The Privy Council has dismissed oil tycoon John Deuss's appeal that his arrest in Bermuda three years ago was unlawful.

Mr. Deuss was arrested to face extradition to the Netherlands on suspicion of money laundering, handling stolen goods and "being in charge of a criminal investigation".

An international warrant was issued after his bank First Curacao International Bank, was closed during an Anglo-Dutch investigation into carousel VAT fraud.

Mr. Deuss, who owns property in Bermuda, was seized by detectives before being voluntarily extradited to his homeland.

Magistrate Khamisi Tokunbo issued a warrant for his arrest on September 28, 2006, acting on 'Information for an Extradictable Offence'.

Mr. Deuss was arrested on October 13 and released on bail three days later, after consenting to voluntary extradition. He surrendered himself to the Netherlands authorities on October 19.

On December 29, 2006 he was then released on bail and returned to reside in Bermuda.

Mr. Deuss has always denied any wrongdoing and has never been charged with an offence in connection with the inquiry.

However he launched a civil appeal against his arrest, arguing Mr. Tokunbo was wrong to issue a provisional warrant at the request of Dutch prosecutors.

The Supreme Court and Court of Appeal in Bermuda however, rejected his claim. The case was subsequently referred to the Privy Council to be heard by British law lords, Lords Phillips, Scott, Brown, Mance and Neuberger.

Their ruling was announced yesterday following a hearing in the Bahamas on April 2.

Delivering the judgment, Lord Phillips said: "It has always been accepted that the appellant is accused of a crime that is extraditable under the law of the Netherlands. The issue has been whether he is accused of an extradition crime so far as the law of Bermuda is concerned."

Lord Phillips said that on examination of the law, Mr. Deuss's alleged conduct was indeed an "extradition crime".

A Bermuda Government spokeswoman said yesterday: "This morning, the Privy Council announced its decision in favour of the Government of Bermuda in the case of Johannes Deuss v The Attorney General and The Commissioner of Police for Bermuda."

Director of Public Prosecutions Rory Field is expected to comment on the decision later today.