Mitsuhiro Taniguchi, 47, was arrested in Lampung late Tuesday and flown to the capital Jakarta, national police spokesman Insp. Gen. Dedi Prasetyo told journalists.

The Japanese national and several associates are accused of submitting false applications to claim 960 million yen ($7.2 million) in COVID-19 relief funds meant for small businesses, according to Japanese media reports.

He was caught in a joint operation by immigration officers and local police, Dedi said, without giving details about the case.

It came after the Japanese embassy alerted Indonesian authorities to the whereabouts of a Japanese national whose passport had been revoked. 

National Police in a statement Wednesday said their Japanese counterparts had been "investigating an alleged fraud of subsidies for small businesses affected by the COVID-19 pandemic", but they did not confirm the amount accrued by Taniguchi's brazen scheme.

Tokyo's Metropolitan Police Department had placed Taniguchi on an international wanted list after arresting his ex-wife and two sons on May 30 on suspicion of fraud, Japanese newspaper Asahi Shimbun reported.

Taniguchi will be deported in coordination with the embassy, Lampung immigration official Is Edy Eko Putranto told a press conference where the Japanese suspect was paraded before the media.

Police attache at the Japanese embassy Takayuki Miyagawa told the press conference the fugitive was arrested for "deceiving the Japan government for subsidies regarding COVID-19".

Taniguchi reportedly entered Indonesia in October 2020, several months after the scheme was uncovered by Japanese police.

He was living in Jakarta and frequently travelled to do business in Lampung, where he had been staying for a week when he was arrested. 

The fugitive was using a limited-stay visa and was working in the country as a foreign investor helping locals to run fish farms, reportedly to raise money to appease his alleged collaborators.