A Great Yarmouth man who worked at a government-funded film-making agency which collapsed this week because of financial difficulties has been arrested on the suspicion of theft.

Melvin Welton, 61, is the finance manager of Screen East which invested in the film Cuckoo which was shot in Yarmouth in 2007 and featured star actor Richard E Grant.

As news of Mr Welton’s arrest was confirmed, it emerged Screen East, which has an office in Norwich, is no longer operating because of financial difficulties and Mr Welton’s arrest.

Screen East’s remit was to promote the East of England as an ideal location for film and television productions and advocate the region’s film-making skills base.

The agency has appointed a insolvency practioner to take the company into administration as it is insolvent and can not meet its debts.

Screen East’s future was already in jeopardy after the government’s decision to axe the Film Council, the primary source of public funding for film making.

In December 2007 a large part of the psychological thriller Cuckoo was shot in a Yarmouth warehouse on South Denes with star actors Laura Fraser and Tamsin Greig filming scenes with electricians, riggers, carpenters and a catering firm from the region being hired for the film's production.

It was released in November.

Its Norwich-based director Richard Bracewell explained the important role Screen East played in Cuckoo’s production.

“We could not have made Cuckoo in the same way, shooting substantially in Yarmouth, without Screen East. We would have taken it to London.

“If Screen East are not currently supporting indigenous film-making in the east that is a massive shock and a huge shame for all the film makers working in this area.”

Mr Welton is responsible for all of Screen East’s financial functions and procedures.

He manages the distribution of Screen East’s venture capital funds and lottery grants and oversees the monitoring and performance function.

His arrest was confirmed by Laurie Hayward, the chief executive of Screen East.

A spokesman for police said: “Norfolk Constabulary can confirm a 61-year-old man from Yarmouth has been arrested on the suspicion of theft and released on bail pending further inquiries.”