Nigerian MPs are to investigate Speaker Patricia Etteh after accusations that she spent $5m on renovating two official residences and buying 12 cars.
Members of the House of Representatives allege she did not follow due process when approving the costly renovations.
The scandal comes as Nigerian President Umaru Yar’Adua’s new administration pledged to stamp out corruption.
In a country beset by graft, the scandal has dominated the front pages in Nigeria for several weeks.
The BBC’s Alex Last in Nigeria say two issues are at stake: how was this money approved, and why was it such a large amount – not least, as the residences were renovated two years ago and have hardly been lived in.
Mrs Etteh denies any wrongdoing, but suspicions run high.
In the past, officials routinely awarded over-inflated contracts and split the excess with the contractors.
The scandal has divided the governing party to which Mrs Etteh belongs, with some vociferous in their defence, others suggesting that she should stand down.
It is unlikely that she will, but the timing is bad.
New Nigerian President Umaru Yar’Adua has pledged zero tolerance for corruption and has been trying to create the image of a new kind of Nigerian leader – one that lives modestly and rejects the excesses that have so characterised the ruling elite.