President Kibaki has promised to stamp out corruption

Euro Bank, a small but ambitious Nairobi bank with close links to the previous Kenyan regime, lost 985m shillings ($12.6m; �7.98m) and was liquidated last month.

The management of the bank were detained by the police for questioning, and politicians immediately began to point to other officials involved in the scandal.

Mr Munge was a director of Euro Bank, and had previously worked at another bank that collapsed.

He said that he had resigned because the question marks over his character made it difficult for him to lead the government's tax collection.

The country's attorney general and the heads of the central bank have also been urged to resign.

Talking tough

President Mwai Kibaki, who led the opposition National Rainbow Coalition to power in December, has promised to rid Kenya of corruption.

Kenya's Anti-Corruption Police Unit are currently investigating Euro Bank's collapse, and have interviewed four top executives.

The unit is attempting is to find out the whereabouts of billions of shillings of savers' money, including a large proportion of public funds.

The National Social Security Fund has lost 256m shillings (�2.1m; $3.3m), for example, and the Kenyatta National Hospital 421m.

The biggest casualty is the National Hospital Insurance Fund, which has lost 479m shillings in the collapse, and which has now lost 1.2bn in Kenyan banks since the 1980s.

'No wrongdoing'

"The questioning of my character will impair my abilities to effectively manage and preside over the affairs of the Kenya Revenue Authority," Mr Munge said.

But he also protested his innocence.