Sean Price became chief constable of Cleveland Police in 2003 Cleveland Police's chief constable and his deputy have been arrested in an investigation into allegations of fraud and corruption.
Chief Constable Sean Price and his deputy Derek Bonnard are two of three people held in the inquiry being conducted by Warwickshire Police.Investigating officers are also searching "a number of premises".
The Cleveland Police Authority said two chief officers had been suspended while the inquiry was carried out.
The authority also said it had refer the matters to the Independent Police Complaints Commission (IPCC).
Warwickshire Police said two men and a woman had been arrested on suspicion of misconduct in a public office, fraud by abuse of position and corrupt practice.
Cleveland Police would not comment, referring all inquiries to Warwickshire Police.
'Massive shock' Warwickshire Police said in a statement: "Police officers conducting a criminal investigation into a number of people with current or past associations with Cleveland Police Authority and the manner in which the authority may have conducted some of its business have this morning arrested three people on suspicion of misconduct in a public office, fraud by abuse of position and corrupt practice.
"Two men and a woman were arrested and have been taken to a police station in North Yorkshire where they will be interviewed."
The Cleveland Police Authority said in a statement: "The authority can confirm that two Chief Officers have been suspended from their posts with Cleveland Police while the investigations are being considered.
"It should be emphasised that suspension is a neutral act and it should not be inferred from the decision to suspend that the potential conduct matters have been proven in respect to the two chief officers concerned."
It added that it was following the prescribed processes and procedures for such matters.
'Legal action' The Cleveland Branch of the Police Federation said it could not comment on the allegations but hoped the matter would be concluded as quickly as possible.
Its statement added: "This news has come as a massive shock to our members who are already facing massive concerns with regards to their pay and conditions of service, along with pension worries."
In May, Mr Price said he was considering taking legal action after the Independent Police Complaints Commission [IPCC] announced it was investigating a claim that he used "undue influence" to appoint a member of staff to his force.
He denied the allegation, which he described as "malicious", and said he would assist the inquiry in every way possible.
The IPCC said the allegation came to light during a review by Her Majesty's Inspectorate of Constabulary into the way some individuals within Cleveland Police Authority "may have conducted some of [their] business".
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