(CNN) Milan's renowned La Scala opera house will give back 3 million euros ($3.4m) of Saudi money, after rejecting a controversial deal that would have given the Kingdom's culture minister a seat on the board.
The Italian theater had negotiated an agreement which would have seen it receive 15 million euros from Saudi Arabia over five years, its director Alexander Pereira told Italy's La Repubblica newspaper earlier this month.
But news of the deal sparked a furious backlash, with politicians and art critics demanding the opera house shun funding from the Gulf nation over its human rights record.
La Scala confirmed on Monday that the plan would not go ahead, after it was rejected at a board meeting, adding that the initial 3 million euro payment had been made without the opera house's approval.
But La Scala did not rule out doing future business with the Kingdom, and said it still planned to tour the country in 2020.
Saudi Arabia has been under intense international scrutiny since journalist Jamal Khashoggi was killed at its consulate in Istanbul last year. The CIA concluded Khashoggi's death was personally ordered by its Crown Prince Mohammad Bin Salman, according to sources close to the matter. Riyadh denies involvement, claiming it was a rogue operation.
"On 4 March (Saudi culture secretary) Prince Badr al Saud made a payment that did not comply with the procedures set forth in the Statute for the competition to the Foundation," a spokesperson for La Scala said in a statement. "The council approved the return of the sum."
"As a result, there is no path available today for joining the Board of Directors," they added. "The Board of Directors remains open to considering new collaborative projects to be formulated in accordance with the procedures."
La Scala is regarded as one of the greatest opera houses in the world, but senior figures at the theater -- including Milan Mayor Giuseppe Sala, who is also the head of La Scala's board -- faced heavy criticism over the deal when it was revealed.
"The idea that the Saudis would enter the board of directors of La Scala would be a slap to human rights in Milan," Italian politician Antonio Panzeri said on Twitter after the plan was revealed. "We cannot allow one of the most prestigious symbols in Milan to cooperate with those who in their country trample rights and freedoms."
Forza Italia lawmaker Maurizio Gasparri posted: "The Board of Directors cannot be opened to representatives of Saudi Arabia." He added that Italy's culture minister Alberto Bonisoli, who met with his Saudi counterpart in December and did not intervene in La Scala's deal, "cannot continue to put his head in the sand."
Italy's hardline Interior Minister Matteo Salvini had also opposed the decision, and fellow League politician Alessandro Morelli welcomed the reversal as a "Victory" on Twitter. "Sala announces the return of Saudi money. He asked for silence because he had his hands in the jam!"
The scandal had led to questions over whether Pereira would keep his job, but Sala confirmed the artistic director would not be fired.
While critics of the deal welcomed the decision to return the payment, Sala also told reporters the opera house was "not closing doors to Saudi Arabia."
"La Scala always speaks with everyone. If someone believes that we shouldn't speak with the Saudis, this is not what La Scala believes," he added.
CNN has approached Saudi Arabia's government for comment.