A Greek businessman has been arrested and charged with money laundering and bribery as part of an investigation into suspicious arms deals.

Greece has promised to crack down on corruption and reform its spendthrift state, which many Greeks blame for the country's worst debt crisis.

Greek prosecutors are investigating alleged financial scandals spanning decades in the debt-laden country.

Thomas Liakounakos, who appeared to be a commercial agent for Swedish company Ericsson in Greece more than a decade ago, is accused of paying a bribe of up to €2 million to a Greek official to secure a deal in 1999, court officials said.

In a statement, Liakounakos strongly denied any wrongdoing. Ericsson has said it has zero tolerance of corruption. The Greek order under scrutiny was for the Ericsson airborne surveillance system Erieye and was worth about €532 million.

Ericsson has subsequently sold its defence business to Swedish group Saab.

The money was paid through an offshore company which appears to belong to Liakounakos, court officials said.