Hungarian police today arrested the managing director of the aluminum company behind the spill of toxic sludge that killed eight people, drove dozens from their homes and threatened to pollute the Danube River.

The arrest of Zoltan Bakonyi, managing director of MAL, was announced in parliament by conservative Prime Minister Viktor Orban. He added that the company should be "placed under state control" to ensure it rather than taxpayers foot the bill for the cleanup.

"Hungary's biggest ecological disaster was caused by human negligence, the escape of a hazardous material from a plant built and run by people," Mr Orban said. The spill occurred after a holding pond for red mud -- a byproduct from the production of alumina, which in turn is used to produce aluminum -- collapsed.

A police statement said Bakonyi had been brought in "for interrogation in connection with the mud disaster that caused the death of a number of people." He can be held for 72 hours before any charges are pressed.

Mr Bakonyi is the son of 30 percent MAL shareholder Arpad Bakonyi, who together with co-founders Lajos Tolnay and Bela Petrusz, are among the 30 wealthiest people in Hungary, according to the annual rich list compiled by Napi Gazdasag newspaper.

Not toxic?

MAL asserted last week that the mud was not toxic but should not be "bathed in" and proposed a timetable for restarting production. The company offered total compensation of €110,000 ($152,000), an average of €360 per effected person.

Environment Minister Zoltan Illes estimated that MAL could face paying up to $100m towards the clean-up if it is found to have been negligent. It is unclear whether the company has the money to pay or whether its insurance policy will cover it.

The announcement of Bakonyi's arrest and the nationalization of MAL came as the official death toll rose from seven to eight. Over 150 people were injured -- 45 are still in hospital -- and 280 homes were damaged. Two of the survivors are said to be in a very serious condition.

On Saturday 700 people from the village of Kolontar were evacuated on concerns about a second breach and around 6,000 people from the next village in line, Devecser, were told to pack a single bag and to be ready to flee.

Cracking wall

The fresh evacuation came after a 21 inch crack was found in the northern wall of the already-ruptured reservoir. The mud which remains in the reservoir is thicker and less likely to gush out with devastating speed than that mud that escaped in the original incident.

Illes told a press conference the northern wall's collapse is imminent. "The reservoir could give way completely either today or some time this week." A 4 meter high barrier is set to be completed this evening to contain the worst of it.

Those in the affected area are being warned to wear breathing masks because the fine dust which makes up the solid element of the mud has risen above safe levels in the air. Rain forecast for later today is likely to temporarily reduce the problem.

Mr Orban said a state commissioner should be appointed to control MAL and manage its assets. Resuming production is in the public interest, he said, because it would help save the jobs of MAL's 3,000 workers, many of them from the affected area.

The exact composition of the sludge is unknown, although the red color comes from the least harmful component, iron oxide. Some fear, however, that it contains potentially dangerous heavy metals including mercury and lead.

In the long term the government plans to remove and replace the soil from the 800 hectares currently submerged under sludge and plant forests whose roots would eventually draw up any harmful elements.