Aluthgamage was arrested after he appeared before the Police Financial Crimes Investigations Division (FCID) to make a statement over the allegations against him.
He was however granted bail after being presented before the Fort Magistrate.
The former Minister was charged with misusing nearly Rs 39 million in state funds to purchase carrom boards and checkers boards in 2014 when he was the Sports Minister.
Aluthgamage denies the allegations against him and accused the Government of engaging in a political witch-hunt against the opposition.
The former Minister had earlier sought court intervention to prevent his arrest but the appeal was rejected.
Aluthgamage had also been arrested in 2016 over money laundering allegations. (Colombo Gazette)