There's no doubt that the police force over there (hell anywhere) is corrupt, but what I think it was, or at least the point they pushed, was that because he was nothing more than a peasant, he shouldn't be able to get the cash. Also, near the end, in the bathroom, the host of the show said he was the only person that made it from rags to riches, and he wanted to keep it that way. Hence why he gave Jamal the "right" answer, because he wanted to keep it the way it has been for all times past. He would have never been arrested if the host himself wasn't such a fucking retard. They just didn't want him winning due to giving the rest of the peasant populace hope for the future, that anyone could be chosen for Kaun Banega Crorepati
The wikipedia entry on the movie sheds a good bit of light on the situation:
http://en.wikipedia.org/wiki/Slumdog_Millionaire
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