When Susilo Bambang Yudhoyono won a surprise victory in Indonesia's 2004 presidential elections, the United States Embassy in Jakarta hailed it as "a remarkable triumph of a popular, articulate figure against a rival [incumbent president Megawati Sukarnoputri] with more power, money, and connections."

The former army general and security minister has gone on to win international accolades for strengthening governance, promoting economic reform, and his efforts to suppress the Islamic militant group Jemaah Islamiyah.

While visiting Jakarta last November, US President Barack Obama applauded Indonesia's democracy and "the leadership of my good friend President Yudhoyono."

However Yudhoyono's record may have to be reviewed after secret US embassy cables, leaked to WikiLeaks and provided to Fairfax Media, reveal allegations of corruption and abuse of power that extend all the way to the presidential palace.

According to the diplomatic cables, Yudhoyono, widely known by his initials SBY, personally intervened to influence prosecutors and judges to protect corrupt political figures and put pressure on his adversaries. He reportedly also used the Indonesian intelligence service to spy on rivals and, on at least one occasion, a senior minister in his own government.

Yudhoyono's former vice-president reportedly paid out millions of dollars to buy control of Indonesia's largest political party, while the President's wife and her family have allegedly moved to enrich themselves on the basis of their political connections.

The US embassy's political reporting, much of it classified "Secret/NoForn" – meaning for American eyes only — makes clear that the continuing influence of money politics, which extends, despite the President's public commitment to combating corruption, to Yudhoyono himself.

The US embassy cables reveal that one of Yudhoyono's early presidential actions was to personally intervene in the case of Taufik Kiemas, the husband of former president Megawati Sukarnoputri. Taufik reportedly used his continuing control of his wife's Indonesian Democratic Party (PDI-P) to broker protection from prosecution for what the US diplomats described as "legendary corruption during his wife's tenure."

Taufik has been publicly accused, though without charges being laid against him, of improper dealings in massive infrastructure projects heavily tainted with corruption. He is believed to have profited from deals relating to the US$2.3billion Jakarta Outer Ring Road project, the US$2.4 billion double-track railway project from Merak in West Java to Banyuwangi in East Java, the US$2.3billion trans-Kalimantan highway, and the US$1.7 billion trans-Papua highway.

In December 2004, the US embassy in Jakarta reported to Washington that one of its most valued political informants, senior presidential adviser TB Silalahi, had advised that Indonesia's Assistant Attorney-General, Hendarman Supandji, who was then leading the new government's anti-corruption campaign, had gathered "sufficient evidence of the corruption of former first gentleman Taufik Kiemas to warrant Taufik's arrest."

However, Silalahi, one of Yudhoyono's closest political confidants, told the US embassy that the president "had personally instructed Hendarman not to pursue a case against Taufik."

No legal proceedings were brought against the former "first gentleman," who remains an influential political figure and is now speaker of Indonesia's parliament, the People's Consultative Assembly.

While Yudhoyono protected Taufik from prosecution, his then vice-president, Jusuf Kalla, allegedly paid what the US embassy described as "enormous bribes" to win the chairmanship of Golkar, Indonesia's largest political party, during a December 2004 party congress, US diplomats observed firsthand.

"According to multiple sources close to the major candidates, Kalla's team offered district boards at least Rp200 million (over US$22,000) for their votes," the US embassy reported. "Provincial boards — which had the same voting right, but also could influence subordinate district boards — received Rp500 million or more. According to one contact with prior experience in such matters, board officials received down payments ...and would expect full payment from the winner, in cash, within hours of the vote."

US diplomats reported that, with 243 votes required to win a majority, the Golkar chairmanship would have cost more than US$6 million.

"One contact claimed that [then Indonesian House of Representatives chairman Agung Laksono] alone — not the wealthiest of Kalla's backers — had allocated (if not actually spent) Rp50 billion (more than US$5.5 million ) on the event." The US embassy cables further allege that Yudhoyono had then cabinet secretary Sudi Silalahi "intimidate" at least one judge in a 2006 court case arising from a fight for control of former president Abdurahman Wahid's National Awakening Party (PKB). According to the embassy's contacts, Sudi told the judge "if the court were to help [Wahid] it would be like helping to overthrow the government."

The intervention of "SBY's right-hand man" was not successful in a direct sense because, according to embassy sources with close ties to the PKB and lawyers involved in the case, Wahid's supporters paid the judges Rp3 billion in bribes for a verdict that awarded control of PKB to Wahid instead of a dissident faction. However, Yudhoyono's strategic objective was achieved as external pressure on Wahid's "precarious position" forced the PKB to reposition itself to support the administration.

Other US embassy reports indicate that Yudhoyono has used the Indonesian State Intelligence Agency (BIN) to spy on both his political allies and opponents.

The president reportedly also got BIN to spy on rival presidential candidates. This practice appears to have begun while Yudhoyono was serving as co-ordinating minister of political and security affairs in former president Megawati's government. He directed the intelligence service to report on former army commander and Golkar presidential candidate Wiranto. Subsequently, at a meeting of Yudhoyono's cabinet, BIN chief Syamsir characterised Wiranto as a "terrorist mastermind."

