KUALA LUMPUR, Dec 10 (AP) -- Police arrested a former top port executive and two other suspects Thursday in an investigation into one of Malaysia's biggest financial scandals.

The arrests were the first in connection to fraud allegations surrounding a government-backed port project that suffered a billion-dollar debt and sparked public criticism over a lack of transparency in state-linked initiatives.

Authorities detained OC Phang, the former general manager of Malaysia's main port authority, and two other people, said Mohamed Mat Yusop, the police chief of Klang district near Kuala Lumpur, Malaysia's largest city.

The other two were a company chief executive and an architect involved in the Port Klang Free Zone project, said Abdul Majid Hamzah, a senior government prosecutor. All three were expected to be charged in court later Thursday, but Abdul Majid did not immediately have information on the charges.

The government approved a loan in 2007 to rescue the Port Klang Authority, the main port authority, from debts exceeding US$1 billion after it incurred massive cost overruns to develop the Port Klang zone, a 400-hectare industrial and trading hub that opened in 2006.

The arrests come after Parliament's Public Accounts Committee, which oversees government expenditure, recommended last month that authorities investigate Phang and ex-Transport Minister Chan Kong Choy for possible criminal breach of trust in the scandal.

The committee said Chan and Phang issued key letters to carry out the project without the Finance Ministry's approval. It also recommended investigations into other government officials involved in the project for allegedly failing to perform their responsibilities diligently.

Opposition leaders have criticized the government over the past two years for not prosecuting anyone in the scandal, which further eroded public confidence in big state projects following other bailouts of prominent companies in the 1980s and 1990s.

Complaints about corruption were among key public grievances that caused the National Front ruling coalition to suffer its worst results ever in general elections last year following five decades in power. Prime Minister Najib Razak has since pledged to take tougher steps to combat graft.

Private auditors warned earlier this year the port project could sink into worse financial woes because it might face problems repaying the government's loan installments, which would result in additional interest and send the project's bill soaring to RM12.5 billion. (By JULIA ZAPPEI/Associated Press Writer)