Cayman Islands Prime Minister McKeeva Bush was arrested on Tuesday on suspicion of financial irregularities and importing explosives without a permit, police on the British overseas territory said.
The Royal Caymans Police Service said Bush, 57, was arrested at his Bay West home at 7.00am and is "currently detained in police custody in connection with a number of ongoing investigations."
Bush he is being held on suspicion of alleged misuse of a government credit card and of abuse of office "in connection with the alleged importation of explosive substances without valid permits on or before February 2012."
The trio of western Caribbean islands -- Grand Cayman, Cayman Brac and Little Cayman -- south of Cuba has a population of nearly 57,000.
The islands have an elected legislature but a governor appointed by London is in charge of the police and foreign affairs.
Bush, who is also the leader of the United Democratic Party, has been active in island politics since the 1980s. He was elected prime minister in 2009.
"It would be inappropriate for the RCIPS to make any further comment in relation to these matters at this time," the police statement read.
The Caymans, where there is no direct taxation, are known both as an off-shore financial haven and for their pristine white sand beaches.
The islands are the fifth-largest banking center in the world, according to a 2008 report from the US Government Accountability Office.
As of mid-2008 there were 279 banks, 19 of which serve both local and foreign clients "while the remaining 260 are licensed to operate on an international basis with only limited domestic activity," the GAO said.
Tourism accounts for about 70 percent of the island's GDP, and two-thirds of its foreign currency earnings.
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