Trump, Malaysia's Najib talk about trade and security, not scandal

By Roberta Rampton and David Brunnstrom

WASHINGTON (Reuters) - President Donald Trump welcomed Malaysia Prime Minister Najib Razak to the White House on Tuesday, praising his country for investments 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.

The White House had originally planned to allow reporters into an Oval Office meeting between Trump and Najib, but at the last minute changed course. That meant photographers could not take the traditional photo of the two leaders sitting side by side, but a White House official said not to read anything into the change.

Najib had once enjoyed close ties with Trump's predecessor Barack Obama, playing golf with the Democratic president in Hawaii in 2014.

But relations cooled over concerns about 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 has denied any wrongdoing.

The U.S. Justice Department sued to seize some $1.7 billion in assets it said were bought with misappropriated 1MDB funds.

The White House had said it would not comment on the Justice Department investigation.

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 referring to the Justice Department investigation, explaining that the administration has prioritised developing relations with Southeast Asian countries to counter "huge gains" China has made in the region during the past decade.

"There's a recognition under this administration that we can't continue to cede our relations in all these countries because of whatever the issue of the day is," the official said.

Trump praised Najib for his tough stand on Islamic State in Southeast Asia, and for cutting off economic ties with North Korea.

"He's been very, very strong on terrorism in Malaysia, and a great supporter from that standpoint," Trump said. "He does not do business with North Korea any longer, and we find that to be very important."

(Reporting by Roberta Rampton and David Brunnstrom; additional reporting by Doina Chiacu and David Alexander; editing by Grant McCool and Richard Chang)