A former Kenya Revenue Authority official was arrested over the weekend in Mombasa after a claim of fraud in the release of Sh163 million condemned sugar to the public.
The official was then driven to Nairobi for a probe and seven other businessmen linked to the same sugar case were also arrested.
The sugar was condemned but was later released, repackaged and sold to unsuspecting Kenyans.
The suspect was picked up from his Mombasa home and driven to Nairobi on Sunday ahead of his planned arraignment in Nairobi on Monday, police said.
This is after a police probe showed a consignment of 20,000 bags of sugar that had been condemned was released to the businessmen who later repackaged and sold it to the market.
Those arrested said a court had ordered the sugar to be released and transported to Thika via SGR where it was to be turned into ethanol for other uses.
But according to the police, the dealers returned the same to Mombasa where it was repackaged and sold.
Police recovered 14 out of 20,000 bags of the original sugar condemned as unfit for human consumption.
The probe is also targeting all multi agency teams that participated in the handling of the sugar.
They include the police, Kenya Bureau of Standards and KRA.