The Malaysian premier said on Tuesday that he's done nothing wrong as a scandal over the source of millions of dollars has caused a rift within his own political party.

The allegations of graft stem from dealings with the state fund 1Malaysia Development Berhad (1MDB) and his receipt of 2.6 billion ringgit ($610.8 million) in what he says was a political donation.

Investigators from Malaysia's Anti-Corruption Commission (MACC) quizzed Najib over the deposits at the weekend. But he's taken to the airwaves to defend himself.

"Firstly, the 2.6 billion ringgit is neither public funds nor 1MDB's money. This was confirmed by the MACC," Najib said in an interview with state television TV3. "It's a donation, a gift. A donation is not illegal under any legal provision."

The scandals have shaken investors in Southeast Asia's third-largest economy and rocked public confidence in the coalition led by Najib's United Malays National Organization party (UMNO), which has held power since Malaysia's independence from the UK in 1957, but was only narrowly victorious last time around in 2013.

Political backlash over graft claims

There's evidence that the graft scandal is threatening the UNMO's support even among the ethnic Malay majority that forms the bedrock of the party. Public support sank to new lows in October, according to a poll from research firm Merdeka Center.

That's alarmed senior UNMO figures who apparently see an opening to challenge Razak for leadership of the party.

"I would like to suggest that the prime minister take a rest for now," UNMO's deputy president Muhyiddin Yassin, a former cabinet minister who was recently purged after calling for greater transparency, told a party conference. "Allow the investigations to proceed freely, transparently and fairly ... go on leave until the case is over."

This latest scandal has political figures predicting that public anger could cause UNMO to be defeated in elections due by 2018 if the prime minister remains in charge.

Saifuddin Abdullah, a former deputy minister who moved to the opposition amid the recent turmoil, said the UNMO is facing a choice between loyalty to their leader and political realities.

"It's sad, because it shows the direction of the party,” he said. “But there are many people who are afraid of what could happen to the party if it splits, so they stick with Najib.”

The prime minister and UNMO take solace in the disarray within the political opposition after its former leader Anwar Ibrahim was jailed in February for five years on sodomy charges.

The conviction has been widely criticized by the United States and others for being politically motivated.

jar/msh (AFP, Reuters)