A Chilean navy deal that led to the purchase of four used frigates from the Netherlands has fallen foul of the law in the Latin American country over suspicions that all wasn't well with the transaction.

The $350 million deal was thought to have been arranged in a government-to-government contract between Chilean and Dutch shipyards in 2005 but reports suggested that a Chilean marine as well as an arms dealer, already in the spotlight for a previous deal, was involved with the purchase.

Guillermo Ibieta's weapons trade firm Eurotechnology International was previously cited in a purchase of tanks that also is regarded as suspect by Chilean law-enforcement agencies.

Ibieta faces fresh questioning this week over the frigates purchase. He was questioned earlier over alleged wrongdoing in the tanks deal.

Chilean newspaper La Tercera said Ibieta had come to the attention of Judge Manuel Valderrama and prosecutor Carlos Gajardo after they investigated an alleged link between Eurotechnology and a former Chilean marine.

Former marine Capt. Juan Tapia Villalon, already prompted to make a declaration to the attorney general, confirmed he received funds from Ibieta's firm but claimed those were to cover travel expenses between Chile and Europe and to pay for valuable data.

"In total I received between $300,000 to $400,000," said Tapia Villalon in a declaration to the attorney general on March 22. "The monies were all transferred to me directly from Eurotechnology, Guillermo's company," he said in the statement.

Tapia Villalon said the payment was justified as the money was used to provide Dutch shipyard Royal Schelde with technical data necessary to recondition the used Karel Doorman class vessels the Chilean navy bought for $350 million. He said the payment was also to cover the cost of his travel between Chile and Europe form 2002-06.

The Chilean Justice Department wants to know how the money was spent and why the marine failed to declare it earlier. Equally important, the authorities want to establish the role Ibieta played in the deal.

Among unanswered questions are the yet undisclosed financial transactions that clinched the deal, whether involving Chilean government procurement officials or Dutch shipyard officials.

"The process was a fairly straightforward one," Dutch Ambassador Johan van der Werff told The Santiago Times, adding, "this was essentially a government-to-government purchase. There could not have been an intermediary."

That raised the question why Ibieta rewarded the marine officer with those generous cash handouts.

In a previous deal Ibieta found himself directly implicated, Chilean media reported. In 2009, the Chilean Investigative Police determined that Ibieta received a $7.5 million payment from a Dutch intermediary during a Chilean purchase of 202 Leopard I tanks from the Netherlands.

The case sparked controversy because the amount received by Ibieta amounted to 14 percent of the total value of the tank deal.

Chilean authorities investigated two former soldiers but couldn't establish their alleged role in what appeared to be an arms deal arranged by Ibieta.

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