Former Croatian PM Sanader arrested in Austria

VIENNA/ZAGREB (Reuters) - Former Croatian Prime Minister Ivo Sanader, wanted in connection with an anti-corruption investigation, was arrested on a highway in Austria on Friday, Vienna's federal crime office said.

Sanader left Croatia on Thursday shortly before parliament lifted his immunity from prosecution. Prosecutors suspect him of being behind a plan to create slush funds for his conservative HDZ party during his 2004-09 tenure in power.

Analysts believe the move against Sanader could help Zagreb's European Union membership bid as Croatia seeks to convince Brussels of its determination to stamp out corruption.

The highest-ranking Croatian official to be investigated for corruption, Sanader denies the accusations, calling them politically motivated. He was stopped near the alpine village of St Michael, around 300 km (186 miles) west of Vienna.

Sanader was taken into custody in the western Salzburg province, federal crime office (BKA) spokesman Alexander Marakovits said. "He will go to the Salzburg provincial court and then the authorities will have to decide what will happen with him in the next days or the next weeks," he said.

A Croatian police spokesman, Krunoslav Borovec, said: "We now expect to receive relevant documentation to be able to start the procedure for extradition."

BKA official Regina Wieseltaler-Buchmann told Austrian television that Croatian authorities now had 30 days to provide documentation that Austria's justice ministry could use to decide whether to extradite Sanader.

"He did not resist," she said. "He was in a vehicle with his brother. We assume he was aware that he was subject of an arrest warrant."

Sanader could then agree to accept extradition or fight the process, which would prolong the proceedings, she said. The extradition could take several months if Sanader says he is a victim of political persecution, Croatian media reported.

EU TALKS

Croatia hopes to conclude EU entry talks next year and its commitment to fighting corruption is a closely watched issue.

"This is certainly good news for our EU talks, but perhaps more important, for the future of our democracy, for the issue of transparency and party financing, which was very low so far," said political analyst Davor Gjenero.

Croatian lawyer Mato Matic said Sanader -- who graduated from university in the Austrian city of Innsbruck and once ran a business there -- had contacted him by text message to deny speculation that he had fled Zagreb.

"He told me to inform the institutions that he had not fled and would be back in three or four days," Matic told state TV.

At the state prosecutor's request, Croatia's parliament unanimously lifted Sanader's immunity from prosecution on Thursday -- shortly after he left the country.

Sanader resigned unexpectedly and with no explanation in July 2009. His ruling HDZ party expelled him in January.

In September, police arrested the chief of the national customs service, Mladen Barisic, a close friend of Sanader and party treasurer for the HDZ.

Croatian media said he had implicated Sanader in his testimony, as had the former general manager of state power board HEP, also arrested in an anti-graft sweep launched after Sanader's former deputy Jadranka Kosor took over the government.

(Additional reporting by Michael Shields and Fredrik Dahl in Vienna; Editing by Maria Golovnina)