JAKARTA (Reuters) - Indonesia's parliament on Wednesday reappointed Setya Novanto as its speaker, reinstating him despite a scandal last year when he was accused of trying to extort $1.8 billion of shares from the local unit of U.S. mining giant Freeport McMoran Inc.

Novanto resigned as speaker in December after an inquiry was launched when the head of Freeport Indonesia Maroef Sjamsoeddin told parliament's ethics panel he secretly recorded a meeting with Novanto and alleged the speaker asked for a stake of 20 percent in the company.

Novanto denied the allegations.

Sjamsoeddin resigned in January for personal reasons, a company spokesman said.

The country's attorney-general later dropped an investigation, the constitutional court ruled in favor of Novanto, and parliament's ethics panel has also cleared him.

Novanto's political career has continued to flourish despite the scandal, and in May he was named chairman of Indonesia's second-biggest political party, Golkar.

The position of speaker was set aside for Golkar because it was previously the main opposition party, even though it has now joined President Joko Widodo's coalition.

"A plenary session today has decided to make me the speaker of parliament," Novanto said. "As a member of a political party, I will take good care of this mandate and this shall be a proof of my dedication to the nation."

Indonesia's ranking in Transparency International's corruption perception index improved last year to 88 out of 168 nations, but the watchdog has previously cited parliament as among the most corrupt institutions in the country.

"(Novanto) has not been formally charged in a corruption case, but the public knows that he is problematic," said Dadang Trisasongko, the secretary general of the group's Indonesian office. "His appointment as the head of an institution reflects the kind of institution he leads."

Freeport Indonesia agreed, in a 2014 memorandum of understanding with the government, to divest a stake of 30 percent by 2019 and invest in domestic processing to win an extension of its contract beyond 2021.

The government already has a 9.36 percent stake, and had hoped to take another 10.64 percent stake this year, but negotiations stalled after the company and the government couldn't agree on a price.

(Reporting by Hidayat Setiaji and Gayatri Suroyo; Editing by Clarence Fernandez)