Susan Sim, Jakarta – President Megawati Sukarnoputri's failure yesterday to name a new attorney-general might be indicative of the difficulties her government will have in deciding how to deal with the ghosts of the past – the same ones that her predecessor insists brought him down because he went after them.

The A-G's office is a booby-trapped, yet potentially lucrative post which, strangely enough, only one man over the past 10 days has lobbied her for – retired Lieutenant-General Hendropriyono. Rumour had it that he was being backed by First Husband Taufik Kiemas.

That hint of cronyism, and Lt-Gen Hendropriyono's unresolved past – human rights activists call him the Butcher of Lampung after a village massacre in 1989 which he says was provoked by the villagers – should have ruled him out for the job of top cop.

But panic buttons were pressed all over town on Tuesday night when key Megawati aides revealed she was going to name him the A-G, reversing an earlier decision to give him another crucial post – that of national intelligence chief.

The international community, having long decided that prosecution of cruel generals was a benchmark of good governance here, was ready to crucify her.

But much teeth-grinding later, Lt-Gen Hendropriyono is back to being the spy-master. Which begs the question: Why has the President not yet been able to find someone to uphold what she promised to do yesterday – establish the supremacy of law and order? Putting the corrupt in jail would also be a key plank of her government, she pledged, fresh from warning her own husband and family not to embarrass her with links to shady businessmen.

And after telling the parties that governing was her business, not theirs, she exceeded all expectations yesterday with shrewd choices which pleased almost all the key pillars here.

She came up with a market-friendly economic team that should put to bed lingering concerns that she is a closet populist about to slam the doors on globalisation. She also named a very capable and popular security czar.

And nobody got the money-making "wet posts", except perhaps her party's Laksamana Sukardi, whose international reputation for integrity made her decision to give him control over state-owned enterprises hard to quibble over.

Yet it is the question of how she will deal with the business cronies who allegedly continue to loot the country which could break her government.

Former president Abdurrahman Wahid staked his legitimacy on making Suharto's corrupt pals and cruel generals pay for past sins, but he made lawmakers so incensed they booted him out. Part of the problem, of course, was that prosecutions appeared to be negotiable despite his tough talk.

The dilemma of cleaning up decades of institutionalised graft goes beyond drawing a line between punishing greedy tycoons to satisfy public outrage and leaving alone industries which employ millions.

Like all party leaders, Ms Megawati has to make sure that her Indonesian Democratic Party of Struggle (PDI-P) continues to have access to financial sources.

When she decided it would be useful to court international opinion in Washington, it was a businessman who paid for the lobbying services of Mr Bob Dole. The former US presidential candidate then set up meetings for her husband Taufik Kiemas with senior Bush officials when she sent him there in June.

Mr Taufik did not win her new admirers, diplomatic sources said, but got straight-talk instead on not jeopardising his wife's position by hobnobbing with business cronies of dubious reputation.

One of Ms Megawati's lieutenants in Parliament, oil tycoon Arifin Panigoro, also has an open file in the A-G's office over his past business deals. Too rich to be bribed by other parties, the former Golkar MP was indispensable in her efforts to build up rapport with the other faction chiefs. Yet, he is so disliked by PDI-P stalwarts that they tried to kick him out of the party twice.

Ms Megawati had to speak up for him. But she told him that his legal battles with the A-G were his own and he should not count on her to interfere. But if she has already decided that impartial prosecutions are paramount to establishing the rule of law, and showed that she is no pawn of the cronies, why is there such difficulty in finding a good man to do the job now?