Notwithstanding any other law, if any state employee, as defined in this chapter, is investigated for a crime, arrested or indicted, or otherwise prosecuted on any charge, arising out of any act committed in the discharge of his official duties, the state agency, board, or other employer of such state employee, upon a preliminary finding by such agency, board or employer that (i) the employee did not violate any law, ordinance or regulation as a result of the act in question and (ii) the employee will not be terminated from employment as a result of such act, may employ special counsel approved by the Attorney General to defend such person. The reasonable compensation for special counsel employed, pursuant to this section, shall, subject to the approval of the Attorney General, be paid out of the funds appropriated for the state agency, board, or other employer of such state employee.