The BBC reports that David Haigh was arrested after landing in Dubai and has spent the last three nights in custody.
Dubai-based private equity group GFH claim the alleged wrongdoing is directly connected to their ownership and subsequent sale of the club.
Haigh, who was employed by GFH in December 2012 and resigned earlier this year, “strenuously” denies the allegations.
A close friend of Haigh’s told the BBC: “David has done absolutely nothing wrong or illegal.
“He is appalled to find himself in this position.
“However, as someone who knows Dubai well and respects its institutions he is confident that the authorities will see these allegations for what they really are and clear him from any wrongdoing.”
Leeds United was sold by GFH in April to Italian Businessman Massimo Cellino
Earlier this month, Haigh attended a voluntary interview with West Yorkshire Police as part of an investigation into the installation of surveillance equipment at Elland Road, Leeds United’s football ground.
He admitted to overseeing the installation of cameras in the club’s boardroom, which became a police matter following allegations that it may have been funded as a result of a misappropriation of club funds.
Haigh is not the first football owner to land himself in hot water over financial matters. In March, former Bayern Munich president Uli Hoeness was jailed for three and a half years for tax evasion amounting to €27.2m resulting from a “period of obsessive stock trading”.
He had chosen to go public in a bid for “voluntary disclosure”, a scheme which allows evaders to avoid trial by correctly detailing the taxes they have skipped and paying them back with 6% interest.
But during the trial it emerged that he evaded sums ten times higher than the previously admitted €3.2m.
