Three local workers and a US employee are already being held while they are quizzed by police.

Newmont denies polluting Buyat Bay in North Sulawesi, despite local complaints and health fears.

Richard Ness, president director of Newmont Mining Corp, was allowed to leave after he was questioned on Thursday, and was due to be questioned further, police said.

Local people have long complained about the mining company’s presence.

In August this year residents formally accused the Newmont mine of polluting the area.

The previous month a baby girl died of an illness which was blamed on pollution levels in the bay.

Locals say that chemicals dumped in the sea by the mining firm have caused a variety of problems, including Minamata disease – a neurological illness named after a Japanese bay where an outbreak struck in the 1950s.

Newmont employees will face questioning on Thursday about alleged environmental pollution and disposal of hazardous and toxic materials in Buyat Bay, according to Newmont spokesman Kasan Mulyono.

“We are co-operating fully with police, and we are confident we can prove that the allegations are false,” Mr Mulyono told BBC News Online.

He said that Newmont’s operation had complied with all Indonesia’s environmental standards, and the company’s presence in the area had not adversely affected the environment.

Richard Ness hit back with a strongly worded statement earlier this week.

“It is difficult to express in words the disgust that we feel regarding the false allegations,” he said.

“It is not true that our operations have affected the quality of the water or the health of the villagers. I repeat – that is not true.”