The prestigious La Scala opera house in Milan has decided to return around €3m (£2.6m) to Saudi Arabia following a backlash against a plan that would have seen the Gulf state’s culture minister become a board member.

The plan, orchestrated by Alexander Pereira, La Scala’s chief executive and artistic director, was unanimously rejected by the board after it drew widespread criticism from human rights groups and Italian politicians.

The kingdom has been under increased scrutiny internationally since the killing of Saudi journalist Jamal Khashoggi inside its consulate in Istanbul last October and the plight of a Saudi woman who turned to social media to help escape alleged family abuse.

“We’ll give the Saudis back their money,” Giuseppe Sala, La Scala’s president and mayor of Milan, said during a press conference on Monday, although he refused to rule out future talks with the kingdom. “We’ll go back to scratch … we’ll see if there are any other opportunities for collaboration,” he said.

It only emerged on Sunday that €3m had already been deposited in an escrow account. Pereira, from Austria, had been endeavouring to strike a deal that would have seen Saudi Arabia invest €15m into the opera house over the next five years. The deal would have also meant Saudi Arabia’s culture minister, Badr bin Abdullah bin Mohammed bin Farhan al-Saud, becoming a member of the board.

Sala, a politician with the centre-left Democratic party, said Pereira had acted in “good faith” in terms of searching for financial partners, but in this instance, had been naive.

“I admire his activism … but he’s been in Italy for a few years now and should know how things work,” he added.

Earlier this month, Pereira, who is credited with bringing in more sponsors and creating a healthier balance sheet since his appointment in 2014, claimed that Sala and the Italian cultural minister, Alberto Bonisoli, had been aware of the Saudi funding plan.

Pereira’s mandate is due to end in February 2020 and he was reportedly hoping to secure a new term. Sala said the board did not discuss the prospect of Pereira leaving the role and that he would remain until the end of the mandate. Attilio Fontana, the president of the Lombardy region and politician with the far-right League, the party in government with the Five Star Movement, had called for Pereira to be sacked.

Matteo Salvini, deputy prime minister and leader of the League, said ahead of the board meeting that La Scala is of national “pride in the world” and that care needed to be taken when considering accepting funds from “countries that have created many problems in the past.”

“You can take money but not from everyone, business is business but there’s a limit, whether it’s China or Saudi Arabia,” he said.

Pereira had also been working on bringing a concert version of Giuseppe Verdi’s opera, La Traviata, to the Saudi Arabian capital of Riyadh.