Markus Junianto Sihaloho & Ulma Haryanto – After weeks of being dogged by graft allegations, Muhammad Nazaruddin has been dismissed as treasurer of the ruling Democratic Party, a senior party official has confirmed.

"We have decided to dismiss – or relieve – Nazaruddin of his duties as general treasurer," Amir Syamsuddin, secretary of the party's ethics council, told a media conference on Monday night.

"If he's not the general treasurer, then he can't do any more damage to the [party's] image and will be able to concentrate on defending himself."

However, Nazaruddin will stay on as a Democrat lawmaker at the House of Representatives, he added. Amir said the fact that Nazaruddin was embroiled in legal and ethical issues mostly related to money conflicted with his position as party treasurer.

Recent media reports about the scandals linked to Nazaruddin "have put the Democratic Party in a disadvantageous position and have hindered him from performing his tasks," he said.

However, Amir said that the lawmaker should still be presumed innocent until he was proven otherwise. He also said the party was not in a hurry to pick a replacement for him.

Nazaruddin, who has already been linked to a graft scandal surrounding a construction project for the upcoming Southeast Asian Games, was accused by Constitutional Court Chief Mahfud M.D. on Friday of giving an "unsolicited payment" in September of 120,000 Singapore dollars ($96,000) to the court's secretary general, Janedjri M. Gaffar, which was subsequently returned.

Political observers have previously said the Democrats appeared to be at a loss over what to do with Nazaruddin.

A Democratic source told the Jakarta Globe over the weekend that the ruling party was struggling to find the best way to deal with Nazaruddin, who had rejected calls to step down as treasurer and had allegedly threatened to release sensitive information he had on the party if he was forced to resign.

Janedjri said on Monday that he had reported the alleged payment to Mahfud immediately after returning the money.

Mahfud has said he wrote a letter to President Susilo Bambang Yudhoyono about the incident shortly after Nazaruddin was accused of accepting Rp 25 billion ($2.9 million) from a company contracted to build the athletes' village in Palembang, South Sumatra, for November's Southeast Asian Games.

Janedjri also said he often met with lawmakers from House Commission III for legal affairs, of which Nazaruddin was a former member, to discuss the court's budget.

Monday's announcement was not attended by party chairman Anas Urbaningrum, who is considered close to Nazaruddin. Amir said the decision on Nazaruddin was final and "it was us three who were tasked with announcing it." He addressed the conference accompanied by two other party officials.