Two people suspected of links to an illicit gold syndicate were arrested in a late night operation b.
Protests by taxi drivers recently seemed to have been the final straw that forced the authorities to suspend him.
Nzama has since been put on special leave to allow the municipality to investigate allegations made by unions, metro police staff and taxi owners against him.
As news of Nzama's special leave spread yesterday, junior metro police officers began to celebrate, with others, saying they were not expecting him to come back.
His special leave is effective from June 1 to August 31.
Vincent Ngubane is now the acting metro police boss.
For years metro police have been complaining about corruption, nepotism and harassment under Nzama's leadership.
The pressure for Nzama's removal mounted when taxi drivers recently protested, trashing the city's streets, assaulting passengers, stoning cars and bringing traffic to a standstill while calling for his removal.
Among other allegations is that Nzama had given eight metro police officers the assignment to be his bodyguards, allegedly after receiving numerous death threats from taxi operators.
Municipal spokesman Thabo Mofokeng yesterday confirmed that Nzama had been put on special leave for a period of three months.
Mofokeng said the arrangement was agreed on amicably by both the municipal manager and Nzama at a meeting last Tuesday.
"We are, however, aware that he now intends to dispute the consensual agreement," he said.
Mofokeng said Nzama was put on special leave so that the municipality could investigate the allegations against him.
"To this end the city has proposed to Nzama that independent people be appointed to do the investigation, and that all parties get the opportunity to place before the investigators evidence in support of or against the allegations," he said.
Mofokeng confirmed that metro police officers had experienced a lot of problems under Nzama's leadership in recent months, and that the city wanted to do a thorough assessment of the causes behind this instability so as to address them appropriately.
"The independent investigators will also play the role of identifying these issues and recommend appropriate action. There have also been serious security concerns against Nzama which have come to our attention. We believe we should take appropriate steps to protect him as our employee," Mofokeng said.
"We hope and trust that all affected parties will give this process a chance so that metro police officers can focus on their mandate without fear, favour or prejudice."