The director-general in the Office of the Premier in KwaZulu-Natal was granted R25 000 bail.
Nonhlanhla Mkhize appeared in the Durban Specialised Commercial Crimes court on Friday, along with three co-accused, Siphiwe Mabaso, Sthembelo Ralph Mhlanga and Mthokozisi Pius Duze, in connection with the 2018 Mhlathuze Water procurement project.
They face charges of intimidation, obstructing the course of justice, and fraud after internal auditors at Mhlathuze Water uncovered illegal procurements amounting to R37 million.
National Prosecuting Authority spokesperson Natasha Ramkisson-Kara said the court granted Mkhize bail because she played a "minimal role" in the fraud.
Mabaso, Mhlanga and Duze remain in custody while the court studies their bail applications.
Ramkisson-Kara said the municipality was required to appoint legal service providers for a three-year contract.
Duze, the suspended Mhlathuze Water CEO, and suspended Mhlathuze Water CFO Babongile Mnyandu allegedly colluded to give Mhlanga, Thabiso Khumalo and Mhlanga's company an unfair advantage to score the tender.
Khumalo and Mnyandu were arrested on Monday and charged with fraud and corruption. They were released on bail by the same court on Tuesday.
Mnyandu's bail was set at R60 000 and Khumalo's at R6 000.
Mkhize and her co-accused will return to court on 6 December.