The Australian man detained at Bali's international airport with almost two kilograms of methamphetamine says he knew nothing about the drugs and is not a drug smuggler.
Indonesian customs officers say Michael Sacatides, 43, from Sydney arrived this morning on a Air Asia flight from Bangkok.
They say he has now been transferred to police custody.
They will take several days or up to several weeks to decide whether to lay formal charges.
The officers became suspicious when they saw a plastic bag in his luggage as it passed through the X-ray machine.
The head of the investigation has told the ABC when they opened the bag they found the drugs in four plastic bags concealed in the panels of his suitcase.
People found guilty of smuggling more than five grams of methamphetamine face the death penalty.
But Mr Sacatides says he knew nothing about the drugs and borrowed the suitcase form an Indian man in Bangkok, where he has been living for a year and a half, working as a boxing instructor.
No I didn't bring any drugs - this is news to me, he is heard saying in a recording of the police interview.
Mr Sacatides says nobody gave him any money or asked him to take the bag.
I borrowed the bag to put, I don't have a bag. I just borrowed a bag to put some clothes in, he said.
The Department of Foreign Affairs (DFAT) says consular officials are trying to get in contact with Mr Sacacides.
DFAT says it is not known whether Indonesian authorities have charged him with an offence.
Methamphetamine is a class one narcotic under Indonesian law.
Three Australians, all members of the so-called Bali Nine heroin smuggling ring, are currently on death row.
Fri Oct 1, 2010
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