The Sabah government today denied that the Sabah Water Department director arrested for graft is back at work.

A Chief Minister's Office spokesperson said the director was suspended from duty and the notice was issued last week, Utusan Malaysia reported.

"What was reported is inaccurate," he reportedly said.

According to Sabah state secretary Sukarti Wakiman, the department's director and deputy director were suspended effective from the dates of their arrests, Oct 5 and 4 respectively, Bernama reported.

They are prohibited from entering any state department in Sabah, or leave the state during the period of investigation, Sukarti said.

Earlier, The Star quoted lawyer PJ Pereira as saying that his client has yet to receive any suspension order and will thus return to work.

The 54-year-old director was reportedly released from the Kepayan police lock-up at about 1pm yesterday after he was allowed bail by the Malaysian Anti-Corruption Commission (MACC) and had deposited RM500,000 in two sureties.

He was also ordered to report to the Sabah MACC every month.

The director, his deputy and two others were arrested on Oct 4 in relation to the MACC'S investigation into the siphoning of federal allocations for water projects since 2010.

The suspects were being investigated under Section 17(a) of the MACC Act, Section 165 of the Penal Code and for money-laundering.

According to The Star, the two-week remand order for the 52-year-old deputy director, a businessman and company accountant expires tomorrow.

In the case that involved MACC's biggest cash haul so far, a 62-year-old adviser to the Sabah Finance Ministry, also became the fifth suspect arrested.

The man, who was reportedly picked up from his office early last week, had retired as a deputy director of the state water department last year before he was appointed an adviser in technical and engineering matters.

The MACC had during its raid seized cash close to RM53 million from the director and his deputy, on top of nine luxury cars, branded watches, 127 land grants and 94 handbags.

Since the initial arrests, 82 people, including contractors, families and department officials have been questioned in the case.