Conservative party vice-chairman Alan Lewis has been arrested on suspicion of rape in the late 1960s.
The 75-year-old textiles millionaire is the owner of Globe Mills at Slaithwaite and one of the key players behind the bid to turn it into a £10m innovation centre in co-operation with Huddersfield University and corporate giant 3M.
Mr Lewis, who was awarded the CBE for his services as chairman of the Confederation of British Industry's initiative to prepare British businesses to the single market, was arrested by Greater Manchester Police after a woman claimed she had been attacked by him more than 40 years ago.
A Greater Manchester Police spokesman said: "A 75-year-old man was arrested following a complaint received earlier this year of an historic rape that occurred in the Manchester area in the late 60s.
"The man was later bailed pending further inquiries. Specially trained officers are providing support and welfare to the victim."
A spokesman for Alan Lewis said: "An allegation has been made against Alan Lewis in respect of an event 46 years ago by a then adult female. He vigorously denies the allegation."
Mr Lewis is a successful entrepreneur who owns the Crombie clothing chain, and is one of nine Conservative Party vice-chairmen.
Earlier this year he placed 12th on the Yorkshire Rich List with an estimated fortune of £260m.