Rahul Gopal, Director General of State Police Housing and Welfare Corporation, Maharashtra, was on Monday arrested by the Anti-corruption Bureau.
Director General, Anti-corruption Bureau, P S Pasricha, said rediff.com: "We arrested him [Gopal] under section 7 & 10 of the Corruption Prevention Act".
On December 8, ACB arrested Govind Chandak, an alleged power broker, in a surprise raid at a guesthouse in Peddar Road in south Mumbai. ACB found Rahul Gopal with Chandak.
The ACB team seized Rs 100,000 from Chandak's room and an equal amount from DGP Gopal's official car parked outside.
On December 13, Rahul Gopal and P S Pasricha were summoned by Deputy Chief Minister R R Patil, who also holds the home portfolio, to discuss the matter.
Patil asked Rahul Gopal to go on leave with immediate effect.
The ACB believes Chandak was using his links with top bureaucrats and politicians to help businessmen.
The ACB kept a watch on Chandak's movements for some time and his telephonic conversations were tapped.
The breakthrough came when they recorded a call between Chandak and Rahul Gopal on December 8.
In that conversation, Chandak told Gopal : "Aap ki ek chaki padi hai, aa kar le jao (Your Rs 100,000 is ready, please collect it)." Gopal replied, "I will come at 9am to collect that money on my way to office."
Undercover sleuths of the ACB kept a watch on Chandak and saw Gopal arrive to meet him. Soon after, they raided Chandak's room and also searched Gopal's car.
In his statement to ACB, Gopal said Chandak was an astrologer whom he had known for long time.
He said that Chandak often loaned him money and that the Rs 100,000 found in his car was borrowed from Chandak.
"The police manual says if a cop accepts a big amount as loan s/he has to intimate the government about it prior to transaction, or else the amount is considered a bribe" said Y P Singh, a senior IPS officer who resigned recently.
