Former Malaysian PM Najib Razak is charged with corruption over '£3.4bn fraud'

Najib pleads not guilty to four counts of corruption, each carrying potential prison sentences of 20 years

Former Malaysian prime minister Najib Razak is surrounded by police as he arrives at Kuala Lumpur High Court (EPA)

Malaysia's former prime minister Najib Razak has been charged in court on four counts of corruption, a stunning fall from grace for the leader who was accused of extensive misappropriation of a state fund which he founded.

Mr Najib pleaded not guilty to all counts, each of which carries a potential prison sentence of up to 20 years. Accused of abusing the position of prime minister for "self gratification", he could also be handed a fine of up to £40m.

The charges come amid a lengthy and ongoing criminal probe, and relate to a suspicious transaction involving SRC International, a former unit of 1Malaysia Development Berhad (1MDB), and Mr Najib's personal account.

​1MDB, which has become shorthand for the scandal that contributing to Mr Najib's party losing its first election in Malaysia's modern history, was a fund set up to pay for development projects in Kuala Lumpur and beyond.

"As a public official, which is prime minister and minister of finance, used your position for self gratification (for a) total of 42 million ringgit," Attorney General Tommy Thomas said.

The charges, three of criminal breach of trust and one count of abuse of power, relate only to a fraction of the total amount allegedly misappropriated from 1MDB. The US Department of Justice has said more than $4.5bn (£3.4bn) was siphoned from the fund.

"I claim trial" Mr Najib said in a barely audible voice as he stood in the dock at the High Court in Kuala Lumpur in Wednesday.

His lawyers have applied for bail and the amount is still being argued in court. Prosecutors want 4 million ringgit (nearly $1 million) bail.

Mr Najib was arrested at his home on Tuesday, less than two months after an unexpected election defeat to a coalition led by his mentor-turned-foe Mahathir Mohamad. Police and anti-graft agency officials have revived investigations into the fund's missing billions since his ouster.

Some of Mr Najib's children were present in court, including his stepson, Riza Aziz, who on Tuesday was questioned by anti-graft officers.

Mr Najib, who spent the night in jail, arrived at 8.20am at the court complex in Malaysia's capital, wearing a dark blue suit and a red tie. Crowds of media and onlookers jostled to catch a glance of the former premier as he was led to a sessions court to face the charges.

Some members of Mr Najib's UMNO party chanted and held up placards in support of their former leader.

A spokesman for Mr Najib said on Tuesday that the SRC charges and the 1MDB investigations against the former leader were "politically motivated", and that Mr Najib will contest the charges and clear his name in court.

Mr Mahathir said in an interview with Reuters last month that embezzlement and bribery with government money were among the charges that Malaysia was looking to bring against Mr Najib, 64, adding that Mr Najib was fully responsible for the 1MDB scandal.

Since his loss at the polls, Mr Najib has been barred from leaving the country and had millions of dollars of items seized from properties linked to his family.

In a pre-recorded message posted on Twitter after his arrest, Mr Najib said he was not perfect and "not all the accusations against me and my family are true.

"Let investigations be carried out. I have not had a chance to defend myself," he said.

Additional reporting by Reuters