Lindsay Murdoch, Jakarta – After taking part in or helping to loot almost everything of value in East Timor last year, Indonesian soldiers are claiming compensation for losing their belongings in a hasty withdrawal from the territory.

Senior army officers have asked the Government to pay millions of dollars to up to 20,000 members of the armed forces who were serving in East Timor when the Timorese rejected Indonesian rule in a United Nations ballot.

The demand will further enrage East Timorese leaders as the UN struggles to rebuild the territory, where most towns and villages were destroyed and almost every building and home was looted, including the entire commercial centre of the capital, Dili.

For days Indonesian military trucks, ships and aircraft were used to take goods – many of them looted by pro-Jakarta East Timorese militia – to Indonesian-controlled West Timor and other destinations, including Jakarta.

The UN and international human rights groups documented the operation, with one UN official in East Timor describing it as "state-sponsored grand larceny on a scale that has rarely been seen anywhere in the world".

Neither the UN nor the East Timorese leadership has asked Indonesia for compensation for the loss of property, including vital infrastructure the UN estimates will cost hundreds of millions of dollars to replace.

But Jakarta this week issued a presidential decree establishing a team with authority to deal with East Timor's transition to independence, declaring that one of its tasks was to discuss Indonesian national assets still in East Timor.

The Bali-based officer in-charge of West Timor, Major-General Kiki Syahnakri, said the army would fight to ensure that soldiers who had served in East Timor and their families were properly compensated.

General Syahnakri, who served for 11 years in East Timor, said he had raised demands for compensation with the Defence Minister, Admiral Juwono Sudarsono, who had "promised to find a solution".

The compensation demands coincide with the disbanding of Infantry Battalion 745, which human rights and other investigations have accused of widespread atrocities in East Timor, including many murders. Human rights activists say the dispersal of the soldiers through other commands will make it more difficult to track the killers.

Indonesia this week told the UN Human Rights Commission in Geneva that it would draft human rights legislation and set up a court to prosecute violations committed in East Timor. It told the UN that prosecutors would soon travel to East Timor to investigate the role of the former armed forces commander and suspended minister, General Wiranto, and 32 other soldiers and officials accused by Indonesia's national human rights commission of responsibility for the violence that erupted in the territory before and after the UN ballot.

Meanwhile, human rights activists in the United States have served a lawsuit on General Johny Lumintang, who they say played a leading role in shaping the Indonesian military's East Timor policy. General Lumintang, the former vice-chief of staff of the Indonesian Army, was served notice of the suit at a Washington airport, the East Timor Action Network said. The network said papers filed in the US District Court on behalf of East Timor victims and their families cited a telegram signed by General Lumintang ordering a military crackdown if the East Timorese favoured independence.