VATICAN CITY: Pope Benedict's butler was arrested on Friday in connection with an investigation into leaks of confidential documents, some alleging cronyism and corruption in Vatican contracts, a senior Vatican source said.

The scandal, which has come to be known as “Vatileaks”, involves the leaking of a string of documents to Italian media in January and February, including personal letters to the pope.

Some of the documents involved allegations of corruption, mismanagement and cronyism in the awarding of contracts for work in the Vatican and internal disagreement on the management of the Vatican bank.

The president of the Vatican bank, Ettore Gotti Tedeschi, was ousted by its board on Thursday.

Vatican spokesmen said earlier on Friday that a person in possession of confidential documents had been arrested but that they could not disclose his position or identity until they were given permission from Vatican investigators. The Vatican source confirmed reports by Italian media that the person arrested was the butler.

“It's all very sad,” another senior Vatican source said, commenting on an episode that is the latest in a string of embarrassments for the Vatican.

The pope's butler serves in the apartments of the Apostolic Palace, serving at the papal tables, handing rosaries to visiting dignitaries and riding in the first seat of the popemobile at papal audiences.

As an intimate member of the papal household, he is privy to the goings on in the most reserved and private rooms in the Vatican. Italian media said investigators had found documents in his apartment.

The pope, who has been shocked and saddened by the leaks, ordered several investigations, including one headed by Vatican police and another by a commission of cardinals.

The leaked documents included letters by an archbishop who was transferred to Washington after he blew the whistle on what he saw as a web of corruption and cronyism, a memo which put a number of cardinals in a bad light, and documents alleging internal conflicts about the Vatican Bank.

In January, an Italian television investigation broadcast private letters to Secretary of State Cardinal Tarcisio Bertone and the pope from Archbishop Carlo Maria Vigano, the former deputy governor of Vatican City and currently the Holy See's ambassador in Washington.

The letters showed that Vigano was transferred after he exposed what he argued was a web of corruption, nepotism and cronyism linked to the awarding of contracts to Italian contractors at inflated prices.

In one letter, Vigano wrote of a smear campaign against him by other Vatican officials who were upset that he had taken drastic steps to clean up the purchasing procedures. He begged to stay in the job to finish what he had started.

Bertone responded by removing Vigano from his position three years before the end of his tenure and sending him to the United States, despite his strong resistance.