France's former president Nicolas Sarkozy has been placed in custody as part of an investigation that he received millions of euros in illegal financing from the regime of the late Libyan leader Muammar Gaddafi.
Investigators are examining claims that Gaddafi's regime secretly gave Sarkozy €50m overall for the 2007 campaign.
France's interior minister under Sarkozy, Brice Hortefeux, was also questioned by police on Tuesday but was not detained.
According to French media, the former president, who has not testified on this case before, could spend up to 48 hours in custody.
The move made Sarkozy - who ruled from 2007 to 2012 and is still an influential behind-the-scenes player on the political right - the target of an inquiry into alleged cash handovers and wire transfers between Tripoli and Paris in the months before he won power.
Sarkozy, who was called "president bling bling" by many due to his flashy style, has been dogged for years by accusations of wrongdoing. Even though Moammar Gadhafi is long gone, accepting such funding from such a country - at least in the state Libya was in 11 years ago, under the iron fist of Gadhafi.
Sarkozy, president from 2007 to 2012, was seen by a Reuters photographer leaving his home in Paris with his lawyer in a auto, then entering the offices of investigators who had placed him in custody and started questioning him on Tuesday.
In an interview, again with Mediapart, Ziad Takieddine claimed he provided 1.5 to 2 million euros in 200-euro and 500-euro notes each time and was given the money by Kadhafi's military intelligence chief Abdallah Senussi.
Initially, an investigation opened into embezzlement of public funds and influence peddling - but the scope has since expanded to include the "illegal funding of Sarkozy's presidential campaign in 2007", said a source close to AFP.
The two-day questioning is the first time Sarkozy has faced police in the case. Prosecutors said that Sarkozy spent approximately double the 22.5 million euros ($24 million) limit that is allowed by law during that campaign.
But relations soured during the Arab spring of 2011 when French jets were the first to attack Col Gaddafi's tanks.
In March 2011, Gaddafi's son Saif al-Islam Gaddafi told Euronews: "Sarkozy has to give back the money he accepted from Libya to finance his electoral campaign". He already faces trial on separate charges of illicit spending overruns during his failed re-election campaign in 2012.
Sarkozy claims he knew nothing about the fraudulent practices.