Jakarta – Prosecutors demanded Tuesday that late former president Soeharto's heirs pay a total of Rp 13.9 trillion (US$1.5 billion) in damages to the state for misusing scholarship funds managed by his Supersemar foundation.

In South Jakarta District Court proceedings they accused Soeharto of having intentionally used foundation money for companies owned by cronies of the former strongman.

Appearing together with other monies in a prosecution dossier was an injection of more than $400 million investment into PT Bank Duta. The money was never returned to the foundation and the bank was declared insolvent.

A loan of Rp 150 billion from the foundation to PT Kiani Sakti – of which only Rp 37.5 billion was returned – was another unlawful investment, the prosecutors said.

"It can be concluded then that the defendants never intended for the money to be returned, or at least allowed these companies to not return the money," prosecutor Yoseph Suardi Sabda told the court.

Prosecutors estimate the state lost $420 million and Rp 185.0 billion worth of scholarships and social activity funds.

The prosecution rejected the testimony of an expert witness presented by the Soeharto heirs that the heirs couldn't be held liable for financial acts of the former president who died on Feb. 27, 2008.

The witness was countering the opinion of another expert who said the law provided for an automatic transfer of legal rights and obligations to heirs.

"We also demand that the court make the heirs pay the fines now, regardless of whether they decide to appeal or not," said prosecutor Johanes Tanak.

Soeharto's death saw the transfer of some legal rights to his children, who were summoned but did not attend a Feb. 12 hearing in the civil trial.

Through their lawyer, the heirs asked the court to hear Bustanul Arifin, an expert witness on religious law who said that Soeharto's children could not be pulled into the civil case unless it involved their inheritance.

After the trial, defense lawyer Juan Felix Tampubolon said the prosecutors were wrong to claim the foundation's money as state funds.

"The foundation's money was accumulated from donations, and thus the foundation is allowed to do whatever it pleases with these donations," Juan Felix said.

"Besides, the investments were made so the dividends would continue to fund Supersemar, allowing the foundation to undertake more social and education activities," he added.

Yoseph called the prosecutor's argument moot because the money was never meant to be invested. "The most important thing here is that they admitted that they used the foundation money for investments, not for social and educational purposes."

Supersemar was funded by state-owned banks, which were obligated by prevailing law to give 2.5 percent of their profits to the foundation. The trial reconvenes on March 27 when a final decision from the court is expected. (anw)