Jakarta – Indonesian state prosecutors have failed to reach an out-of-court settlement with former dictator Suharto over a civil suit they filed against him in July, they said Tuesday.

They are seeking the recovery of more than 1.5 billion dollars in state assets and damages for the alleged channelling of funds from a charity Suharto chaired to companies linked to his relatives.

State prosecutor Dachmer Munthe said that a 30-day mediation period did not produce a settlement as Suharto was adamant that he had not broken the law.

"Mediation failed as they (Suharto's legal team) did not accept that there was a violation of the law," Munthe told AFP, adding that this meant the case would go to court.

Suharto's lawyer Juan Felix Tampubolon confirmed to AFP that the team did not agree any assets should be returned.

The civil suit represents revived efforts by the government of President Susilo Bambang Yudhoyono to bring the former strongman to justice, although analysts are sceptical the case will succeed.

A long-running criminal case against Suharto was finally abandoned in May last year on health grounds, triggering widespread criticism of Yudhoyono, who was elected on an anti-corruption platform.

Suharto stepped down after more than three decades of rule in 1998. A successful case against him would be seen as a symbolic step to improving Indonesia's dismal corruption record.

Indonesia is consistently rated as one of the most graft-prone nations in the world, a situation largely seen as a result of Suharto's rule.