Rome -Former Mayor of Rome Gianni Alemanno has been placed under investigation on suspicion of involvement in a mafia style organisation using public funds in the capital that has led to 37 arrests, police said Tuesday. 

 The inquiry, with as many as 100 people investigated for links to organised crime and far right extremist groups, is the worst scandal to hit local politics in the Eternal City.

 Alemanno, a former member of the neo-fascist Italian Social Movement party founded by admirers of World War 2 dictator Benito Mussolini, has had his home searched by police but strongly denies involvement in the mushrooming affair.

 Public Prosecutor Giuseppe Pignatone said "in Rome there is not just a single mafia organisation controlling the city. There are different mafia organisations, Today we have identified the one we call "Mafia Capital," Roman and original, without links to other southern organisations, which however uses the mafioso method". "Some men close to the former mayor Alemanno are fully-fledged components of this organisation and players in episodes of corruption."

 Alemanno, a former agriculture minister in media magnate Silvio Berlusconi's government, served as mayor of Rome from 2008 to June 2013.

 Among those identified in the inquiry was Daniele Ozzimo, the current centre-left Democratic Party city alderman for housing, who resigned while insisting he is innocent.

 Finance police seized assets worth 200 million euros during the investigation and police searched both the Campidoglio palace housing Rome's city hall and the offices of the regional government of Lazio.

 The mafia organisation used bribery, rigged public contracts and carried out extortion as well as usury and recycling dirty money, police sources said.

 A key figure among those arrested was Massimo Carminati, a former member of the banned right-wing terrorist group NAR, Armed Revolutionary Nucleii, in the 1980s, a group that recruited from the extreme fringe iof the MSI.

 Also arrested was Franco Panzironi, the former head of the city's notoriously bent street cleaning agency AMA. The crime gang also took control of funds allocated to reception centres in the capital where illegal immigrants were detained.