Media advisor Andrew Crook was arrested over the alleged kidnapping of a bank executive in Indonesia, according to ABC News.
Police described the alleged scheme as "very elaborate" and "bizarre".
They said Mr Palmer, whose party's senators wield crucial swing votes, was "categorically" not involved in the investigation.
ABC reported that Queensland police had been investigating claims that Mr Crook and another suspect, multi-millionaire property developer Tony Smith, tried to force a witness in a legal case involving Mr Smith to recant evidence after luring him to an Indonesian island.
The witness was an employee of the National Australia Bank (NAB), which Mr Smith has been suing, claiming the bank lost him tens of millions of dollars during the global financial crisis, ABC said.
Police said the banker was held for several hours, and had his mobile phone, wallet and passport taken.
They confirmed that they had charged two men and had issued a warrant for a third, but have not yet named the suspects. They said that all three men had been on the island where the alleged incident took place.
Mr Palmer, who made his fortune in mining and won a seat in the lower house of parliament last year, said he did not know anything about the allegations.
But he appeared to suggest that the case could be politically motivated, saying that the government "don't like the opposition we've been giving them in the Senate".
"I'm personally very concerned because Mr Crook is our media adviser and if they wanted to attack me or our party they can do that," he said.
Police brushed aside Mr Palmer's claim the police investigation could be politically motivated, saying it stemmed from a pre-existing investigation connected to a civil matter dating back to 2012.
Mr Palmer was "a victim of the circumstances of this case where his name has been used by the three offenders in an effort to lure the victim, the NAB executive, to the island in Indonesia".
Queensland police have detained an aide to Australian billionaire and politician Clive Palmer.