By Roberta Rampton and David Brunnstrom
WASHINGTON (Reuters) - U.S. President Donald Trump welcomed Malaysian Prime Minister Najib Razak to the White House on Tuesday, praising his country for investing in the United States while steering clear of an American investigation into a Malaysian corruption scandal.
The visit is important for Najib, who faces elections next year and wants to signal he is still welcome at the White House despite a criminal probe by the U.S. Justice Department into a state fund called 1Malaysia Development Berhad (1MDB).
Flanked by top advisers in the Cabinet Room, Najib told Trump that Malaysia Airlines would buy 25 Boeing 737 jets and eight 787 Dreamliners, and would probably add another 25 737s in the near future - a deal he said would be worth more than $10 billion within five years.
Najib said Malaysia's Employees Provident Fund, a major pension fund, wanted to spend $3 billion to $4 billion on U.S. infrastructure development.
Najib enjoyed close ties with Trump's predecessor, Barack Obama, playing golf in Hawaii in 2014, but relations cooled over human rights issues as well as the 1MDB scandal.
Najib founded the fund, which is facing money laundering probes in at least six countries including the United States, Switzerland and Singapore. He denies wrongdoing.
The U.S. Justice Department has said more than $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates, according to dozens of civil lawsuits it filed last year.
The Justice Department sued to seize some $1.7 billion in assets it said were bought with misappropriated 1MDB funds, but asked for a stay on its civil lawsuits in August because it was conducting a related criminal probe.
The White House had said it would not comment on the Justice Department investigation but a senior U.S. official acknowledged it was unusual to meet with Najib while 1MDB was under regulatory scrutiny.
"It's a weird situation, no doubt," the official said, explaining that the administration has prioritized developing relations with Southeast Asia to counter "huge gains" China has made in the region.
Najib and his delegation stayed at the Trump International Hotel, according to several U.S. media reports, but the White House dismissed questions about the stay.
"We certainly don't book their hotel accommodations, so I couldn't speak to the personal decision they made about where to stay here in D.C.," White House press secretary Sarah Huckabee Sanders said.
In a speech to U.S. business leaders, Najib said opposition politicians had blown the 1MDB scandal out of proportion in a failed attempt to topple his government.
"I know that some of you will have heard some less positive stories about the Malaysian economy, particularly about 1MDB," Najib said.
"Indeed, there was a campaign to deliberately sabotage the company – and undermine investor confidence in our economy – in a failed attempt to topple the government in-between election cycles."
He also said Malaysia's investigations into 1MDB revealed there had been some "failings".
The U.S. lawsuits had alleged $681 million of the misappropriated funds from 1MDB was transferred to the account of "Malaysian Official 1", which U.S. and Malaysian sources have previously identified as Najib.
A Malaysian government investigation has cleared him of any wrongdoing.
Najib's invitation to the White House was slammed by several rights groups who had urged the Trump administration to bring up Najib's record of cracking down on the media and others critics.
NORTH KOREA TIES
Trump sees Malaysia, a majority Muslim nation, as an ally in its fight against Islamic militancy. It is also wants it to cut ties with North Korea.
"He does not do business with North Korea any longer, and we find that to be very important," Trump said referring to Najib.
Ties between Malaysia and North Korea soured after North Korean leader Kim Jong Un’s half brother was assassinated in Kuala Lumpur this year. It was also discovered that North Korea was using Malaysia as a base for its arms export and other businesses, that funneled money to Pyongyang.
Before their meeting, Trump praised Najib for his tough stand on Islamic State.
"He's been very, very strong on terrorism in Malaysia, and a great supporter from that standpoint."
For a graphic on Malaysia's 1MDB scandal, click: http://fingfx.thomsonreuters.com/gfx/rngs/MALAYSIA-SCANDAL/010020XT28M/img/map2.png
(Reporting by Roberta Rampton and David Brunnstrom, A. Ananthalakshmi in Kuala Lumpur; additional reporting by Doina Chiacu and David Alexander; editing by Grant McCool, Richard Chang and Nick Macfie)