KUALA LUMPUR (Jan 10): 1Malaysia Development Bhd (1MDB) has denied former prime minister Tun Dr Mahathir Mohamad's claim that its foundation's Special Haj Programme was funded through stolen money.

"1MDB strongly denies this baseless and unsubstantiated allegation," the state fund said in a statement. "On the contrary, 1MDB has legitimate business operations, formerly in energy production and more recently, in real estate development."

Funds generated from these business operations are contributed to 1MDB Foundation, which then uses such funds to sponsor the Special Haj Programme, it added.

Mahathir, who is chairman of Parti Pribumi Bersatu Malaysia, recently claimed that haj performed through the 1MDB Foundation sponsorship would not be "haji mabrur", or divinely accepted haj.

1MDB said that since its inception in 2010, its foundation has provided about RM690 million to sponsor 60 projects in education, healthcare, youth development and community services, which have an impact on the lives of 2.8 million Malaysians.

"Examples of such activities can be found on the 1MDB website, ranging from Dana PIBG Grants and Academic Grants to SPM/STPM students to Academic Grants for Sri Murugan Centre and Unified Examination Certificate Holders, as well as Dana Belia 1Malaysia and 1Malaysia Mobile Clinics," added 1MDB.

The fund said 1MDB Foundation also supports other programmes such as the Program SPM Jabatan Perkhidmatan Awam (Public Service Department), which is currently sponsoring over 600 Malaysian scholars of all races.