WOOLWORTHS has confirmed it is working closely with police after an executive was arrested for alleged involvement in a secret kickback scheme.

Bill Harvey, the national buyer for coffee, tea and sugar for Woolworths, was arrested by police at the company's Bella Vista headquarters, in Sydney's northwest, on Friday, the Herald Sun reports.

He has been since been sacked from Woolworths.

It's alleged wholesalers have been forced to pay a 15 to 20 per cent "promotional surcharge'' to have their products stocked in Woolworths.

Mr Harvey allegedly received a percentage of this money in cash from tea and coffee suppliers.

Auditors are checking to see if other products are involved in the alleged scheme.

"Woolworths confirms it has been working closely with police in relation to an investigation,'' the company said in a statement today.

"Woolworths takes such matters extremely seriously but due to the ongoing investigation, can make no further comment at this time.''

The company added it was not itself being investigated.