Redknapp and four others arrested by the fraud squad

Portsmouth's manager, Harry Redknapp, was among five men arrested yesterday by fraud squad detectives investigating alleged corruption in football. The other four were Portsmouth's former owner, Milan Mandaric (now owner of Leicester City), Portsmouth's current chief executive, Peter Storrie, the former Portsmouth player, Amdy Faye, and an agent, Willie McKay.

A spokesman for the City of London Police declined to confirm any of the arrested men's identities but said last night that five men aged 69, 60, 55, 48 and 30 were being held on suspicion of conspiracy to defraud and false accounting.

Faye, who left Portsmouth in 2005 for Newcastle, then Charlton (in 2006) and then Rangers (this year, on loan), was arrested yesterday in Glasgow.

Police turned up at Redknapp's home in Poole, Dorset, on Tuesday evening to conduct a search of his house. Redknapp was not there because he was in Germany, scouting at a match, but the 60-year-old former West Ham and Southampton manager was taken into custody on his return to England yesterday and was being held at Chichester police station yesterday afternoon.

The men were taken into custody after officers had searched eight addresses across the UK. By 5pm last night, police had concluded searches at 10 properties and two further searches were under way. The CLP did not rule out further arrests and it is understood that a former Premiership manager is among those coming within the scope of its inquiry.

The CLP investigation by the CLP's Economic Crime Unit is believed to have focused on possible financial malpractice. The CLP's work is separate to the "bungs" inquiry conducted by the former Metropolitan Police commissioner Lord Stevens and his company, Quest.

The inquiry has looked into possible undeclared income and revenue fraud, or in other words, tax evasion. There is a crucial legal difference between this and any probe into "bungs" because of the nature of the inquiry and the assembly of evidence for possible charges. It is understood that the CLP is not looking specifically at allegations of "bungs" themselves, but rather the whereabouts of certain monies relating to transfers, and whether appropriate tax was paid.

The Independent understands that one of the deals the CLP was examining related to the transfer of Faye, a Senegal international midfielder, from Auxerre to Portsmouth in 2003. The fee reported for the player at the time was 1.5m.

The CLP's inquiry has been ongoing for some time. A 61-year-old man was held in May on suspicion of money laundering and a 28-year-old man the Tottenham Hotspur defender, Pascal Chimbonda was questioned in September.

Police also searched Newcastle United, Portsmouth and Glasgow's Rangers as well as two homes during a series of raids in July. The CLP last night declined to confirm the location of any of yesterday's searches or how those arrested are linked to football.

When Chimbonda was arrested, the CLP was understood to have focused its inquiries on the player's move from Bastia in France to Wigan in 2005, for a fee reported at the time of 500,000. Chimbonda was arrested on suspicion of conspiracy to defraud.

McKay, Chimbonda's agent at the time of his move to Wigan, confirmed in September that Chimbonda had "answered some police questions" but said that the police were "scraping the barrel" with their inquiries. Chimbonda moved from Wigan to Tottenham for 4.5m August last year but that move is not thought to be relevant to the inquiry.

While the CLP inquiry is separate from that conducted by Lord Stevens, several figures have been prominent in both. In June, Lord Stevens published his final report after a 15-month investigation into allegations of illegal payments relating to Premiership transfers.

Lord Stevens concluded that 17 of 362 deals he looked at could not be "signed off", and recommended that the Football Association and Fifa, the governing body of world football, both take further steps to look at those. It is not known how far such work has gone as neither the FA nor Fifa will comment on ongoing investigations.

Lord Stevens' inquiry was commissioned by the Premier League after claims in January 2006 by Luton Town's then manager, Mike Newell, that offers of illegal payments in the game were not uncommon, and that he himself had been approached to take money to smooth deals. Later that month the Premier League said it would launch an inquiry into alleged bungs.

Lord Stevens' Quest investigation firm of forensic accountants were appointed in March 2006 with the task of examining 362 permanent transfers (not loans) involving Premiership clubs between 1 January 2004 and 31 January 2006. The remit was specifically to find out whether there had been any wrongdoing by Premiership clubs, managers or other officials.

Quest attempted to interview every key figure involved in the 362 deals: clubs, managers, agents, other middlemen, plus players, and "insider" informers granted anonymity. But Quest had no legislative powers or authority to demand full co-operation.

By early October last year, Stevens had "written off" all but 39 deals as clean, although fewer than half of 150 agents contacted had fully co-operated. By 20 December, only 17 uncleared deals remained, the 17 detailed in June's final report. A further 50-plus transfers involved minor rule breaches, Stevens said in March.

The CLP investigation was sparked not by Lord Stevens' work but by tip-offs passed on by other agencies, in Britain and abroad, in relation to alleged irregularities in football transfers, especially in France.

Newell has already been vindicated to some extent with the announcement last week that the FA had issued more than 50 disciplinary charges against Luton Town and former and current officials, and six named agents, in relation to alleged breaches of rules governing payments to agents.

Yesterday's arrests are more serious still, indicating suspected criminal activity.

Take Five: The men arrested in corruption probe

Harry Redknapp, Portsmouth manager

The 60-year-old worked at Bournemouth and West Ham before his first spell at Fratton Park between 2002-04. He defected to Southampton before returning to Pompey in 2005. Portsmouth have thrived on the pitch this season and are sixth in Premier League, two points from a Champions League placing.

Milan Mandaric, Ex-Portsmouth owner

Mandaric, 69, is a Serbian-American businessman with long-standing involvement in football club ownership. Owned the San Jose Earthquakes and Standard Liege before buying Portsmouth in 1998, later hiring Redknapp. Resigned as Portsmouth chairman in 2006 and bought Leicester this year.

Peter Storrie, Portsmouth Chief executive

Storrie has been at Portsmouth since 2002. He previously worked at Notts County, Southend United and West Ham, where he worked with Harry Redknapp. In June this year he was invited to serve on the FA Council as one of eight representatives from the Premier League.

Willie McKay, agent

The 48-year-old Scot was involved in three of the 17 deals that Lord Stevens was unable to "sign off" after his 15-month probe. Clients include or have included Amdy Faye, Jean-Alain Boumsong, Aliou Ciss, Pascal Chimbonda, Nicolas Anelka, Joey Barton, Scott Brown and James McFadden.

Amdy Faye, former Portsmouth player

The Senegal midfielder, 30, moved to Portsmouth from Auxerre in 2003 for a fee reported at 1.5m. Switched to Newcastle, then managed by Graeme Souness, in 2005. Moved to Charlton last year and is now on loan at Rangers, for whom he has made only two league starts this season.