Paris, Mar 20 (IANS): Former French President Nicolas Sarkozy has been taken into police custody for questioning over allegations that he received funding from the regime of the late Libyan leader Moammar Gadhafi for the 2007 presidential election campaign.

Sarkozy, 63, was summoned to a police station in Nanterre and was being questioned in relation to "irregularities" over the financing of his 2007 campaign that swept him to power for a single five-year term, Le Monde daily reported citing court sources.

An inquiry was opened in April 2013 into allegations that Sarkozy's campaign had benefited from illicit funds from Gaddafi but it was the first time that he is being questioned over the matter. He has denied any wrongdoing.

The development came several weeks after a former associate, Alexandre Djouhri, was arrested in London and later released on bail. One of Sarkozy's former ministers and a close ally, Brice Hortefeux, was also being questioned on Tuesday, the BBC reported.

The former President can be held by police for up to 48 hours before facing magistrates.

French law bans candidates from receiving cash payments above 6,300 pounds, but the massive donation is said to have been laundered through bank accounts in Panama and Switzerland.

A document made public in Paris apparently showed that the French leader and the former Libyan dictator made an illegal financial deal, reports say.

Written in Arabic and signed by Mussa Kussa, Gaddafi's intelligence chief, in 2006, it referred to an "agreement in principle to support the campaign for Sarkozy for a sum equivalent to 50 million euro".

A bundle of evidence was originally leaked by senior members of Libya's National Transitional Council to French investigative news site Mediapart, according to a Daily Mail report.

A governmental briefing note among papers sent to Mediapart pointed to numerous visits to Libya by Sarkozy and his colleagues which were aimed at securing funding, it said.