Lagos - Police have arrested the head of a federal agency charged with developing Nigeria's impoverished southern oil region, after allegations the man spent millions of dollars on a witchdoctor in hopes of vanquishing a rival.

President Umaru Yar'Adua announced on Friday that the head of the Niger Delta Development Corporation, Sam Edem, had been suspended from his job after local media reports of Edem's large expenditure on black magic. Police later said he had been arrested.

The police said they were investigating the source of the about $4-million (R30-million) Edem reportedly spent on hiring a sorcerer to hex and kill another development official, while steering more lucrative state contracts to him.

Local media also reported that Edem burnt nearly $2-million in local currency in a black magic ceremony designed to precipitate greater funds later.

The federal government said it was investigating how Edem had amassed the fortune he used to engage the sorcerer. Edem had not denied any of the charges.

Police said Edem contracted the witchdoctor to kill a subordinate that Edem believed harboured him ill will.

Edem also wanted the sorcerer to help compel a state governor to award him "juicy contracts", and to ward off vice-president Goodluck Jonathan, who Edem believed wanted him fired.

Police said Edem was "incensed" when none of the work contracted to the witchdoctor had been achieved and had demanded a total refund. The witchdoctor refused, saying Edem still owed him about $2-million in arrears. - Sapa-AP