Indonesia's top legal officer dropped a corruption investigation of former president Suharto today, a move that some opposition leaders said could trigger another wave of student protests just days before a new president is selected.

Ismudjoko, the nation's acting attorney general, said his investigation had uncovered some irregularities but nothing to show that Suharto had violated the law to enrich himself. "There is not sufficient evidence to continue the investigation," said Ismudjoko--who like many Indonesians uses only one name--after presenting his report to President B.J. Habibie, Suharto's hand-picked successor.

After taking office 16 months ago, Habibie promised to crack down on government corruption, and he repeatedly denied assertions that he would try to protect his old boss, who ruled Indonesia with an iron fist for 32 years. The decision to halt the Suharto investigation could damage Habibie's already slim chances of staying in power; the 700-member People's Consultative Assembly will choose a new president on Oct. 20, and Habibie--who did not comment publicly on the legal decision--is one of several candidates.

Many assembly members have demanded that the government prosecute Suharto, who was forced to step down in May 1998 after a wave of student protests and deadly riots rocked Jakarta, the capital, and other cities. Since then, students have regularly clashed with security forces, demanding that Suharto be tried and branding the attorney general's investigation a whitewash.

On Tuesday, Habibie's Golkar Party is scheduled to announce whether it will continue to back him as its sole candidate for the presidency. "Politically, [the attorney general's decision] is a major factor. It could damage Habibie's candidacy," said Marzuki Darusman, who heads an anti-Habibie faction within Golkar.

Reform advocates condemned the decision and warned that the world's fourth-most-populous nation should brace itself for more protests. "The people are going to be angry that Suharto has been let off," said Hendardi, who heads the Indonesian Legal Aid Foundation.

Suharto, 78, has been accused of siphoning off millions of dollars of public funds through charity foundations. The former president has denied any wrongdoing.

Ismudjoko said he had investigated the finances of seven foundations headed by Suharto but concentrated on the two largest, Supersemar and Dahmais.

The investigation focused on a scheme set up by Suharto under which his foundations received regular, legally required, donations from state institutions.

Investigators found that the foundations lent the funds to various commercial corporations. Suharto opponents claim the funds were used to fuel the business empires of his six children. Ismudjoko did not specify what commercial interests had borrowed the money, but he said that although such loans were irregular, they were not illegal because their profits ultimately were returned to the foundations and used for charitable work.