JAKARTA, August 12, 2008 (AFP) - The youngest son of ex-dictator Suharto formally denied corruption allegations Tuesday and filed a counter-suit against the Indonesian government seeking millions of dollars in damages, lawyers said.

The counter-suit was filed in the central Jakarta district court at the same time as Hutomo 'Tommy' Mandala Putra responded in writing to the finance ministry accusations of corruption.

The ministry alleges Tommy' illegally sold off assets from troubled car importer PT Timor to five of his companies at a discount to avoid paying off state loans made to Timor during the 1997 Asian financial crisis.

In a document received by AFP, defence lawyer Otto Cornelius Kaligis said the accusations were 'legally baseless' as Tommy's PT Timor had no connection with the companies listed as defendants.

He said the finance ministry had brought the allegations to court to justify maintaining a freeze of his assets in Guernsey, a British crown dependency off the French coast.

'It's obvious that they want to use this as evidence for the Guernsey court to continue extending a freeze on a BNP Paribas account belonging to my client,' he said.

'We see the accusations as defamation against my client, so we have decided to countersue,' he said, adding they were seeking some 21.8 million dollars in compensation from the finance ministry.

They also demanded a public apology to be issued in the local media.

An Indonesian court in February rejected a separate corruption case against Tommy, awarding him 550,000 dollars in a countersuit.