Britain's former High Commissioner for Cyprus, David Dain, suggested that the fugitive businessman Asil Nadir should be forcibly repatriated from his safe haven in the Turkish north, according to its President, Rauf Denktash.

Mr Dain is alleged to have put such pressure on Mr Denktash that the Turkish Cypriot leader considered it amounted to a kidnap demand. He said yesterday: "He must have known I couldn't just handcuff the man and deliver him without authority to a base. That was what I understood he was asking me to do."

Lord Mackay, the then Lord Chancellor, was visiting Cyprus for a conference and was present during a conversation between the two men. He was reportedly so shocked that he said: "I am a man of the law. I should not be hearing such things."

Mr Dain, 56, a senior diplomat who has headed both the Western European and South Asian departments of the Foreign Office, is about to become High Commissioner for Pakistan.

His proposition allegedly came in May 1993 when Asil Nadir, head of the crashed pounds 1.3bn Polly Peck empire, began his exile in Northern Cyprus. Britain does not officially recognise the Turkish-speaking state and has no extradition treaty with it.

The plan was for the Northern Cyprus authorities to arrest Nadir and take him to one of the two British bases on the island from where he could be flown back to face pounds 146m theft charges. It was allegedly discussed twice, the second time in the presence of Lord Mackay, at a reception held in his honour. An account of this meeting features in the ITV programme, The Cook Report, to be broadcast Tuesday evening.

Mr Denktash recalled: "After Asil Nadir arrived, the High Commissioner came to me as a very agitated, very angry man and he said you have to hand him over to us or else. Then he said, `I am warning you, if you do not hand him over, somehow take him to a British base,the country will suffer.' I was appalled and I told him so." A few days later he repeated the request in front of Lord Mackay.

A Foreign Office spokesman said:" We have made a number of requests that Asil Nadir be handed over to the UK authorities in the normal way." They had seen a record of the meeting which confirmed Mr Dain's request that Nadir be returned to face charges, but "it does not suggest that he made any irregular request".