Story highlights Robert Seldon Lady was CIA's Milan base chief, prosecutors say

He was convicted in absentia in 2009 of abducting terrorism suspect

Former CIA official says Lady is no longer with the agency

One of the 23 Americans whom an Italian court convicted in absentia of kidnapping a terrorism suspect in 2003 has been arrested in Panama on an Italian arrest warrant, the Italian justice ministry's press office said Thursday.

The ministry identified the arrested man as Robert Seldon Lady, who Italian prosecutors said had been the CIA base chief in Milan.

In a 2009 trial, an Italian court convicted Lady and 22 others of abducting Osama Mustafa Hassan Nasr, or Abu Omar, from the streets of Milan in 2003.

The trial was the first to deal with a practice that human rights groups call "extraordinary rendition." They say the United States has often transferred terrorism suspects to countries that practice torture.

Abu Omar, who was suspected of recruiting men to fight in Iraq and Afghanistan and was under heavy surveillance by Italy's intelligence agency, was transferred to Egypt and tortured, Italian prosecutors said.

Italian prosecutors said Abu Omar was nabbed by a CIA team working with Italian officials.

A former senior CIA official said Lady is no longer with the CIA.

In the 2009 trial, the Italian court sentenced Lady to eight years in prison, prosecutor Armando Spataro said. The other Americans were sentenced to five years.

Each of the 23 Americans was ordered to pay 1 million euros (about $1.3 million) to Abu Omar, plus 500,000 euros to his wife.

But at the time, it seemed unlikely that the convictions would have much effect on the Americans, as none appeared at the trial and the Italian government did not ask for their extradition.

Washington has acknowledged making secret "rendition" transfers of terrorism suspects between countries but denies using torture or handing suspects over to countries that do.