(June 16): Prime Minister Mahathir Mohamad has rejected an offer by Low Taek Jho to drop his claim to assets frozen by US authorities in return for immunity from prosecution over the 1Malaysia Development Berhad (1MDB) scandal, the Wall Street Journal (WSJ) reported, citing sources.

According to the WSJ, Dr Mahathir turned down the offer through an intermediary.

Low, commonly known as Jho Low, is the alleged mastermind of the multi-billion dollar money-laundering scandal at state fund 1MDB. He has said he was only an unofficial adviser to the fund, and denied any wrongdoing.

Low is believed to be residing in Hong Kong, Macau and other Chinese territories.

Newswire agency Bloomberg had reported that Malaysian authorities issued a warrant for Low's arrest on June 7, citing sources.

According to WSJ, Malaysia does not have an extradition treaty with China but has been using back-channel communications with Beijing to seek Low's return to Malaysia.

Dr Mahathir had earlier told WSJ that Malaysia's laws do not allow Low's participation in the 1MDB scandal to be absolved in return for his cooperation in tracking down where the money went.

"I am quite sure the kind of incentive he would readily accept is that he would not be prosecuted. But we cannot do that. It's against the law. The law does not provide for what American law provides, plea bargaining and all that," Dr Mahathir had said.

The US-based publication also reported that Low told his friends before Malaysia's May 9 elections that he felt safe because former prime minister Najib Razak was protecting him.

Najib's Barisan Nasional coalition was eventually ousted in the polls. He is now the subject of a money laundering and corruption probe, after reports that millions of dollars made their way into his personal bank accounts from the fund and its former subsidiary, SRC International.

Over the past month, Malaysia's anti-graft agency has raided residences linked to Mr Najib and questioned the former prime minister and his wife Rosmah Mansor over former 1MDB subsidiary SRC International.

According to a separate Reuters report on Friday, a source was quoted as saying that Malaysian authorities are considering charging Razak with money laundering and misappropriation of property. He has consistently denied any wrongdoing in relation to 1MDB.

Earlier this week, Malaysia's new Attorney General, Tommy Thomas, said that his office was studying possible criminal and civil action, after receiving investigation papers on 1MDB from the Malaysian Anti-Corruption Commission (MACC).

A source close to the investigations told Reuters that Najib may be charged with dishonest misappropriation of property under the Malaysian Penal Code.

The offence carries a maximum jail sentence of five years, a fine and whipping. The law forbids, however, men over the age of 50 years from being whipped.

Any fine would be decided by the court depending on the offence and amount misappropriated.

According to the source, Najib may also face money laundering charges, which would carry a maximum sentence of 15 years' jail and a fine of no less than five times the value of the laundered proceeds.

It is now up to the attorney-general to decide whether or not to accept the recommendations, file different charges or call for further investigations.

The previous attorney general cleared Najib of wrongdoing in relation to 1MDB.

Najib said this week that if he was charged on "political grounds", he was confident the courts would find him innocent.

1MDB is the subject of money-laundering probes globally, including the US, Switzerland and Singapore.

The US Department of Justice has alleged more than US$4.5 billion ($6.1 billion) was misappropriated from 1MDB, about US$700 million of which ended up in Mr Najib's personal bank accounts.