The CBI has recovered lots of incriminating documents

CBI spokesman SM Khan

Along with Mr Verma, the CBI arrested his son, Siddharth, and two of his business partners.

The have all been accused of taking millions of rupees in bribes from private firms in exchange for favours and money laundering.

Mr Verma, who was suspended from his job last week, is alleged to have taken part in a trading fraud, in which shipments of rags were illegally passed off as garment exports as a way of claiming government incentives.

His son is accused of running several trading companies which were allegedly laundering money amassed by the family.

Raids

A CBI official said more arrests may follow.

The arrests follow a series of raids by the Indian Central Bureau of Investigation (CBI) on the homes of almost 50 senior and middle-ranking customs officials.

Prime Minister Vajpayee is struggling to rebuild credibility

The Indian police seized large amounts of cash, documents, computers and property-related papers from the officials.

"The CBI has recovered lots of incriminating documents" CBI spokesman SM Khan said.

Mr Verma and his co-accused were to be produced in a magistrate's court later on Monday.

A CBI official said the wide variety of charges would require "extensive custodial interrogation".

Bribes scandal

The arrests came less than a month after Tehelka.com, an Indian website, secretly filmed politicians, officials and army officers apparently taking bribes from journalists posing as arms dealers.

That scandal led to the resignation of several top officials, including the Indian defence minister.

The main opposition Congress Party urged the entire government to resign over the affair, and partners in the ruling coalition called for an independent inquiry.

The BBC Delhi correspondent says the government is struggling to rebuild credibility which has been badly damaged.

But many people in India are cynical about public life and see corruption as endemic.