambaza is alleged to have siphoned off close to 500,000 dollars from AdM to finance the refurbishing of his official home and to have diverted money earmarked for the redesign of Tete airport in the north for his personal use, including cattle, cars and a luxury home.

He is also alleged to have bought three homes for the company's board members and of buying a home in South Africa for the son of former transport minister Antonio Munguambe, who is studying in the country.

The attorney general's office ordered Cambaza's arrest for alleged mismanagement of public funds, a crime that carries jail terms of between eight and 12 years.

He is expected to appear before a court in the next 48 hours.

Although the government of President Armando Guebuza has stepped up its fight against corruption, seen as endemic in the former Portugese colony, Cambaza is one of the first senior officials the state has tried to bring to book.

Disappointed by the slow pace of progress on graft, some Western governments like Sweden and Norway cut aid to the country in recent months.

AdM manages all of Mozambique's 19 airports and several airfields throughout the country.

The company has embarked on an ambitious expansion programme, in part to prepare for a possible influx of visitors during the 2010 football World Cup in neighbouring South Africa.

Maputo international airport is getting a 70-million-dollar facelift.

AdM also plans to invest 200 million dollars in airfields across the country. (dpa)