Mauritius’s ex-finance minister Renganaden Padayachy has been released on bail pending fraud charges, his lawyer said, after five days in detention in connection with an investigation of alleged embezzlement.

Padayachy was arrested last Wednesday alongside former central bank governor Harvesh Seegolam, who was released on bail on Thursday. Padayachy faces a provisional charge of “fraud by abuse of position”, according to the Financial Crimes Commission (FCC).

The investigation aims to establish whether Padayachy abused his position in the management of public funds within the Mauritius Investment Corporation (MIC), created in 2020 by the Bank of Mauritius to support businesses during the Covid-19 pandemic.

According to the FCC, massive financial irregularities were noted in transactions supervised by the former minister, including allocations of funds deemed inconsistent with the MIC’s initial mandates.

Padayachy and Seegolam are accused of artificially inflating the valuation of a company, EastCoast Hotel Investment, in which MIC had invested, which lost 300 million Mauritian rupees (approximately $6.7 million) for MIC, police sources have said.

Both men have denied any wrongdoing.

The FCC’s lead investigator told Magistrate Prashant Bissoon that the commission no longer opposed his release on bail, which was set at roughly $13,000.

“This is a great day for him,” Padayachy’s lawyer Raouf Gulbul told reporters in the capital Port Louis, but acknowledged the investigation was complex and likely to last a long time.

“My client will remain at the disposal of investigators,” Gulbul added.

The case marks a new stage in the ongoing investigations into MIC’s operations, which are also at the heart of other proceedings targeting former politicians and officials.