According to BBC, his bike was seized in the south-western district of Masaka, about 135km (85 miles) from the capital, Kampala, on Monday.
Some riders allege that officers had demanded a $40 (£32) bribe from Walugembe to release his vehicle.
A police spokesman says the entire traffic department is now under investigation for bribery.
It is also reported that Walugembe had been living in police quarters and been supplying food to the force.
Riding motorbike taxis – or boda bodas as they are known in Uganda – is a common source of income for unemployed young men in countries across Africa.
But in Uganda they have been banned from carrying passengers as part of efforts to control the spread of coronavirus.
‘Boda boda’ riders are only able to operate between 06:30 and 17:00 local time and can only transport cargo.
- US Killing Of Iranian General Soleimani “Unlawful” – UN Expert - July 9, 2020
- I Miss Being ‘Beaten Up’ By Diamond Platnumz – Ex Girlfriend - July 9, 2020
- Pogba Finally Speaks On Playing Alongside Bruno Fernandes - July 9, 2020