Ramalinga Raju, former chairman of Indian outsourcing giant Satyam Computer and the man implicated in a $1-billion fraud scandal, has been arrested.
Raju has admitted that he doctored the company's books, which include assets and cash that don't exist.
The company's former MD and brother of the chairman, Rama Raju was also arrested.
The two had resigned on Wednesday when the scandal broke.
They are being investigated for cheating, forgery, criminal breach of trust and falsifying documents. They may face up to 10 years in prison.
Price Waterhouse Coopers may also be called into question over the state of Satyam's book, although the accounting firm states it worked according to suditing standards.