The accused employees who are guards on contractual payroll were on night watch duty in the office when they smuggled out the logs.
The guards, whose job was to keep a watch on the forest office property instead resorted to theft leading to their arrest yesterday, forest officials said.
They were trying to transport the logs to a local timber trader in a hired mini-lorry when it was intercepted near Badamangala chowk of the township during last midnight, Kendrapara Forest Range Officer HImanshu Muduli said.
Two persons who had purchased the stolen timber were also arrested.
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The lorry carrying the smuggled logs was seized.
The involvement of three other permanent employees of the forest department was also being investigated.
If found guilty, they would also be prosecuted, the range officer said.
The five arrested persons were booked under sections 4,12,14 of Orissa Timber Transit Rule, 1980 and various provisions of Orissa Forest Act, 1956 were later remanded to jail custody after a local court rejected their bail applications, the official said.