Ajay, who claimed to be the spokesman of the CPI-Maoist's Andhra-Odisha border special zonal committee, in a statement Wednesday said Panda was working for the state government and police after his expulsion from the party two years ago.
He was providing information on Maoist activities to the police and the state government after forming an organisation called Odisha Maoist party, the spokesman said.
"Sabyasachi's arrest is an eyewash, a drama," the Maoist spokesman said in the one-page release written in Odia, the state's official language.
"In the name of encounter", police raided Panda's hideouts. He had prepared grounds to get his men arrested in connivance with the police after surrendering all looted arms, Ajay said.
Sabyasachi Panda was arrested from Berhampur town in Odisha July 18. There was a reward of Rs.5 lakh on him.
He was involved in a number of cases like the Nayagarh and R. Udayagiri armoury loots, killing Swami Laxmanananda Saraswati, abduction of two Italian nationals and in many other cases, leading to the killing of 25 security personnel and 34 civilians, police said.
Panda is currently in a 10-day police custody.