KUALA LUMPUR, Malaysia—Officials here are investigating whether the government of former Prime Minister Najib Razak used funds from a China-backed infrastructure program to help pay debts owed by the state investment fund at the center of one of the world’s biggest graft probes.

Prime Minister Mahathir Mohamad in July froze over $20 billion in Malaysian infrastructure projects that are part of China’s One Belt One Road initiative, saying the contract values appeared to be inflated, in what he called a sign of possible corruption. Now, Mr. Mahathir’s government suspects cash intended for the projects was diverted through offshore shell companies and used to pay nearly $700 million of debt owed by 1Malaysia Development Bhd., or 1MDB, according to two government officials involved in reviewing the projects. Malaysians associated with the Najib government, working with representatives of Chinese companies, appear to have arranged the diversion of funds, the officials said. “Chinese companies may be involved in round tripping of major infrastructure projects in Malaysia that siphons off funds from these projects to help 1MDB,” Malaysia’s new Finance Minister Lim Guan Eng told The Wall Street Journal. China’s foreign ministry didn’t respond to a request for comment.