"He denies any wrong doing and will meet with Connacht Rugby officials in the coming days to review the situation internally."
She said the club could not comment further as it remained a legal matter, but did confirm Muliaina was released on bail, without charge, on Saturday April 4.
However the New Zealander does remain part of the Connacht squad. Lam was certain of this when asked at a press briefing ahead of Connacht's next Pro 12 fixture against Ulster.
Currently out of action after sustaining a groin injury in last Friday's European fixture, Muliaina is rehabilitating with the strength and conditioning team.
"He has joined our return-to-play group, and I am hoping he will be available again [before the end of the season], but again he has to go through that like all the others in the long injury list we have."
Lam also dismissed speculation that Muliaina's announced move to Italian franchise Zebre and his arrest were related. "No link at all," said Lam.
In the latest statement Connacht Rugby said South Wales Police were "continuing their investigation into an alleged incident in Cardiff last month".
"Muliaina returned to Galway on Sunday April 5 having co-operated fully with police investigations. He denies any wrong doing and will meet with Connacht Rugby officials in the coming days to review the situation internally.
"As this remains a legal matter, Connacht Rugby can provide no further comment at this time."
Lam refused to discuss the impact Muliaina's arrest was having on the squad as it fights to maintain its sixth place ahead of Friday's meeting with title hopefuls Ulster in Galway.
"The reason we have been successful this year is because we are focused on process. We have been right throughout the community and some people think that's a big distraction, but when you focus on process, you are able to block out distractions, and that's what we are about. It's quite easy for all of us because we get on and do our jobs and the Ulster match is such a big game."
South Wales Police are continuing their investigation into the alleged incident in Cardiff.