Cambodia is facing an overcrowding of its jails, with an estimated 14,000 prisoners across the system in 2010.
Yoeung Baloung was supposed to be serving 13 years on charges related to illegal logging.
The Ministry of Interior last week said it was adjusting provisions in the law that were main areas of concern for many NGOs.
Organizations are worried the new law, which seeks tighter regulations, would inhibit the growth and develop of the country.
The Cambodian government denied the findings of an annual Human Rights Watch report.
The investigation stems from a drunk driving accident that injured three people on a motorcycle.
Arbitration Council President Kong Phallack said the lower number was due to the closure of factories in the wake of the 2008 crisis.
Hun Sen was responding to concerns raised by the US lawmakers as the refugee center nears its closing date, Feb. 15.
Yoeung Baloung, a former police chief of Ratanakkiri province, was supposed to be in jail on charges related to illegal logging.
The four men were charged under Article 38 of the 1992 penal code and face up to seven years in prison if convicted.