VATICAN CITY â€"  The Vatican confirmed Saturday that the pope's butler had been arrested in its embarrassing leaks scandal, adding a Hollywood twist to a sordid tale of power struggles, intrigue and corruption in the highest levels of Catholic Church governance.

Paolo Gabriele, a layman who lives inside Vatican City, was arrested Wednesday with secret documents in his possession and was being held Saturday, the Vatican spokesman the Rev. Federico Lombardi said in a statement.

Gabriele is often seen by Pope Benedict XVI's side in public, riding in the front seat of his open-air jeep during Wednesday general audiences or shielding the pontiff from the rain. He has been the pope's personal butler since 2006, one of the few members of the small papal household that also includes the pontiff's private secretaries and four consecrated women who care for the papal apartment.

Lombardi said Gabriele had two lawyers representing him as the Vatican judicial system takes its investigative course.

The "Vatileaks" scandal has seriously embarrassed the Vatican at a time in which it is trying to show the world financial community that it has turned a page and shed its reputation as a scandal plagued tax haven.

Vatican documents leaked to the press in recent months have undermined that effort, alleging corruption in Vatican finance as well as internal bickering over the Holy See's efforts to show more transparency in its financial operations. But perhaps most critically, the leaks have seemed aimed at one main goal: to discredit Pope Benedict XVI's No. 2, Cardinal Tarcisio Bertone, the Vatican secretary of state.

The scandal took on even greater weight last week with the publication of "His Holiness," a book which reproduced confidential letters and memos to and from Benedict and his personal secretary. The Vatican called the book "criminal" and vowed to take legal action against the author, publisher, and whoever leaked the documents.

The Vatican had already warned of legal action against the author, Italian journalist Gianluigi Nuzzi, after he broadcast letters in January from the former No. 2 Vatican administrator to the pope in which he begged not to be transferred for having exposed alleged corruption that cost the Holy See millions of euros in higher contract prices. The prelate, Monsignor Carlo Maria Vigano, is now the Vatican's U.S. ambassador.

Nuzzi, author of "Vatican SpA," a 2009 volume laying out shady dealings of the Vatican bank based on leaked documents, said he was approached by sources inside the Vatican with the trove of new documents, most of them of fairly recent vintage and many of them painting Bertone in a negative light.

At a press conference this week, Nuzzi defended the publication and said he wasn't afraid of Vatican retaliation. In fact, he even taunted Vatican prosecutors to seek help from Italian magistrates to investigate the case, charging that it would be a remarkable turnaround given the Vatican had been less than helpful in the past when Italian prosecutors came asking for information for their investigations.

The arrest has come during one of the most tumultuous weeks for the Vatican in recent memory. On Thursday, the president of the Vatican bank, Ettore Gotti Tedeschi, was ousted by the bank's board. Sources close to the investigation said he too had been found to have leaked documents, though the official reason for his ouster was that he had failed to do his job.

The Vatican has taken the leaks very seriously, with Benedict appointing a commission of cardinals to investigate. Vatican gendarmes as well as prosecutors are also investigating the sources of the leaks.