Saudi royals 'gave Malaysia PM $681mn donation'

The Saudi royal family was the source of a $681mn "donation" that has engulfed Malaysian Prime Minister Najib Razak in scandal, his attorney general said on Tuesday in a statement clearing Razak of corruption allegations.

Mohamed Apandi Ali said a review of evidence compiled by the country's anti-corruption agency showed that the money was a "personal donation from the Saudi royal family". 

He gave no further details on the source.

Najib, 62, has for months fended off accusations that the huge payment made into his personal bank accounts in 2013 was syphoned off from a state-owned company he had launched.

But until now, the origin of the money has not been specified, other than claims by Najib's government that it came from unnamed Middle Eastern donors.

"I am satisfied that there is no evidence to show that the donation was a form of gratification given corruptly," Apandi, who was installed by Najib after the scandal broke last year, said in a statement.

He added that "no criminal offence has been committed", and that he would instruct the anti-corruption agency to "close" the case.

The fund transfers were revealed last July just as Najib was battling allegations that hundreds of millions of dollars were missing from deals involving the state company, 1Malaysia Development Berhad (1MDB).

Najib is the chairman of 1MDB's board of advisers, and the company strenuously deny wrongdoing.

But the political opposition and even critics within Najib's ruling party have demanded independent investigations, accusing the premier of sabotaging official probes.

Shortly after the fund movements were revealed, Najib provoked fierce criticism by sacking Malaysia's previous attorney general - who was investigating the matter - and appointing Apandi, who has ties to the ruling UMNO party.

Najib's "donation" alibi has been widely derided by Malaysians accustomed to regular UMNO scandals, and the self-proclaimed reformer's image has been severely battered.

Speculation is rising that the scandal could be the final straw that dumps his ruling coalition from power.

UMNO-controlled coalitions have governed for nearly six decades, but the party is in crisis as swelling numbers of voters have rejected it at recent polls over graft, its hardball political tactics, and accusations of rights infringements.

The next elections are due by 2018.

US authorities are reportedly looking into 1MDB-related overseas fund flows, while Swiss, British, Singaporean and Hong Kong authorities have acknowledged scrutinising the affair.

Early last year, a New York Times investigative report detailed multi-million-dollar purchases of luxury US property by a close Najib family associate and alleged millions of dollars of jewellery was bought for Najib's wife, Rosmah Mansor.

Najib has responded to the 1MDB scandal by purging critics within UMNO, and won its renewed endorsement at a party congress in December.