Two months ago, Akbar Tanjung was at the top of his game. The chairman of Indonesia's second-largest party and speaker of parliament had just helped orchestrate the fall of president Abdurrahman Wahid and the rise of Megawati Sukarnoputri to the country's top job. Back then, a contemplative Akbar talked about remaking his party, Golkar, founded by former dictator Suharto, as a modern, centrist political machine. Golkar, he said, had shucked off its authoritarian past and now stood for democracy and the rule of the law. "Our party has changed," he insisted.

Akbar's dream has now been compromised by the latest in a string of political financing scandals, this time with himself in the starring role. One of Indonesia's most powerful politicians, Akbar testified this week at the attorney general's office concerning media questions about what exactly he did with $4 million in government funds in 1999, on the eve of the last election. Akbar has denied any wrongdoing, but the inquiry has left him weakened within his own party and has served once again to remind voters of Golkar's checkered past. More importantly, the case has highlighted Indonesia's losing battle with corruption. Says anticorruption campaigner and lawyer Frans Winarta: "There are a lot of test cases here and Akbar is the biggest."

At the heart of the scandal is the State Logistics Agency, or Bulog, the tar baby of Indonesian politics. Bulog's current mission is to control rice prices, but it was used for years as a political slush fund. Suharto's son Tommy was convicted last year of corruption in a land swap with Bulog. (The decision was controversially overturned last month.) Wahid was impeached partly due to alleged misuse of Bulog funds. The agency was a tempting target for politicians because it generates huge amounts of cash that are not on the government's books. That money, until the system was recently changed, could be used at the discretion of the president. "They have a bad tradition of fund-raising," says Winarta. "They can do whatever they want."

Akbar's troubles began in 1999, when Golkar's B.J. Habibie was still president. Habibie ordered Bulog chairman Rahardi Ramelan, a confidante, to give Akbar, then a minister, $4 million. The money, Rahardi told ASIAWEEK, was supposed to go to social programs. Rahardi adds it was not his job to check how the money was used. "I am just the cashier," he says. Akbar has said he gave the funds to a foundation whose name he cannot recall. The suspicion is that the money made its way into Golkar coffers to help fund its 1999 election campaign. Marzuki Darusman, Golkar deputy chairman and attorney general under Wahid, denies any misuse. "The money didn't have anything to do with Golkar," Marzuki says, adding that Akbar has now remembered which foundation got the money. "All this will be cleared up," he says.

Even if it is, Akbar's days as party chief may be numbered. He alienated Golkar's old guard by opposing Habibie's re-election as president in 1999. The current scandal has now set him at odds with party reformers. "The case could drag on for years, and that will drag the party down," complains Marzuki, a leading figure in Golkar's reform wing. All this also presents complications for Megawati, who depends on Golkar for support in parliament. She has approved the lifting of Akbar's legislative immunity so the case can be investigated.

The episode comes as international pressure on Megawati's government to crack down on corruption is building. Aid donors will meet in Jakarta next week to consider a package of up to $4 billion for next year. High on the agenda, says Mark Baird, country director of the World Bank, which chairs the meeting, will be anticorruption efforts. "Corruption has been a major concern of all donors," says Baird. He notes that almost $2 billion worth of funding promised at last year's meetings has not been spent because of Jakarta's failure to meet commitments, including promises for cleaner government. Megawati said this week she wants to break Indonesia's culture of corruption. Sadly, such words ring hollow to many. "I see no indication she is serious," says Winarta. Until Megawati's words are married to action, the Akbar scandal won't be the last.