The public prosecutor in French Polynesia has asked the criminal court to fine the president Edouard Fritch $US50,000 for abuse of public funds.
Mr Fritch appeared in court with his predecessor Gaston Flosse to account for their actions as mayors of the town of Pirae from the late 1980s onward.
They are alleged to have arranged for the town administration to pay for the water supply to the upmarket Erima neighbourhood, where Flosse lived.
The charges followed a 2011 auditor's report which found that Flosse set up the free supply which Mr Fritch continued, with both of them billing the town hundreds of thousands of dollars over the years.
The prosecutor wants Flosse to be given a suspended two-year jail sentence, be fined $US100,000 and banned from holding office for three years.
No date has been set for when a ruling will be made.
Friday's case is Mr Fritch's first during his current term, after being convicted of corruption twice during his previous term.
In the current case, he was charged before last year's election but a first attempt to try him last year was deferred because the court was busy with the Air Moorea crash trial.
The two politicians have fallen out and in February, Flosse was fined $US20,000 for making defamatory statements about Mr Fritch.
On Friday, the appeal court upheld the fine.
Gaston Flosse has been barred from public office since 2014 because of corruption convictions.