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Police had warned Mr Ely not to remove or alter the piece of statue
A company director has been arrested on suspicion of illegally keeping part of a statue of Saddam Hussein taken from Iraq in 2003.
Jim Thorpe, director of Trebletap, was questioned over the company's plans to sell the 2ft bronze piece of buttock.The piece was brought to the UK by the firm's founder Nigel Ely but failed to sell at an auction in Derby after failing to meet its reserve price.
Mr Ely, from Herefordshire, was questioned earlier this week.
Derbyshire police said the Iraqi government had made a complaint to the Metropolitan Police last week via the Iraqi Embassy.
The complaint had been passed to them as the agents and the statue were situated in Derby.
Mr Ely was issued with a notice, under the Police and Criminal Evidence Act, advising him not to alter or dispose of the item until the matter is resolved.
Cultural property
Mr Thorpe was questioned on suspicion of breaching Section 8 of the Iraq (UN Sanctions) Order 2003 before being released on bail pending further inquiries.
Under the order, anyone possessing Iraqi cultural property must give it to the police.
Trebletap, which specialises in turning war memorabilia into pieces of art, told BBC Radio Derby earlier this week that it was keeping the statue in a secret location.
Mr Ely, a former SAS soldier, used a sledgehammer and chisel to remove the portion when the statue was brought down in central Baghdad at the end of Hussein's reign.
He said he planned to sell it to raise money for charity but withdrew it from sale at an auction in October after it failed to meet its £250,000 reserve
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