Charles Sirleaf, son of ex-president of Liberia, Ellen Johnson Sirleaf, was one of two officials detained on Thursday.
The arrest follows the release of reports detailing widespread alleged malpractice at the central bank.
Charles Sirleaf, the son of Liberia’s former president Ellen Johnson Sirleaf, was a deputy governor at the Central Bank of Liberia during the period when the bank notes were illegally ordered. He denied any wrongdoing.
The director of banking, Dorbor Hagba, was also arrested on Thursday evening.
The American aid agency USAID and the Liberian government funded the investigations which were launched last year in October following the suspected disappearance of newly printed notes worth $100 million (€88 million) destined for the Liberian central bank – the equivalent of around 5 percent of the West African nation’s gross domestic product.
A London-based firm Kroll was hired to carry out the audit. The supposed disappearance led to a travel departure ban on 15 people in September, including Charles Sirleaf.
“Kroll has identified discrepancies at every stage of the process for controlling the movement of banknotes into and out of the (central bank),” the risk consultancy said in its report that had been commissioned by the United States at the request of the Liberian government.
A Liberian government report found that notes worth $16.5 million remained unaccounted for and said the bank’s management “deviated from conventional best practices.”
Kroll said its investigation found no evidence of a large shipment of cash going missing as had been reported by local media. Instead, the new banknotes all arrived from a Swedish company but the central bank then failed to properly track what was done with them, the report said.
The report said most of the bank notes are believed to have been put into circulation without authorities removing and destroying the old bills they were designed to replace.
It said officials at the central bank were unable to explain who approved the injection of new bank notes without removing the old ones and on how the money was infused into the Liberian economy.
Critics of President George Weah’s government have accused his administration of having had a hand in the poor handling of the bank notes for their personal gain, an allegation they have denied.
In 2016, Liberia’s House of Representatives passed a resolution approving the printing of 5 billion Liberian dollars (US$31 million; €27 million).
The Central Bank requested an additional 10 billion Liberian dollars but the request was denied by the Senate. The bank engaged a company to print the additional banknotes anyway.
“This raised the risk of unintended negative economic effect, including high inflation and the rapid depreciation” of the Liberian dollar, the report said.
Ellen Johnson Sirleaf herself was listed in the Paradise Papers 2012 as a director of a Bermuda-based financial company. The leak shows how many of Africa’s rich and powerful – from the head of Nigeria’s Senate, Bukola Saraki, to Ellen Johnson Sirleaf, the president of Liberia – park their money in offshore havens.