Through his own military contacts Wiranto learnt that he was the subject of "derogatory" BIN reports, but when he complained he was told by presidential adviser TB Silalahi that no such reports existed.

The leaked US embassy cables are ambiguous on the question of whether Yudhoyono has been personally engaged in corruption. However, US diplomats reported that at a 2006 meeting with the chairman of his own Democratic Party, Yudhoyono "bemoaned his own failure to date to establish himself in business matters," apparently feeling "he needed to ‘catch up' ... [and] wanted to ensure he left a sizeable legacy for his children."

In the course of investigating the President's private, political and business interests, American diplomats noted alleged links between Yudhoyono and Chinese-Indonesian businessmen, most notably Tomy Winata, an alleged underworld figure and member of the "Gang of Nine" or "Nine Dragons," a leading gambling syndicate.

In 2006, Agung Laksono, now Yudhoyono's Co-ordinating Minister for People's Welfare, told US embassy officers that TB Silalahi "functioned as a middleman, relaying funds from Winata to Yudhoyono, protecting the president from the potential liabilities that could arise if Yudhoyono were to deal with Tomy directly."

Tomy Winata reportedly also used prominent entrepreneur Muhammad Lutfi as a channel of funding to Yudhoyono. Yudhoyono appointed Lutfi chairman of Indonesia's Investment Co-ordinating Board.

Senior State Intelligence Agency official Yahya Asagaf also told the US embassy Tomy Winata was trying to cultivate influence by using a senior presidential aide as his channel to first lady Kristiani Herawati.

Yudhoyono's wife and relatives also feature prominently in the US embassy's political reporting, with American diplomats highlighting the efforts of the president's family "particularly first lady Kristiani Herawati ...to profit financially from its political position."

In June 2006, one presidential staff member told US embassy officers Kristiani's family members were "specifically targeting financial opportunities related to state-owned enterprises." The well-connected staffer portrayed the President as "witting of these efforts, which his closest operators (e.g. Sudi Silalahi) would advance, while Yudhoyono himself maintained sufficient distance that he could not be implicated."

Such is the first lady's behind-the-scenes influence that the US embassy described her as "a cabinet of one" and "the President's undisputed top adviser."

The embassy reported: "As presidential adviser TB Silalahi told [US political officers], members of the President's staff increasingly feel marginalised and powerless to provide counsel to the President."

Yahya Asagaf at the State Intelligence Agency privately declared the first lady's opinion to be "the only one that matters."

Significantly, the US embassy's contacts identified Kristiani as the primary influence behind Yudhoyono's decision to drop vice-president Kalla as his running mate in the 2009 presidential elections.

With Bank of Indonesia governor Boediono as his new vice-presidential running mate, Yudhoyono went on to an overwhelming victory. The president secured more than 60 per cent of the vote, defeating both former president Megawati, who had teamed up with former special forces commander Prabowo Subianto, and vice-president Kalla, who allied himself with Wiranto.

In January 2010 the US embassy observed: "Ten years of political and economic reform have made Indonesia democratic, stable, and increasingly confident about its leadership role in south-east Asia and the Muslim world. Indonesia has held successful, free and fair elections; has weathered the global financial crisis; and is tackling internal security threats."

However, America's diplomats also noted that a series of political scandals through late 2009 and into 2010 had seriously damaged Yudhoyono's political standing.

A protracted conflict between the Indonesian police and the national Corruption Eradication Commission had damaged the government's public anti-corruption credentials, while a parliamentary inquiry into the massive bailout of a major financial institution, Bank Century, called into question the Vice-President's performance as former central bank governor.

One prominent anti-corruption non-government organization privately told the US embassy that it had "credible" information that funds from Bank Century had been used for financing Yudhoyono's re-election campaign.

Former vice-president Kalla strongly criticized the bailout, alleging that the Bank of Indonesia under Boediono had been negligent in supervising Bank Century and arguing that the bank should have been closed as its failure was due to fraud perpetrated by major shareholders.

Against this background the US embassy reported that Yudhoyono was increasingly "paralyzed" as his political popularity rapidly diminished.

"Unwilling to risk alienating segments of the parliament, media, bureaucracy and civil society, Yudhoyono has slowed reforms. He is also unwilling to cross any constituencies ...Until he is satisfied that he has shored up his political position, Yudhoyono is unlikely to spend any political capital to move his reform agenda, or controversial aspects of US -Indonesia relations, forward."

Over the past 13 years Indonesian democracy has undoubtedly strengthened. The Suharto dictatorship has been replaced by a competitive political system characterized by robust debate and free media.

However, as the leaked US embassy's reports show, in what is only a glimpse of the inside workings of President Yudhoyono's tenure, some of the secretive and corrupt habits of the Suharto years still linger in Indonesian presidential politics.

Another version of this story appeared in The Age in Melbourne, Australia.