If the code was released in the public domain instead of a under a permissive license, could it still be argued that it is the property of the sanctioned entity?
To my understanding, the only way for a work to be truly public domain is for the copyright to expire. Anything else is just a permissive license.
I believe the copyright holder can willingly relinquish their copyright to a thing by explicitly declaring their thing to be "cc-0 licensed" or "public domain", or other explicit declaration of giving it away entirely and completely "no strings attached" thereby giving the thing freely to "the commons" to be used by anyone as they see fit.
Dedicating work to the public domain is not possible in many jurisdictions, which is the reason for CC-0 and similar licenses. They're "close enough" for practical purposes but they're not the same thing. Even if you use CC-0, you will still have the copyright of the work in such jurisdictions, because it is only an attempt to give up as many rights as possible.