JAKARTA (Reuters) - Indonesia’s anti-corruption agency has arrested the governor of Aceh province over accusations that he took illegal fees for projects funded from more than $500 million of state funds, the latest high-profile target in a battle on graft.

The governor of Indonesia's Aceh province Irwandi Yusuf, is seen following his arrest by the country's anti-corruption agency at Corruption Eradication Commission (KPK) building in Jakarta, Indonesia June 5, 2018 in this photo taken by Antara Foto. Antara Foto/Reno Esnir via REUTERS

Irawandi Yusuf, a former separatist rebel, became the first directly elected governor of the northwestern province after a peace deal to end years of conflict was signed with Jakarta in the wake of the devastating 2004 tsunami.

Yusuf, who escaped from a jail where he had been serving a sentence for treason after it flooded during the tsunami, was reelected in 2017 for a second term as governor.

The province has a high level of autonomy and is the only Indonesian area to use Islamic law.

The governor had been named a suspect, along with two businessmen and another official, said agency official Basaria Panjaitan.

“There was an alleged corruption offence for receiving gifts or promises by Aceh’s governor, related to the allocation and distribution of Aceh’s special autonomy budget,” Panjaitan said in a statement late on Wednesday.

“This is really costing the people of Aceh,” she added, saying that a budget of 8 trillion rupiah ($555.17 million) had been allocated for projects such as road building, poverty eradication, education and health.

Nine people were initially detained in Aceh before the four suspects were flown to Jakarta, Febri Diansyah, a spokesman for Indonesia’s corruption eradication commission (KPK), said in a text message.

Reuters could not immediately reach Yusuf, who is being held in a KPK detention center, or his lawyer, to seek comment.

The Antara state news agency cited Yusuf as denying he had received any illegal fees for infrastructure projects.

The KPK has jailed a string of high-ranking officials in the past decade, but Indonesians still have to contend with high levels of graft in many areas of their lives.

The southeast Asian nation placed 96th among 180 countries in Transparency International’s annual corruption perceptions index last year, on par with neighboring Thailand and Colombia.

The KPK will prosecute Yusuf under Indonesian law, rather than Islamic law, media quoted Panjaitan as saying.

Under Islamic law, Aceh has imposed public caning for crimes such as theft, gambling and adultery.

But following an international outcry over such public canings, Yusuf said in April he would issue a decree to allow them only inside prisons.

($1=14,410.0000 rupiah)