Mhlanga was arrested on Thursday on charges of abuse of office and theft.
It is understood that Mhlanga diverted the whole US$50 000 to his own use.
Mhlanga is expected to appear at a Bulawayo court facing three counts of abuse of office and one count of theft.
Mhlanga is the third legislator to be arrested after MDC-Tâ€™s St. Maryâ€™s legislator, Marvelous Khumalo and Zanu PFâ€™s Magunje law maker, Franco Ndambakuwa.
Khumalo and Ndambakuwa are out on US$500 bail.