Vietnam News Agency reported the arrest of Dinh La Thang, a rare public downfall of a leading member of the Communist Party's inner circle.
An unnamed source confirmed to AFP that Thang had been detained at his Hanoi home and was "now under police custody".
In May, the 57-year-old official was suddenly stripped of his membership of the politburo, the shadowy, powerful body made up of senior apparatchiks including the president and prime minister.
In an echo of a major graft crackdown in China, communist Vietnam has prosecuted several top officials on corruption and incompetence charges at its bloated state-run enterprises.
Thang, who was chairman of the board at PetroVietnam between 2006 and 2011 before holding senior government roles, is one of the most senior party officials to be punished in recent years.
Authorities said he is responsible for PetroVietnam's investment in Ocean Bank, a lender snarled up in a massive embezzlement scandal, as well as losses incurred at PetroVietnam Construction Company (PVC).
Thirty-six former Ocean Bank employees were convicted in September of stealing more than $400 million from the lender. The bank's chairman was imprisoned for 30 years.
The second allegation concerns PVC, which saw a $150 million loss linked with former executive Trinh Xuan Thanh who made headlines in August after he apparently turned himself in to Vietnamese authorities after years on the run in Germany.
However, Germany said he was kidnapped from a Berlin park in a brazen daylight operation by Vietnamese agents that amounted to a "scandalous violation" of international law.
Analysts say the campaigns against big political and business players have more often emerged out of infighting rather than a genuine commitment to tackling graft or reforms.
Vietnam has been ranked 113 out of 176 on the corruption index by Transparency International, worse than its Southeast Asian neighbours Thailand, the Philippines and Myanmar.
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