(Refiles to removes "hold" from headline)
* Najib pleads not guilty
* Charges arise from transfer of funds from former unit of fund Najib spokesman says charges "politically motivated"
By Rozanna Latiff and Joseph Sipalan
KUALA LUMPUR, July 4 (Reuters) - Malaysia's former prime minister, Najib Razak, on Wednesday pleaded not guilty to abuse of power and other charges arising from an investigation into a scandal-plagued state fund, weeks after he was ousted in a stunning election defeat.
Najib, 64, who has denied wrongdoing in relation to the 1Malaysia Development Berhad (1MDB) fund he founded, was charged with abuse of power and three counts of criminal breach of trust as part of an investigation into a transaction involving its former unit SRC International.
The charges relate to some 42 million ringgit ($10.4 million) of funds that allegedly went from SRC into Najib's personal bank account. This represents a small fraction of the billions of dollars the U.S. Department of Justice has said was misappropriated from 1MDB.
Malaysia's attorney general said he expected more reports from the Malaysian Anti-Corruption Commission (MACC) investigating wrongdoing at the fund.
"This is arising from the first MACC IP (investigation papers) given to my office three weeks ago. No doubt there will be more," Tommy Thomas, who is leading the case against Najib, told reporters outside the court.
In a pre-recorded message posted on Twitter after his arrest, Najib said he was not perfect and "not all the accusations against me and my family are true.
"Let investigations be carried out. I have not had a chance to defend myself," he said.
Each of the four charges against Najib carries a prison term of up to 20 years. The abuse of power charge carries a fine of not less than five times the "value of gratification".
Najib was granted bail of 1 million ringgit ($247,000) and was ordered to surrender his passports. The judge set a tentative date for the trial to begin of Feb. 18, 2019.
The son of a former prime minister, Najib joined parliament at the age of 23 and rose through the ranks to take the top job in 2009. But his second term in office from 2013 was plagued by allegations around 1MDB, prompting a stunning fall from grace that culminated in his arrest on Tuesday.
Mahathir Mohamad, who helped Najib's political ascent before turning on him as the allegations surfaced, led a campaign that unseated Najib in a May 9 election and ousted a coalition that had ruled since Malaysia's independence from Britain in 1957.
One of Mahathir's first acts was to reopen the 1MDB investigation.
After spending the night in detention, Najib arrived at the court in the capital Kuala Lumpur on Wednesday wearing a dark blue suit and a red tie.
Crowds of media and onlookers jostled to catch a glance of the former premier. Some supporters of Najib's UMNO party chanted and held up placards in support of him.
Soon after coming into power in 2009, Najib founded 1MDB. The fund is being investigated in at least six countries on suspicion of money laundering.
SRC, created in 2011 by Najib's government to pursue overseas investment in energy resources, was a unit of 1MDB until it was moved to the finance ministry in 2012.
SRC has been the initial focus of Malaysian investigators as all the suspicious transactions involving the firm were made through Malaysian entities, unlike other 1MDB related transactions that went through foreign banks and companies.
A spokesman for Najib said on Tuesday that the SRC charges and the 1MDB investigations were "politically motivated", and Najib will contest the charges and clear his name in court.
Mahathir told Reuters last month that embezzlement and bribery using government money were among the charges being considered against Najib, adding that his former protege was fully responsible for the 1MDB scandal.
Since his election loss, Najib has been barred from leaving the country and investigators have seized luxury handbags, jewellery and other items worth millions of dollars from properties linked to his family. ($1 = 4.0440 ringgit) (Reporting by Rozanna Latiff and Joseph Sipalan; writing by John Geddie and A. Ananthalakshmi Editing by Darren Schuettler and Robert Birsel)