Nigerian President Muhammadu Buhari has ordered the arrest of the former national security adviser, accusing him of stealing about $US2 billion ($A2.81 billion) through phantom arms contracts and hampering the fight against Boko Haram militants, his office said.
The arrest order is part of a campaign by Buhari, who was elected in March, to tackle corruption that has enriched an elite but left most Nigerians in poverty.
Buhari's office said former security adviser Sambo Dasuki had "awarded fictitious and phantom contracts" worth around $US2 billion for jets, helicopters and ammunition for the army to fight the jihadist Boko Haram group which were never delivered.
Dasuki had also instructed the central bank to transfer more than $US140 million to accounts in Britain, the United States and West Africa "without any contract documents", the statement from the presidency said.
Under Buhari's predecessor Goodluck Jonathan, when Dasuki was in office, Boko Haram took control of parts of Nigeria's northeast where it is trying to carve out an Islamic state.
"Had the funds siphoned ... been properly used for the purpose they were meant for, thousands of needless Nigerian deaths would have been avoided," the presidency said late on Tuesday.
There was no immediate comment from Dasuki. In a statement attributed to him by local media he was quoted as saying he had always served Nigeria "with the best of intentions".
Arms procurement was supposed to be under the purview of the Defence Ministry but its inability to deliver prompted Jonathan to shift the task to the National Security Adviser in September last year. Normally the NSA only advises on procurement.
Top military sources complained they were given little notice or say in what they needed and had to be creative with whatever equipment arrived.
Nigeria's NSA had to seek arms and ammunition from a wide range of eastern European and Asian countries as some western states, where equipment was sought previously, were concerned with possible human rights abuses.
Large orders finally arrived early this year and were key in turning around the fight against Boko Haram, according to diplomats.
This year, Nigeria, backed by its neighbours, was able to recapture much of the territory lost to Boko Haram though suicide bombings and other attacks blamed by officials on the militant group remain part of daily life in the north.
Boko Haram has waged a six-year campaign which has killed thousands and displaced 2.1 million people.
