Lib Dems mired in row after party donor blacklisted by fraud squad

London: The Liberal Democrats were mired in a fresh donor row when it emerged that one of the party’s biggest benefactors is an international arms dealer listed on the Indian fraud squad’s blacklist of “undesirables”.

Sudhir Choudhrie, who has donated more than £500,000 (Dh3 million) to the Lib Dems via his family company since 2010, was named by India’s Central Bureau of Investigation as one of 23 “unscrupulous persons” in 2012, the Guardian can reveal.

However, the Lib Dems accepted donations from Choudhrie as recently as November 2013, when his CC Alpha Group family company donated £30,000. His family and companies have donated more than £500,000 since 2010.

The activities of Choudhrie were thrown into the spotlight earlier this week when he and his son Bhanu were arrested and questioned for several hours by the Serious Fraud Office in connection with an investigation into allegations of multimillion pound bribery and corruption at Rolls-Royce, which supplies engines for military and civilian jets.

The revelation about the Indian businessman comes as a growing network of links between the Choudhrie family and the Lib Dems emerged.

Nick Clegg and his wife Miriam hosted an event in 2011 for Choudhrie’s charity Path To Success in Lancaster House, London, an official government residence.

Justice Minister Simon Hughes received a £60,000 donation in November 2013 after a request for the cash.

Bhanu’s wife, Simrin Choudhrie, says on her LinkedIn page that she worked as a campaign assistant in Hughes’s office on his 2004 mayoral campaign and “later assisted Simon with the bid to host the Olympics in 2012”.

Danny Alexander, the chief secretary to the Treasury, used an official government trip to India to make a visit to the home of Choudhrie last year.

Lib Dem sources said the party had no knowledge that Choudhrie was on the CBI list of people “suspected to be resorting to corrupt or irregular practices in their dealings with official agencies”.

The sources said the party had done full due diligence on the Choudhries along with other donors before the last election in 2010. At this point, they were given documentation — a chit — showing that Sudhir Choudhrie had been cleared of all allegations against him in India.

The sources said the party only found out about Choudhrie and his son’s arrest on Wednesday from newspaper reports.

It is understood Clegg has met Choudhrie many times as he has been a major donor for a decade, but they could not be described as personal friends.

“The Choudhrie family are long-term party supporters and donors. Sudhir Choudrie has met Nick Clegg and other senior party figures on a number of occasions,” one aide said.

The Choudhries’ spokesman confirmed that the list, seen by the Guardian, was genuine but said there was “no reason why Mr Choudhrie is still on such a list”.

He said Choudhrie was probably placed on the list while the CBI was conducting its inquiries, and could have been removed from it now that both investigations have been “formally closed”. The Indian CBI did not respond to requests for comment.

Of the Choudhries’ arrests in connection with the Rolls Royce bribery scandal, the spokesman said: “The allegations made against Bhanu and Sudhir Choudhrie are strongly denied. Full co-operation is being given to the authorities.”

The Indian-born businessman, who lives in a £5 million apartment in Chelsea, was placed on the Indian list of “unscrupulous persons” following two formal investigations of alleged bribery in Choudhrie’s work brokering arms deals.

Choudhrie was investigated, and later cleared of allegations he accepted a $150,000 (Dh550,904) commission as part of an arms deal with the Israeli company Soltam in 2000.

The Indian CBI also investigated claims that Choudhrie and his companies received “a number of suspected remittances to the tune of millions of dollars” from arms firm Israel Aircraft Industries over a deal to supply seven Barak missile systems and 200 missiles to the Indian navy. The CBI closed its seven-year investigation into the allegations on December 24, 2013, due to a lack of evidence.

The “Undesirable Contactmen” list, which was prepared by the CBI and distributed to all Indian government departments, states politicians and officials should be “careful and cautious in dealings with unscrupulous contact men whose names are on these lists, to avoid associating with them socially and accepting hospitality and gifts from them.

“Even official dealings with the UCM should be discouraged. Nefarious activities of these individuals should not be allowed and they should not be allowed sponsorship of Govt projects.”