KUALA LUMPUR (Reuters) -On its website, Global Ikhwan Services and Business Holdings (GISB) describes itself as a Malaysian conglomerate with a vision to implement the Islamic way of life in line with the teachings of the Prophet Muhammad.

But the rescue this week of hundreds of children and youths from what Malaysian authorities said was suspected sexual abuse at charity homes allegedly run by GISB has put back in the spotlight the firm's roots in a religious sect outlawed by the government three decades ago.

GISB acknowledges links to the religious sect Al-Arqam, which was banned in 1994, and names the sect's late preacher Ashaari Muhammad as its founder, but has largely sought to distance itself from the group's practices and beliefs, which the government views as heretical.

GISB has said it did not run the homes and has denied all allegations of abuse. In a video posted on Facebook, however, its chief executive said the firm had broken unspecified laws and that there were 'one or two' cases of sodomy at the youth homes.

In 2011, GISB made headlines for its controversial views on sex and marriage, which included encouraging polygamous families and setting up the Obedient Wives' Club, a group that called on wives to submit to their spouses "like prostitutes".    

The police raids on the charity homes in two Malaysian states this week came after several Islamic leaders called on the government to probe GISB's activities.

Abu Hafiz Salleh Hudin, a lecturer on Islam at the International Islamic University of Malaysia, said he was aware of reports made to Malaysia's Islamic Development Department (Jakim) about worker exploitation and deviant teachings at GISB as far back as a decade ago.

"They would stress that they were exploited, and they were not being paid for work," he told Reuters, citing reports made by former GISB members.

The former members had also held on to Al-Arqam's teachings and beliefs, Abu Hafiz added.

Police say they are investigating other allegations, including money laundering. Authorities say they also plan to scrutinise religious schools run by GISB while Jakim said it would present a report into deviant teachings involving the firm to the cabinet.

Police say most of the youths rescued from the homes in two Malaysian states were children of GISB members. 

Many showed signs of abuse, neglect and emotional trauma, while 13 had been sodomised, officials said on Friday. 

'HIDING UNDER VEIL OF LEGITIMACY'

Residents in Bukit Beruntung, a town in which a police source and locals said authorities had raided several youth homes, expressed shock at the abuse allegations.

"If it's true, then that is really worrying," said Mohd Khair Syafie, the imam of a surau, or Muslim prayer hall, in the town, some 50 km (31 miles) outside the capital.

Ashaari Muhammad founded the Al-Arqam movement in 1968, which was initially focused on discussing religious issues. 

In the 1980s, the group, which had tens of thousands of followers, was condemned by Malaysia's religious authorities over what they said were deviant teachings by Ashaari, whose followers claimed he had supernatural powers and could defer death.

Ashaari, who had five wives and 37 children, spent two years in prison in the 1990s and died in 2010. 

In 2006, Malaysia's government outlawed Rufaqa Corp, another company founded by Ashaari, which it described as an attempt to revive Al-Arqam. A Rufaqa official at the time denied it had an other agenda than preaching Islam and building its business. 

In an August interview with business daily The Malaysian Reserve, GISB said the company was rebranded from Rufaqa Corp and reiterated it was a commercial entity compliant with Islam. 

Munira Mustaffa, executive director of security consultancy Chasseur Group, said GISB's businesses appeared to help it "hide under the veil of legitimacy."

"Living in a country where they know they are being watched, GISB have been careful to present themselves as entrepreneurial individuals and legitimate businesspeople," said Munira. 

"But at the same time, they follow the same template as other isolationist communities or cults."