Aluthgamage, a loyalist of former President Mahinda Rajapaksha, was arrested by the Financial Crimes Investigation Division (FICD) of the Sri Lanka police on charges of misappropriating government fund to buy sports goods, Carrom and Checker-boards, when he was a Minister, according to police.
He was produced before a local court, which released him on bail.
The Opposition has also alleged that the FCID of the police was "illegal" and it was set up for a political witch hunt against the members of the Rajapaksa-led opposition group.
The former minister had earlier sought court intervention to prevent his arrest but the appeal was rejected.
Aluthgamage had also been arrested in 2016 over money laundering allegations.
Last week, six Sri Lanka Freedom Party ministers had resigned from Sirisena-led unity government, days after they voted in favour of a no-confidence motion against Prime Minister Ranil Wickremesinghe.
In a surprise move, following the resignations, Sirisena suspended Parliament for nearly a month.
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