According to Norway's Dagbladet newspaper, police arrested Kjell Gunnar Larsen, the chief executive of the Norway's SOS Racisme, in a raid on his house on Monday morning.
The officers seized electronic equipment, phones, laptops, and large amounts of cash, which they suspect may have been siphoned off the organisation.
"We found a large amount of cash in his home," police attorney Hallvard Bjorndal told Norway's Dagbladet newspaper. "What we can say is that we are talking about a larger amount of cash than what you normally find in a household."
"We believe that the accused has drained the accounts via withdrawals to the tune of several millions," Bjorndal added.
Larsen has been under investigation by Norwegian police since 2011, when a court ruled that the organisation had inflated its membership lists by a factor of ten to win more financing from state bodies.
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The court ordered it must pay back 9,708,501 million kroner of the support that it had received from the National Council for Norwegian Child and Youth Organisations (LNU), over the preceding decade, pushing it to file for bankruptcy in 2013.
Larsen has previously rejected all allegations, with SOS Racism describing the charges as "a witch hunt" on its website. Larsen's bank accounts have already been seized by police, and the organisation's offices were raided in 2012 in a hunt for incriminating evidence.