Prosecutors demanded 4 million ringgit ($1,460,992 million) bail, but the judge set it at 1 million ringgit in cash ($365,250) and ordered Najib to surrender his two diplomatic passports.

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Najib was arrested at his home on Tuesday, less than two months after an unexpected election defeat to a coalition led by his mentor-turned-foe Mahathir Mohamad.

"As a public official, which is prime minister and minister of finance, used your position for self gratification (for a) total of 42 million ringgit", Attorney General Tommy said referring to the abuse of power charge.

He faces three counts of criminal breach of trust and one count of abuse of power.

Each charge - all of which he denied - could see him jailed for up to 20 years.

There were also shouts of "Melayu" and "Hidup Melayu", a cheer championing Malays, the country's dominant race, as well as chants for Najib to be released.

"As a normal human being, I am not flawless but believe me, that the accusations against me and my family are not all true", he said.

In addition, the court granted an interim gag order until Aug 8 when the case will be mentioned and an application for a full gag order will be heard.

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Wednesday's court hearing was the latest step in a quick-moving investigation into alleged wrongdoing by Najib, his family and many of his close political and business allies.

Najib, 64, has accused Malaysia's new government of seeking "political vengeance".

Anti-corruption officers arrived at his house in four unmarked cars and escorted the former PM to the Malaysian Anti-Corruption Commission. "I expected questions from the press", he said.

The ex-Prime Minister said that he hoped that the court case will follow the rule of law.

Najib set up 1MDB when he took power in 2009 but the fund amassed billions in debts and is being investigated in the US and several other countries.

In March, Red Granite Pictures, which also produced big-budget Hollywood films such as "Dumb and Dumber" and "Big Daddy" agreed to pay US$60 million to the US Department of Justice (DOJ) to settle a lawsuit alleging its use of illicit funds to make the movies. Najib insisted the funds were a donation.

Najib's laywer Muhammad asked for the case to be expedited.

A spokesman for Najib said the SRC charges and the 1MDB investigations against the former leader were "politically motivated", and that Najib will contest these charges and clear his name in court.