Malaysia suspends party official, probes website over criticism of 1MDB scandal: WSJ

Najib Razak, Prime Minister of Malaysia.
Getty Images

Malaysia's ruling party has suspended a senior official who had asked for a deeper investigation into allegations of corruption at the country's state investment fund and is also investigating a website that reported on the scandal, The Wall Street Journal reported.

The ruling United Malays National Organization (UMNO) suspended Muhyiddin Yassin, a deputy party president, citing his failure to support Prime Minister Najib Razak, The WSJ reported. Muhyiddin had previously been fired by Najib from his position as deputy prime minister.

"If we want to see Malaysia return to a respected country in which the people can live a more prosperous life, we need to be prepared to demand change," Muhyiddin said in a statement on Saturday, according to The WSJ.

In addition, the government is also proposing changes to Malaysian laws that would allow caning and life imprisonment for journalists and others found guilty of receiving leaked documents, the newspaper said.

On Friday, the editor of an online news organization said was asked to appear before police after the communications regulator blocked access to the website. Police tweeted that the website's coverage of the fund was confusing, according to The WSJ.

Efforts by The WSJ to reach Najib on Saturday were unsuccessful, . He has denied wrongdoing or taking money for personal gain.

Why Malaysia’s 1MDB scandal is denting growth

Since last year, a state-owned investment fund, the 1Malaysia Development Berhad (1MDB), has been embroiled in one of Malaysia's worst political scandals that has left international investors wary.

Malaysian authorities, including the central bank, have launched investigations, as have international bodies such as the FBI in the United States, into allegations of misappropriation of funds by 1MDB.

In July, the Wall Street Journal published a report alleging that nearly $700 million had flowed from the fund to Najib's personal bank account. Najib has repeatedly denied wrong-doing and, under pressure from the WSJ report, said the funds were a private donation from a Middle Eastern country he declined to name.

Last month, Malaysia's Attorney General Mohamed Apandi Ali told an unscheduled press conference that Saudi Arabia's royal family gave Prime Minister Najib Razak a $681 million gift, in an effort to end months of speculation about the source of the huge personal donation that landed in Najib's personal bank account.

Apandi said that no criminal offense had been committed, in a move that appeared to mark the end of the matter, at least within the country.

Last December, the WSJ expanded on its allegations by reporting that hundreds of millions worth of unreported political spending flowed from public source or programs intended for other purposes, including at least $140 million that was spent on charity projects to boost the chances of PM Najib's political party to win the 2013 election.

You can read the WSJ report here

Follow CNBC International on Twitter and Facebook.