Information obtained by the Sunday Times this week shows divisions and fights have erupted within the law enforcement and state security agencies over the issue.

Tsvangirai's high-profile case has attracted the interest of the police and the Joint Operations Command (JOC), which brings together army, police and intelligence chiefs.

The JOC wants Tsvangirai arrested, although some of its members fear this could trigger political upheaval in the country ahead of elections and propel him to power by default.

The issue has generated quarrels within the Reserve Bank of Zimbabwe (RBZ), which gave Tsvangirai the $1.5- million, the police and other state security arms.

The controversy has also attracted the attention of President Robert Mugabe, who in 2009 approved the $1.5-million for the house, which is currently under renovation.

Makuvise allegedly misappropriated the money in collusion with the premier.

The money was approved by Mugabe on November 13 2009, after a request by Tsvangirai through RBZ governor Gideon Gono for it to buy the house because Mugabe had allegedly blocked him from moving into either the State House or Zimbabwe House.

Government officials say there has been explosive conflict between the police, JOC and the RBZ over the issue. Senior officials said this week the unfolding battles were on how to handle the sensitive issue, which has serious political implications for Tsvangirai and the country.

There are two main contending arguments over the issue. One group within the JOC wants Tsvangirai arrested, claiming there is overwhelming evidence there has been fraud. Others say, even though that might be true, arresting him would be a serious political mistake, as it could plunge the country into chaos and fast-track Mugabe's demise.

"There is serious infighting going over the issue. Endless meetings have been held in recent months to deal with that but no solution has been found yet. One group, mainly in the JOC, wants Tsvangirai arrested and charged with fraud.

"This group argues that it doesn't matter what the people's reaction will be as long as the allegations can be substantiated," a senior government official told the Sunday Times. "The opposing camp contends that, even if the allegations were to be proven in a court of law, the majority of the people won't believe it. They will say it was a political case and the charges were trumped-up. That might plunge the country into chaos and fast-track Mugabe's departure."

Another government official said strategically for Mugabe, arresting Tsvangirai would be a "disaster". "In terms of political strategy, arresting him would be a blunder, because whatever the outcome, most people would complain. If he is convicted they will say it a political issue and if he is acquitted they will say there was no issue in the first place. So you can't win," the official said. "Damned if you find him guilty, damned if you don't."

A senior intelligence officer said the biggest fear was creating "a Jacob Zuma out of Tsvangirai". "You see those cautioning against his arrest say Zimbabwe's political leaders and security operatives must learn something from South Africa," the officer said.

"Zuma was charged over the arms deal and hauled before the court on allegations of rape, although he was acquitted on the latter case. Quite clearly, the manner in which those issues were handled propelled him to power. If those matters were dealt with differently, Zuma may not be the president of SA today. So others are saying let's learn from that."

Efforts to get comment from the police on Friday were unsuccessful. Police have denied in the past that they were investigating the premier despite overwhelming evidence to the contrary.

Tsvangirai has denied the charges.

By The Times (SA)