Peter Kone aged 29 of Erave, Southern highlands province, was charged with two counts of conspiracy to defraud the state under section 407 (1), (b) of the Criminal Code Act, 1974.
This is the third arrest so far by detectives investigating allegations of massive fraud reported at the payroll section of Police Headquarters.
A man and his wife both identified as Christopher Chapau and Rhonda Kerea were arrested in Manus province on February 16 for their alleged involvement in a similar police payroll fraud case.
Acting Assistant Commissioner of Crimes Victor Isouve said Kone is the third person to be arrested since investigations began towards the end of last year (2015).
Isouve said Kone and a co-worker attempted to defraud the state by creating a bogus payroll account identified as 3Zurich Zeibesh.
They went further and produced a claim of K101,670.74 but the scam was detected before the money was transferred into the (ghost) account.
The false claim for final entitlements was entered into the main Finance Alesco payroll system, when it was detected by Finance Department employees.
The matter was referred to the Crimes Directorate and Kone was arrested and charged on February 26.
Acting ACP Isouve said investigations into the police payroll fraud are beginning to widen and more arrests are expected in the coming weeks.