Ousted Mangaung mayor Olly Mlamleli was arrested by the Hawks on Wednesday morning, several African National Congress (ANC) insiders told News24.

One insider said she was at Bainsvlei police station in Bloemfontein, where Mlamleli was being held.

"I heard about it on my way to council and immediately drove to the police station and I saw Olly being taken out of a Hawks vehicle," the insider said.

Three other ANC leaders said the arrests were related to the controversial asbestos contract, which Mlamleli was fingered for during her stint as MEC.

Another source said a council sitting had to be postponed because ANC councillors left to support Mlamleli after hearing of her arrest.

"We could not do anything today. The minute they heard that Olly was arrested, her supporters left council and we did not meet quorum," the ANC councillor said.

Efforts to get confirmation from the Hawks was unsuccessful.

ANC officials in the Free State are expected to convene an urgent meeting following the arrests of high-profile people in the province.

ANC spokesperson Thabo Meeko confirmed this to News24 on Wednesday.

"We heard that high-profile people in the province were arrested. We are waiting for the NPA to reveal names after they appear in court. The ANC officials in the province will convene and take decisions," he said.

He said ANC processes will kick in as those who are charged with corruption will have to step aside.

Provincial ANC leaders said the party is due to deal with the political consequences of the arrests.

Another party insider and South African Communist Party (SACP) provincial leader said he was on his way to a meeting with the some of the party leaders to discuss the arrests.

Ripple effect

"At this point, it will be hard for me to say why exactly they have been arrested, but this is going to cause a hailstorm. This will have a ripple effect on many people all the way to the top," the SACP leader said.

In May, ANC secretary-general Ace Magashule and Mlameli were fingered in a damning report by Public Protector Busisiwe Mkhwebane.

The report ruled that the province failed to follow proper procurement procedures when they awarded the R200-million contract, and that the provincial department participated in an expired contract of the Gauteng human settlements department and failed to conduct a due diligence investigation before participating in the contract.

Mkhwebane highlighted that the province was in possession of the Gauteng department's Service Legal Agreement, which had expired, but went ahead to pay the service provider R139-million.

This, despite the Auditor-General having declared the procurement as irregular as early as July 2015.

She further highlighted that the department did not receive value for money and the service provider had sub-contracted the contract at a fee of just over R21-million, while the service provider walked away with R230-million.

The controversial deal was signed during Magashule and Mlamleli's time as Free State premier and MEC of agriculture respectively.