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Malaysia PM Najib Razak used $700M donation to win 2013 elections: WSJ

Protesters demanding Prime Minister Najib Razak's resignation during an August rally in Kuala Lumpur.
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Protesters demanding Prime Minister Najib Razak's resignation during an August rally in Kuala Lumpur.

Malaysia's Prime Minister Najib Razak said he channeled an anonymous $700 million donation to politicians and projects to help his ruling party win 2013 elections, the Wall Street Journal reported on Tuesday, citing an unnamed cabinet minister.

"I took the money to spend for us," the unnamed minister quoted Najib as saying at a July meeting of senior leaders, the WSJ reported. The report noted that the spending by public entities to help Najib's United Malays National Organization stay in power was not illegal but "represented a new milestone in Malaysia's freewheeling electoral system."

In July, the WSJ published a report alleging that nearly $700 million had flowed from Malaysia's state investment fund, 1MDB, to Najib's personal bank account.

Under pressure from the WSJ report, Najib said in August that the funds were a private donation from Middle Eastern country, which he declined to name. He has repeatedly denied wrong-doing.

Expanding on its allegations, WSJ said on Tuesday that hundreds of millions worth of unreported political spending flowed from public sources or programs intended for other purposes, including at least $140 million that was spent on charity projects to boost the party's election chances.

Some of this cash came from the troubled state investment fund, according to the WSJ. Minutes from 1MDB meetings indicated the fund prioritized political spending even when its cash flows couldn't cover its debt payments, the WSJ reported.

1MDB, which was launched in 2008 as one of Najib's pet projects, has been under scrutiny for months amid allegations of financial fraud. The fund is undergoing a "rationalization" program, launched in May, to reduce its debt of more than $11 billion by selling assets. In November, 1MDB sold its power plants for 9.83 billion ringgit ($2.3 billion) to a Chinese nuclear power supplier. It's reported to have paid around 12 billion ringgit for the assets.

Singapore and Switzerland have both suspended bank accounts tied to 1MDB and there have been media reports the U.S. Federal Bureau of Investigation (FBI) is investigating the fund as well. Investigations in Malaysia have been dogged by accusations they were biased toward the government.

A representative of the prime minister's office didn't immediately return CNBC's emailed request for comment.

Read the full WSJ report here.