By Rozanna Latiff and Emily Chow
KUALA LUMPUR (Reuters) - Malaysia's attorney-general said on Tuesday that $681 million transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia and there were no criminal offences or corruption involved.
The involvement of the Saudi royal family is an unexpected twist in a scandal over the mysterious funds transfer and the troubles of indebted state fund 1Malaysia Development Berhad (1MDB), whose advisory board Najib chairs.
"I am satisfied with the findings that the funds were not a form of graft or bribery," attorney-general Mohamed Apandi Ali told a hastily called news conference, where a statement was issued that said Najib had returned $620 million to the Saudi royal family because it had not been utilized.
"There was no reason given as to why the donation was made to PM Najib, that is between him and the Saudi family," Apandi said.
He said no criminal offense was committed by Najib in relation to three investigations submitted by Malaysia's anti-graft agency and that no further action would be taken.
The Malaysian Anti-Corruption Commission (MACC) had earlier said the funds were a political donation from an unidentified Middle Eastern benefactor.
The attorney-general said in a statement he would return to the MACC papers pertaining to the three separate investigations with instructions to close all three cases.
Najib, who has weathered months of calls from opposition leaders and establishment figures to resign, has denied any wrongdoing and says he did not take any money for personal gain.
The scandal has shaken investors in Southeast Asia's third-biggest economy and rocked public confidence in the coalition led by Najib's United Malays National Organization (UMNO) party, which has held power since independence in 1957.
However, Najib still enjoys the backing of most of UMNO's powerful division chiefs. Even his fiercest internal critics, such as influential former Prime Minister Mahathir Mohamad, accept that he cannot be unseated.
(Reporting by Rozanna Latiff, Emily Chow and A.Ananthalakshmi; Writing by John Chalmers; Editing by Paul Tait)