Joe Anderson, the Labour mayor of Liverpool, was arrested on Friday along with four others as part of a probe into building and development contracts in the city.
Merseyside police confirmed they had detained five men as part of an “ongoing investigation” but did not name any of them.
Two people familiar with the situation have told the Financial Times that Mr Anderson was one of those arrested.
Detectives made arrests at addresses throughout the city as well as Ormskirk and Southport.
Mr Anderson, 62, was arrested on Friday morning on suspicion of conspiracy to commit bribery and witness intimidation. Two other men are under suspicion for the same allegations, while a further two were arrested on suspicion of witness intimidation alone. They are aged between 25 and 72 and all live in the Merseyside area.
Mr Anderson was one of England’s first directly elected mayors in 2012 and previously held the post of leader of Liverpool city council since 2010.
Labour declined to comment but party sources confirmed that Mr Anderson had been suspended pending the outcome of the investigation.
A Liverpool City Council spokesperson said: “Liverpool City Council is co-operating with Merseyside Police in relation to its ongoing investigation. We do not comment on matters relating to individuals.”
Joe Anderson has been released on bail after being detained as part of the fraud investigation.
Merseyside police confirmed on Saturday morning that all five of the men had been “released on conditional bail, pending further inquiries”.
