The meeting took place in Mr Nadir's London home at 80 Eaton Square in December last year, while he was awaiting trial on charges of theft and false accounting involving more than pounds 30m.
In May Nadir jumped his pounds 3.5m bail and fled to Northern Cyprus. Mr Malone told reporters that he had never had any dealings with Nadir. That he apparently did will cause renewed embarrassment to the Tories, who have tried to distance themselves from Nadir, a party donor.
Mr Malone's secretary fixed the time of the meeting after an earlier one had to be postponed because of parliamentary commitments. Sources say that the meeting lasted several hours. Mr Malone sipped champagne throughout.
Christopher Morgan, a partner in Morgan Rogerson, the PR company which acted for Nadir, was also there. Speaking from his home in Provence yesterday he refused to say whether he had invited Mr Malone. Two of Nadir's assistants were also present.
Mr Malone, MP for Winchester, was a parliamentary consultant for Morgan Rogerson until May 31 this year - three weeks after Nadir's flight. This relationship was recorded in the Register of Members' Interests. In June, Mr Malone told the Independent: 'I was not aware at any stage that the firm was acting for him.' Asked if he had met Nadir, he said: 'Frankly I cannot recollect.'
Mr Malone is on holiday in Europe at present. A Conservative Central Office statement issued yesterday denied that he had lied. It said: 'Mr Malone stated that he had never met Mr Nadir with a view to making representations on his behalf. That is true. Mr Malone was not asked whether he had ever met Mr Nadir at all. In fact, he had met Mr Nadir once.'
When asked about the nature of his conversation, Nadir said from Northern Cyprus last week that: 'I discussed my predicament and all the injustice that was being practised on me. He appeared to be very helpful and (said) that he was going to speak to certain people. To say that he is not involved in the matter is incorrect.' No mention had been made of a possible approach by Mr Malone to the Attorney-General.
The Attorney has disclosed that seven MPs wrote to his office raising issues connected with Nadir's case but only three have been identified: Michael Mates, who resigned as Northern Ireland minister over the affair, Michael Heseltine, President of the Board of Trade, and Peter Brooke, the Heritage Secretary. Mr Malone has denied writing to the Attorney about Nadir.
The Central Office statement said: 'At the meeting, he (Mr Malone) was not asked to make representations on Mr Nadir's behalf and did not offer to do so.'