Brazilian swimming chief Coaracy Nunes was arrested Thursday as part of an investigation into a $12.8 million corruption probe where even a pet shop was used as a front to launder funds, prosecutors announced.
In charge of the federation (CBDA) since 1988, Nunes, 78, was the subject of one of four arrest warrants issued as part of Operation "Clear Water" against leaders of the national swim body.
Three have been arrested while one official is considered a fugitive.
The investigation, which started in 2015, is centred on nearly 40 million reais ($12.8 million) of public funds paid to the CBDA which has been "poorly managed or diverted for personal gain" by the federation's leaders, a Federal Police statement claimed.
Thamea Damelon, the prosecutor in charge of the case, told a press conference in Sao Paulo that "the federation was created to invest in sport ... but the money was diverted by ghost companies".
Investigators specifically identified one fraud in a tender for the purchase of 1.5 million reais ($480,000) of sporting equipment. At the address of the company supposed to have won the contract, they found a pet shop.
The investigation also concerns "suspicions of the appropriation by a party of the leaders of the CBDA of $50,000 of bonuses intended for the sportsmen", added the police in their statement.
Further suspicions arose from the non-participation of the national junior water polo team at the world championships in 2015 when the CBDA claimed they lacked the funds to finance the trip even though they had just received a government subsidy.
"I'm not going to say it's a surprise, it was in the air for a while, but it's very sad," Brazilian swimming star Cesar Cielo, a double Olympic champion, told local media.
Brazil failed to win an Olympic swimming medal at the Olympics they hosted in Rio last year.