23 July 2010 Last updated at 06:19 ET

Kosovo central bank chief arrested in corruption probe

Hashim Rexhepi smiled as he was led away by police

Kosovo police have arrested the territory's central bank governor Hashim Rexhepi in an anti-corruption investigation.

The EU's rule of law mission (Eulex) said the probe concerned suspected bribes, tax evasion, influence-peddling and money laundering.

Eulex said Mr Rexhepi was among four suspects whose homes were searched.

The Kosovo police also searched the Central Bank of Kosovo and a private company.

The EU has some 1,900 law enforcement officials deployed across Kosovo to strengthen law and order, in the Eulex mission launched in December 2008.

They have the power to take on cases that the local judiciary and police find difficult to handle.

On Thursday UN judges in The Hague ruled that Kosovo's declaration of secession from Serbia in 2008 was not illegal.

Friday's operation in Pristina follows other high-profile searches by Eulex and Kosovan police.

In April, the offices of Kosovo's Transport Minister, Fatmir Limaj, were raided as part of a probe into the construction of a major highway.

Earlier this month, four companies suspected of fraud over the issuing of a mobile phone licence were also searched.

Kosovo is at a critical stage in its attempts for wider recognition as an independent state, the BBC's Balkans correspondent Mark Lowen reports.

To achieve that international recognition Pristina knows it has to present itself as a more functional government, able to combat the corruption and organised crime that have flourished in Kosovo since the war of the 1990s, our correspondent says.