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UPDATE 1-Malaysia’s Najib says “conscience clear” as funding scandal festers

KUALA LUMPUR Malaysian Prime Minister Najib Razak stated he had completed nothing wrong in getting hundreds of millions of dollars into his individual bank accounts, as his celebration opened its annual meeting on Tuesday amid tensions more than a festering funding scandal.

Najib has so far weathered calls for him to quit more than allegations of graft at state fund 1Malaysia Improvement Berhad (1MDB) and his receipt of 2.6 billion ringgit ($ 610.8 million) in what he says was a political donation.

But stress is mounting on Najib as the saga causes a rift among prime leaders in his United Malays National Organisation (UMNO), which has ruled the country for 58 years but appears increasingly at threat of losing the subsequent election.

In his most detailed explanation because the scandal erupted in July, Najib mentioned his conscience was “totally clear” and the truth would come out when investigations were completed.

Malaysia’s anti-corruption agency, MACC, questioned Najib over the deposits at the weekend and the commission also said on Monday that it had interviewed the unidentified donor in the Middle East.

“Firstly, the 2.6 billion ringgit is neither public funds nor 1MDB’s cash. This was confirmed by the MACC,” Najib mentioned in an interview with state television TV3.

Malaysia’s Central Bank was aware of the accounts’ existence, he stated, adding the donor did not see it as a bribe and expected absolutely nothing in return.

“It really is a donation, a gift. A donation is not illegal under any legal provision,” Najib mentioned.

The Wall Street Journal had reported in July that the funds had been discovered in Najib’s accounts by investigators probing accusations of financial irregularities at 1MDB.

Najib, who chairs 1MDB’s advisory board, has denied the income came from the fund, which is getting investigated by several foreign agencies, such as the FBI.

“TAKE A REST”, SAYS DEPUTY

The scandals have shaken investors in Southeast Asia’s third-largest economy and rocked public confidence in the coalition led by Najib’s UMNO, which has held power considering that independence in 1957.

Backing for the government among the ethnic Malay majority that forms the bedrock of UMNO’s assistance sank to 31 percent in October, from 52 percent in January, according to the most current poll from study firm Merdeka Center.

In a speech to his supporters on Monday night, UMNO’s Deputy President Muhyiddin Yassin called on the prime minister to step aside till the investigations were completed.

“I would like to recommend that the prime minister take a rest for now,” he said. “Allow the investigations to proceed freely, transparently and pretty… go on leave till the case is more than.”

Muhyiddin, who has led calls for Najib to give a fuller explanation of the IMDB affair, was ousted as deputy prime minister earlier this year.

In a break from tradition, Muhyiddin will not speak at UMNO’s annual assembly.

The uncertainty designed has hit an economy already reeling from falling oil and gas rates, with the ringgit losing almost a quarter of its worth against the dollar this year.

Najib, 62, nonetheless enjoys the backing of most of UMNO’s potent division chiefs, and even his fiercest internal critics accept that he can’t be unseated.

Analysts say there is no obvious contender to replace the embattled leader, and Najib has proved adept at playing the networks of patronage that underpin UMNO.

The opposition is also weak with out charismatic leader Anwar Ibrahim, who was jailed on charges of sodomy in February, a verdict his supporters say was politically motivated.

Amongst Najib’s most potent critics has been influential former prime minister Mahathir Mohamad, who has mentioned UMNO will drop the next election in 2018 if Najib remains in charge.

As the party gathered for its annual meeting, Najib responded to his critics with an appeal for unity.

“I want the celebration to stay united,” he mentioned in the TV3 interview. “I do not want to see the party in chaos or divided…I want celebration members to close ranks.”

($ 1 = 4.2570 ringgit)

(Extra reporting by Joseph Sipalan Editing by Alex Richardson and Nick Macfie)