Colin Skellett, head of Wessex Water, has denied receiving any payments during the sale of the company to Malaysia-based YTL Power.

Mr Skellett told the BBC that he was "absolutely amazed" at his arrest, and that "the allegations have no foundation whatsoever".

I know that I am completely innocent and if justice is done I will be completely exonerated

Colin Skellett Wessex Water

On Thursday, Mr Skellett was arrested by City of London fraud squad officers on suspicion of receiving a bribe of nearly �1m.

Mr Skellett was released on bail on Thursday evening, and underwent further questioning for 90 minutes by the police on Friday.

He has now been released on police bail "for a few months" while the police investigation continues.

"I know that I am completely innocent and if justice is done I will be completely exonerated," he told the BBC.

He has also stressed that he plans to continue working "as normal" at the company.

Surprise winner

YTL Power bought Wessex Water in May this year for �1.24bn ($1.7bn).

It fought off competition from a bid which was led by the UK banks Royal Bank of Scotland (RBS) and Abbey National.

Somebody's looked at - big sum of money - YTL - Wessex sale - and put two and two together and made five.

Colin Skellett Wessex Water

Mr Skellett, chairman and chief executive at Wessex, told the BBC that he had played no part in the deal.

"Nobody from Wessex Water was involved in the decision on who acquired Wessex Water," he said.

"That decision was made by the US company Azurix, who were the owners then of Wessex Water, advised by the bank.

"We were not part of the decision-making process and indeed we thought that the deal would be done with RBS and we were amazed when it did go to YTL."

Azurix was a unit of the failed energy trader Enron, which went bankrupt last year.

Consultancy fee

Mr Skellett said that he had received a �1m fee from YTL for consultancy work.

He said that, after Wessex Water was sold, he had considered stepping down from the industry, but YTL had asked him to help them grow other parts of their business.

"I've signed a consultancy agreement, I did it in July with them (YTL), which locks me in for five years, and that's what I'm getting the �1m for," he said.

"That's a completely transparent payment that's gone into my bank for a consultancy agreement. That's a legal agreement I've signed with them."

Mr Skellett said he thought that, in the post-Enron crackdown on corporate fraud, somebody had made a mistake.

"Somebody's looked at - big sum of money - YTL - Wessex sale - and put two and two together and made five."

'Across the board' support

In a statement, Wessex Water also said that neither Mr Skellett "nor other Wessex Water directors were involved in the discussions to sell to YTL".

The company added that it was "pleased that matters seem to be resolving themselves" and said it hoped that Mr Skellett would be "back in the office shortly".

In his interview with the BBC, Mr Skellett said that he had had a lot of support from people "across the board".

"I have had e-mails and letters - they really have been terribly helpful."

Focus

On Thursday, detective superintendent Ken Farrow, head of the City of London police fraud squad, said the inquiry "focused exclusively on [a Wessex Water] senior official's relationship with a Malaysian utility company".

"There is no suggestion of any wider mismanagement of Wessex Water Ltd," he added.

A second man - said to have "no direct connection" with Wessex Water - was also arrested on Thursday after coming voluntarily to a City of London police station in connection with Mr Skellett's arrest.

The police said the man had also been released on bail to return to a police station at a later date.

YTL Power has said it had "no knowledge of any illegal payment and has offered the police its full co-operation in relation to the investigation".

Shares in YTL fell 4.3% on the Malaysian stock exchange on Friday.

Mr Skellett is also the non-executive chairman of infrastructure services company Jarvis.

News of his arrest on Thursday pushed shares in Jarvis down 14%, but on Friday they recovered 3.9% to close at 267.5p.