Mr Najib has consistently denied allegations of corruption. Source: REUTERS

A transfer of nearly $700 million to Prime Minister Najib Razak ’s alleged private bank account before a 2013 election was a “personal donation” from Saudi Arabia’s royal family and not illegal, a Malaysian investigating body said. The nation’s top prosecutor, Attorney General Mohamed Apandi Ali, said on Tuesday all but $61 million of the $681 million transferred in March of that year was returned to the Saudis five months later.

Mr. Apandi said he ordered Malaysia’s anticorruption body to close its investigation into the transfers, which sparked mass street protests against the prime minister after they became public last summer. Tuesday’s finding is unlikely to quell controversy about the funds. “The notion that the Saudi ‘royals’ would ‘donate’ hundreds of millions of dollars to a foreign leader, as opposed to a government institution, struck me as suspect, to say the least,” said Fahad Nazer, a senior political analyst at consultancy firm JTG, in an email. Mr. Nazer previously worked as a political analyst at the Saudi Embassy in Washington.

The attorney general’s four-page statement didn’t address several issues Malaysians have sought answers to, such as: Who specifically donated the money? Why was it donated? And what happened to the money that wasn’t returned?

Although the statement said the Saudi donor didn’t expect anything in return from Mr. Najib “in relation to his capacity as a prime minister,” the finding could raise questions about the extent of foreign influence over Malaysia’s political establishment. The funds were received shortly before a closely contested general election in 2013.