Malaysia's Prime Minister Najib Razak pledges to broaden race based policies (Photo: Reuters)
Malaysia's Prime Minister Najib Razak cleared of wrong doing with regards to 1MDB (Reuters)

Malaysia's anti-corruption agency has cleared Prime Minister Najib Razak of any wrong doing after finding 2.6bn ringgit (£450m, $700m) in his personal accounts, saying that they were donations and not funds transferred from a state development fund.

Although Najib may effectively be cleared from corruption allegations, new questions now arise as to who the donors were and what the $700m donations were for.

The anti-corruption agency, Malaysian Anti-Corruption Commisision had looked into allegations that funds were transferred from the state development fund 1 Malaysia Development Berhad which was set up in 2009 to turn the capital Kuala Lumpur into a financial hub and to develop the national economy.

Najib chairs the fund's board of advisors. The fund has debts to the tune of $11bn (£7bn) and separate investigations are underway over its allegations of mismanagement.

The prime minister had been accused of siphoning off $700m from the fund, something which he has strongly denied, accusing those pointing fingers at him of embarking on a political campaign to remove him from office.

He is currently considering legal action against the Wall Street Journal for publishing two articles over the allegations and has blocked access to Sarawak Report, a website portal run by former UK prime minister Gordon Brown's sister-in-law.

A Malaysian publication The Edge was also suspended for three months for similar reasons.
Last week, Najib revamped his cabinet, replacing his deputy Muhyiddin Yassin who has publicly criticised his handling of the scandal. He also replaced Attorney General Abdul Gani Patail who was tasked with leading the investigations into the allegations.

Who are the donors?

Wall Street Journal said the agency did not say who the donor was, nor the purpose of the contribution. Its officials did not immediately respond to further queries from the newspaper.

"Results of the investigation found that 2.6bn ringgit alleged to have been deposited into an account belonging to the Prime Minister was a donor contribution and not from1MDB," the agency said.

The results of the investigations have been handed over to the Attorney-General, newspapers said. A spokesman for the agency told the Straits Times that the funds did enter Najib's accounts but the accounts have been closed."

Wall Street Journal said the prime minister's office did not immediately respond to requests for comment.

The agency highlighted that its investigations only focused on issues related to 1MDB's former subsidiary SRC International and the channelling of the funds into Najib's personal accounts. It is still pursuing investigations pertaining to the subsidiary over 4bn ringgit.

Police are carrying out investigations related to 1MDB and the central bank, Bank Negara Malaysia is focusing its probe on financial procedures, The Star newspaper said.

Najib's political party, the United Malay National Organisation or Umno, which has stood behind the prime minister through the corruption scandal has said that it was not unusual to require huge amounts of funding to run election campaigns.

However former prime minister Dr Mahathir Mohamed said in his blog that such funds are not held in personal accounts but in accounts that require two of the three trustees to sign off before any money can be disbursed.

Parliamentary probe into 1MDB halted

The Straits Times said that since the Attorney General was replaced on 28 July, investigations have instead focused on data leaks rather than the corruption allegations itself.

A parliamentary investigation into 1MDB was frozen temporarily after the bipartisan Public Accounts Committee was told to halt its work as four of its members, including chairman Nur Jazlan Mohamed, were appointed to the Cabinet in the recent reshuffle.

The hearings were scheduled to have started this month but members were sent letters informing that the hearings have been cancelled pending the appointment of new committee members, according to the Malay Mail.