David Cameron flies into a storm of allegations of government corruption in Kuala Lumpur

Malaysia’s Prime Minister denies that he benefited from the investment fund that investigators have traced to what they allege are his own bank accounts

Malaysia's Prime Minister Najib Razak (Getty Images)

An investigation into alleged corruption worth hundreds of millions of pounds at Malaysia’s national investment company threatened to overshadow David Cameron’s arrival in Kuala Lumpur on 30 July.

Malaysia’s Prime Minister, Najib Razak, has been forced to deny allegations that he has personally benefited to the tune of $700m (£447.5m) from the investment fund that investigators have traced to what they allege are his own bank accounts.

In a statement, Mr Najib says he is the victim of a smear campaign orchestrated by the man who was Malaysia’s Prime Minister between 1981 and 2003, Mahathir Mohamed. The Prime Minister described the situation as “political sabotage”.

“Unfortunately, the Prime Minister’s political opponents, unwilling to accept his record or the facts, continue to try to undermine him with baseless smears and rumours for pure political gain,” said his office. The scandal has led to calls for his resignation.

The fund, known as 1MDB, was set up in 2008 with a mandate to invest in various economic sectors and to turn Kuala Lumpur into a global financial centre. Unlike other sovereign wealth funds, it finances itself, largely through debt.

It now owes creditors $11bn and an investigation has been launched into its lack of transparency, why it has moved funds offshore, and why it needed a $1bn loan earlier this year from Abu Dhabi to settle other debts.

On 28 July, Mr Najib sacked his deputy, Muhyiddin Yassin, a critic of the situation at 1MDB. Malaysia’s Attorney General, Abdul Gani Patail, who was leading one of the four investigations into the allegations about 1MDB, has also been replaced. In a statement to local media, the government said that he had been removed on health grounds.

While investigations into corruption at 1MDB have found no wrongdoing by the Malaysian Prime Minister, a parliamentary inquiry was suspended earlier this week when the man chairing it was promoted to be deputy home minister.

Mr Cameron, whose stop in Malaysia is part of a tour of South-east Asia, during which he hopes to open new markets for British business, said recently that “the wind of economic change is blowing east. “We still do more trade with Belgium than we do with Indonesia, Malaysia, Singapore and Vietnam combined,” he said.

The Sarawak Report, an investigative website run by the sister-in-law of Gordon Brown, Clare Rewcastle Brown, which has reported on the allegations, called on Mr Cameron to cancel his visit.

“The British Prime Minister has made the issue of rooting out global corruption one of his key platforms as a world leader,” the website said.

“He is absolutely right to do so, which is why he should not then carry on to visit Malaysia on this occasion, just as Najib Razak has carried out a shocking strike against all those who have questioned his own corruption.”