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(In july 6 story, corrects date of election in third para)
By Randy Fabi and Kanupriya Kapoor
JAKARTA, July 6 (Reuters) - Jabbing his finger repeatedly in the air, presidential hopeful Prabowo Subianto shouted to supporters in a packed Jakarta stadium that the corrupt had no place in Indonesia.
"You who disgrace Indonesia, you who buy Indonesia ... we must answer 'No! Not this time! Indonesia wants to stand with dignity,'" the pugnacious former special forces general said to a roar of applause in a speech ahead of this week's election.
Behind him, applauding, sat one of the most senior Indonesian officials ever to be investigated in a government probe into graft, who is also the head of a major Islamic party supporting Prabowo's July 9 presidential bid.
Suryadharma Ali quit as the religious affairs minister in May after being named by the federal anti-corruption agency KPK of being involved in embezzling from the $5 billion state fund allocated for the pilgrimage to Mecca. Indonesia, the biggest economy in southeast Asia, has the world's biggest population of Muslims.
Ali has maintained his innocence. "Being made a suspect is not the final say on the matter," he told local media.
But the presence of Ali and others being investigated for corruption in his coalition raises the question of how effective Prabowo may be if he beats front-runner Joko "Jokowi" Widodo to lead the world's third-largest democracy for the next five years.
His other allies include the Prosperous Justice Party, whose chairman was jailed over a beef import scandal, and the Golkar party of business tycoon Aburizal Bakrie, several of whose members are facing corruption charges. Most of the allies are in the coalition of current President Susilo Bambang Yudhoyono.
"The spirit of democracy is being damaged by various practices," Prabowo said in a debate with his rival on Saturday. "I'm not saying there are no thieves in my party. But what I meant was this is a phenomenon in our country, who knows you might have them on your side."
Prabowo's brother Hashim Djojohadikusumo, a central figure in his campaign, said earlier: "We have to make a few unintentional, unwanted compromises. The Indonesian judicial system presumes, innocence before proven guilty, so I don't want to comment on the recent cases. But we will not compromise on our basic thesis."
Insiders say all of Prabowo's coalition partners have been promised seats in the cabinet, including a special, senior position for Bakrie, the head of the Bakrie Group, a prominent resources-to-telecommunications conglomerate that has struggled with environmental and debt problems.
"Prabowo says 'welcome' to every political party. 'Welcome what do you want? One, two, three positions?" said Fahmi Idris, a senior official with Golkar.
However, Bakrie spokesman Lalu Mara Satri Wangsa, who is also vice secretary general of Golkar, denied any deals had been agreed.
Prabowo has declined comment when asked about deal-making with coalition allies.
Three officials from his Gerindra party did not return e-mailed requests for comment.
Opinion polls still have the popular and unassuming Jokowi in the lead, but the combative Prabowo, running on a platform of strong and effective government, is close behind. A crucial number of voters are undecided.
Transparency International ranks Indonesia 114th out of 177 countries it surveys on perception of corruption. The World Economic Forum's Global Competitiveness Report has said corruption remained "the most problematic factor for doing business" in Indonesia.
One of the world's fastest growing countries just a few years ago, the economy is projected to be at its weakest in four years in 2014 because of falling prices of its commodity exports, a weak rupiah currency and patchy policy.
Despite Prabowo's reputation as a strongman and his vow to reverse the indecisiveness of Yudhoyono's outgoing government, markets are more likely to cheer a Jokowi win in the hope that he represents a change from Indonesia's old-style horse-trading in politics.
"Jokowi represents a break with that kind of past. There is a lot of hope invested in political change of the kind that Jokowi represents," said Tim Condon, ING Asia's chief economist.
The rupiah has fallen around 5 percent over the past three months, accompanying a steady narrowing in the lead Jokowi had in opinion polls over Prabowo. The stock market, Asia's worst performer in 2013 in dollar terms, has fallen almost 3 percent since mid-May, when Jokowi's lead started slipping.
Prabowo was once married to a daughter of former iron ruler Suharto, and was a favoured member of his inner circle at the time.
He has been dogged by persistent allegations of past human rights abuses, in particular during the economic crisis that led to Suharto's downfall in 1998. Shortly thereafter, Prabowo was discharged from the army for breaking the chain of command and ordering troops to arrest activists.
But he was never investigated on any criminal charge and has consistently denied any wrongdoing. Now 62, this is his third shot at the presidency.
Prabowo also caused a flutter last week with comments that suggested to some analysts that he may try to turn the clock back on Indonesia's transition to a full democracy after Suharto's three decades of autocratic rule.
"There are many things (from the West) that we implement, that we imitate, out of our own simplicity," he said at a seminar in Jakarta. "It turns out that these things aren't appropriate for our culture. But it's already a fact. For example, direct (presidential) elections."
But he was quick to retract.
"I believe in democracy. I was a soldier, a professional soldier. And I swore an oath to defend the Indonesian constitution...This is already my third general election. So I do it the hard way. I don't go and assemble tanks and take over parliament house," he told a later meeting.
Firman Noor, a political analyst at the Indonesian Institute of Sciences, said even if Prabowo was so inclined, there was very little likelihood that Indonesians would allow a move away from full democracy.
"It will be a step to political suicide for Prabowo to pursue this when he knows there will be almost no support for it," he said.
Prabowo did not speak to Reuters for this article. But in an interview two years ago, he said what Indonesia needed was a strong government.
"There are always leaders and people who will look for reasons not to try anything new. But the Indonesian leadership must have the will, the toughness, the character, the courage, to think and try to look for creative solutions," he said.
"I was brought up with the motto 'who dares, wins' and I think it is time for the Indonesian elite to dare." (Additional reporting by Fransiska Nangoy in Jakarta and Aubrey Belford in Bangkok; Editing by Jonathan Thatcher and Raju Gopalakrishnan)