Five executives working for a subsidiary of Newmont Mining Corporation have been detained in Indonesia on charges of polluting the environment. The charges relate to allegations that a gold mine operated by the U.S.-owned company caused widespread illness by leaking mercury into the water supply.

The five men, three Indonesians, an American and an Australian, all worked for P.T. Newmont Minahasa Raya, known as N.M.R., a gold mine in the north of the Indonesian island of Sulawesi.

Local people accuse the mine of polluting the water of an ocean bay and making them sick. The company denies the allegations, saying it has had the water regularly checked for mercury contamination, and that levels are well within international standards.

"We consider the allegations are baseless, because our studies, our monitoring data, shows that there is no pollution in Buyat Bay as a result of our operations," said Kasan Mulyono, N.M.R.'s spokesman. "The water quality is good and the fish are safe to eat, and there is no indication of health problems from our environmental discharge."

The United States Embassy in Jakarta on Friday criticized the arrests, saying they are inappropriate, given the company's pledge to cooperate with the investigation.

Local people accuse N.M.R of dumping mercury and arsenic contaminated waste into Buyat Bay. The company says tests carried out on its behalf by independent laboratories show no elevation in the mercury levels in the water.

N.M.R. President Richard Ness was taken in for questioning by the police in Jakarta on Friday. He says his company did not use mercury in the refining process, although illegal miners on a neighboring river system do.

Indonesian newspapers have shown pictures of local children with skin diseases. A civic group has filed a class-action suit against N.M.R., claiming $550 million in reparations and damages for people living nearby.

The mine was a major employer in the area, but it closed at the end of August, after exhausting the gold-bearing ore in the area. N.M.R., owned by the U.S. company Newmont Mining Corporation, is currently carrying out reclamation work on the mine site.