Kuala Lumpur High Court Judge Suraya Othman found the prosecution had failed to establish a case against Kasitah Gaddam, the former Land and Cooperative Development Minister, said his lawyer Muhammad Shafee Abdullah.

Suraya ruled that the prosecution had failed to call material witnesses and its star witness was of "questionable character," Muhammad Shafee said. It was not clear immediately if the prosecution will appeal the ruling.

Kasitah had faced up to 25 years in jail on charges of cheating and corruption. His case began in 2004, shortly after then Prime Minister Abdullah Ahmad Badawi took over office with a pledge to crack down on endemic corruption.

Kasitah owed a bank about 11.5 million ringgit ($3.2 million) in the mid-1990s, and is alleged to have attempted to repay the loan through a series of transactions via the Sabah Land Development Board, a state government agency, of which he was then chairman.

The board is tasked with government land development projects in Sabah state.

The prosecution alleged that Kasitah misused his position to force SLDB to sell 40 percent of its shares in a plantation company in 1996 by convincing the government that failure to do so would cause losses to the board. The shares were subsequently bought cheaply by Kasitah through a front company, according to prosecutors.

Muhammad Shafee said Kasitah "never should have been charged because there was no evidence against him." He said Kasitah was made a scapegoat in the government's anti-corruption drive, adding the court verdicts restored his credibility.

Kasitah's case was a rare instance of a high-ranking official being taken to court for alleged corruption. The pledge to end corruption was the main election platform of Abdullah before he assumed the prime minister's office in 2003. But it yielded few results during the six years he was in office until April this year.

Apart from Kasitah, the only other prominent catch was tycoon Eric Chia Eng Hock, charged with criminal breach of trust in connection with 76.4 million ringgit ($20 million) missing from government-controlled Perwaja Steel.

Chia was, however, acquitted in 2007 and died a year later at the age of 75.