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Malaysia's anti-graft unit says funds in PM's account a 'donation', not from state fund

KUALA LUMPUR (Reuters) - Funds deposited into Malaysian Prime Minister Najib Razak’s bank accounts were from a donation, not from debt-laden state fund 1Malaysia Development Berhad (1MDB), the anti-corruption commission said on Monday.

Malaysia's Prime Minister Najib Razak attends a presentation for government interns at the Prime Minster's office in Putrajaya, Malaysia, July 8, 2015. REUTERS/Olivia Harris

Acknowledging that 2.6 billion ringgit (£433.1 million) in funds were transferred into Najib’s private accounts, the commission said results of the investigations found that it was a “donor’s contribution”.

It did not elaborate on the donor or why the money was transferred to Najib’s private accounts.

The Wall Street Journal reported in July that investigators looking into allegations of graft and financial mismanagement in 1MDB found that nearly $700 million was deposited into Najib’s private bank accounts. Reuters has not verified the report.

Najib has denied taking any money for personal gain, saying the corruption allegations are part of a malicious campaign to force him from office. 1MDB has denied transferring funds to Najib and an interim government report has found nothing suspicious.

The allegations of extensive graft at the fund are nevertheless the biggest threat to Najib’s credibility since he took office in 2009 and could threaten the grip his United Malays National Organisation has kept on politics since independence in 1957.

State-owned 1MDB has debts of over $11 billion (£7.05 billion) and Najib is the chairman of its advisory board. Najib sacked his deputy last week after he called on Najib publicly to explain the situation around 1MDB.

The Malaysian Anti-Corruption Commission’s (MACC) statement comes amid an investigation by police on information leaks by government officials involving the 1MDB probe. Two officers of the MACC and an official from the attorney-general’s office were arrested over the weekend.

The task force set up to probe 1MDB had earlier said that it expects to complete investigations by year-end. The group comprises the MACC, attorney-general’s office, central bank and the police.

A parliamentary investigation into the scandal has been put on hold as the man overseeing the probe was appointed deputy home minister and had to resign from his Public Accounts Committee post.

Reporting by Trinna Leong; Editing by Nick Macfie