The head of Ukraine’s state emergencies service, Serhiy Bochkovsky, and his deputy Vasyl Stoyetsky were handcuffed by police at the televised meeting. This follows President Poroshenko’s termination of a regional governor yesterday.
Mr Kolomoisky had been running the key industrial region of Dnipropetrovsk and had financed armed volunteers to fight pro-Russian separatists in the east. He had been vying with President Petro Poroshenko for control of the Ukrnafta energy company.
The two arrests shown on TV on Wednesday were connected to illegal kickbacks involving procurement contracts, Interior Minister Arsen Avakov told the cabinet meeting.
Prime Minister Arseniy Yatsenyuk, quoted by Reuters news agency, said that “when the country is at war and when we are counting every penny – they steal from people and the state.
“This will happen to everyone who breaks the law and sneers at the Ukrainian state.”
Mr Avakov said he was also dismissing all regional heads of the state emergencies service, as they were suspected of involvement in a corrupt scheme that had diverted money offshore.
Speaking on Ukrainian TV, he said officials at the service had used a private company to transfer funds “to a non-resident of Ukraine, a Jersey-based offshore company”.
From there, he said, money went to “another private company owned by Stoyetsky and Bochkovsky, after which this money was divided between card accounts opened, in particular, in Cypriot banks”. He showed printouts of what appeared to be card statements.
Mr Yatsenyuk’s government is under pressure from Western lenders to prove that it is cleaning up government finances, as Ukraine has been plagued by high-level corruption since independence in 1991.
Last month the International Monetary Fund agreed a $17.5bn (£11.5bn) loan to Ukraine as part of a new economic reform programme. Western loans to Ukraine total $40bn, spread over four years.
Another senior official, the head of state-run Southwestern Railways Oleksiy Kryvopishyn, was sacked on Wednesday. It is Ukraine’s second-largest railway company, mainly serving central areas including Kiev.
President Poroshenko’s dismissal of the oligarch Ihor Kolomoisky is seen as a clash between business rivals vying for control of energy assets.
Armed men suspected of links to Mr Kolomoisky had briefly occupied the offices of state-owned Ukrnafta and its subsidiary UkrTransNafta.
Mr Kolomoisky was reportedly unhappy after parliament passed legislation aimed at weakening his influence.
Mr Poroshenko’s office named Valentyn Reznichenko as the new acting governor of the Dnipropetrovsk region.
Mr Kolomoisky – who is estimated to be worth more than $2bn (£1.3bn) – has helped President Poroshenko by keeping order in Dnipropetrovsk and preventing pro-Russian rebels from advancing into the region. It lies near rebel-held areas of Donetsk and Luhansk regions.
A senior Russian politician, Federation Council speaker Valentina Matviyenko, spoke scathingly about Ukraine’s “war of the oligarchs” on Wednesday.