ADDIS ABABA (Reuters) - Ethiopian police have arrested a minister and 11 other people on corruption charges, an official and state media said on Saturday, in the country's most high-profile swoop against graft for more than a decade.

Businesses in the region regularly complain of corruption as an obstacle to their work. Transparency International ranked Ethiopia 113 out of 176 nations worldwide in its 2012 perception of corruption index, where No. 1 is considered least corrupt.

That ranking puts Ethiopia above most nations in the Horn of Africa and east Africa regions, although Rwanda is ranked 50.

Melaku Fenta, a senior ruling party member and director general of the revenue and customs authority with the rank of minister, was arrested on Friday alongside two other officials from the authority, government spokesman Shimeles Kemal said.

"They were under investigation on suspicion of corrupt practices," Shimeles told Reuters, without giving details.

The spokesman said there were further arrests as well but did not give a total. The state news agency reported 12 arrests overall. Independently, newspapers said the arrests included a prominent businessman and customs employees outside the capital.

Global Financial Integrity last year said Addis Ababa lost $11.7 billion in outflows of illegal funds in the past decade.

Melaku is the most high profile suspect to be arrested on corruption charges since Siye Abraha, a former defense minister who was released in 2007 after six years behind bars. However, he was already out of government when arrested.

(Reporting by Aaron Maasho; Editing by Edmund Blair/Mark Heinrich)