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BOMBAY, March 3 (AFP) - A producer in India's film industry -- Bollywood -- has been arrested for allegedly using mafia money to fund movies, police said Monday.

Police in the western city of Bombay said they believed Adil Farooq was one of the key members of a gang headed by underworld don Abu Salem who is currently in custody in Portugal.

"We had received a complaint against Farooq and were observing him for some time," said police inspector Daya Nayak.

"What is surprising is that till the recent past he was just a small travel agent and now has turned film producer, signing some big actors."

Farooq had recently announced the launch of "Tum" (You), a movie starring the popular actors Jackie Shroff, Saif Ali Khan and Aftab Shivdasani and directed by upcoming young director E. Neewas.

"He is now in our custody until March 13 and we will interrogate him and see what we can find on Salem and his other henchman Kamal Rashid who stays in Dubai," Nayak told AFP.

Salem is alleged to have made extortion threats against several Bollywood actors, producers and directors and is alleged to have carried out the murder of producer Gulshan Kumar in 1997.

He is currently detained in Lisbon and there has been speculation he may be deported to India.

In the last few years Bollywood has made headlines for alleged links with the mafia, especially after the arrest of top producer Bharat Shah in 2001.

Shah was charged with funding his films with underworld cash and was in prison for nearly 18 months. He is currently out on bail. 

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