August Hanning, who was president of the Federal Intelligence Service (BND) from December 1998 to November 2005, was detained on suspicion of espionage, treason and obtaining classified information for a foreign power, Bild newspaper reported on Tuesday.
Prosecutors allege Hanning bought secret information from a former employee of the foreign intelligence agency BND, and intended to sell it on as part of his consulting activities, according to the report.
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He was arrested in Bad Toelz-Wolfratshausen in southern Germany.
A former aide of his, identified only as Manfred D, was also arrested on Tuesday.
The prosecutor’s office did not reveal who the men were alleged to have spied for.
The investigation was launched after the discovery of an alleged intelligence report leak intended for the chancellery, Bild said.
