Four men have been arrested over allegations £18 million-worth of council contracts were improperly awarded.
Detectives have searched a number of houses and arrested four people for fraud connecting Brighton and Hove City Council Housing Department.
The investigation was launched by the Sussex Police Economic Crime Unit in November 2013 following an initial investigation by the council's own internal audit team.
The probe is focused on the alleged improper awarding of local authority contracts worth more than £18 million over the past ten years to a property management company providing the homeless with temporary accommodation.
Searches were carried out at five addressees at 7am this morning with warrants under at the Police and Criminal Evidence Act.
Four men were arrested.
One of the properties searched was in Holland Road, Hove. The Argus understands the home is owned by the council’s suspended head of housing, Jugal Sharma.
A force spokesman said the occupant was not in when they searched the house. He added that they would be looking to speak to him on his return.
Officers took computers, equipment and documents from the house.
The Argus understands one of the men arrested is Mr Sharma’s brother Ashley Parker, formerly known as Ashone Sharma and Ashoni Parker. He was arrested at his home address in Balfour Road, Ilford, Essex, where police also seized evidence.
The Argus also understands a work colleague of Mr Parker, Edward Charles Parker-Bancroft, was arrested at his home in Harlands Road, Haywards Heath. Evidence was also taken from the 57-year-old’s property.
Two further arrests were made in Elms Road, London, where a 53-year old was taken for questioning and in Ashvale Drive, Upminster, Essex, where a 67-year-old was taken away.
Later this morning police searched a business address in Queens Road, Brighton. No arrests were made.
Detective Sergeant Sally Smith said; "The men have been taken to Brighton for interviews and further enquiries."
Councillors were informed of the arrests in an email from council chief executive Penny Thompson this morning.
In a statement issued to the press, she said: “We take allegations of misconduct in public office very seriously. Following an investigation by our internal audit team we notified Police and we are cooperating fully with the Police investigation.”