Jakarta – President Megawati Sukarnoputri has given police the go-ahead to investigate allegations of a multimillion-dollar graft case involving the governor of the war-torn province of Aceh, a spokesman said Friday.

The police will investigate Governor Abdullah Puteh's alleged role in marking up the price of power generators purchased for the local government, said national police spokesman Maj. Gen.

Paiman.

The case caused a loss of 30 billion rupiah to the state, said Paiman, who like many Indonesians uses a single name. "As a state official, the police need presidential approval to question the governor. He will be questioned soon in Jakarta," he said.

Puteh has denied any wrongdoing. Megawati issued a decree last week severely curtailing his powers. The case has complicated the hand-over of control from the military to a civilian authority after the government downgraded a state of martial law in Aceh to a state of emergency on May 19.

A year ago, the government imposed military rule in Aceh after it pulled out of internationally brokered peace talks and launched a large-scale offensive to control a separatist insurgency.

At least 2,000 people have been killed during the operations, the army says. Human rights groups say most of them were civilians. The Free Aceh Movement has been waging an independence battle since 1976.