Nick Clegg defended his party's decision to hold on to the £2.4m donated by the millionaire fraudster Michael Brown, who is back in Europe and facing extradition to the UK.
Mr Brown was flown from the Dominican Republic to Madrid at the weekend and is now awaiting return to the UK under a European Arrest Warrant.
The fraudster achieved national fame when he gave £2.4m to the Liberal Democrats to see them through the 2005 general election. No other Liberal Democrat backer has been able to come near to matching his munificence, and yesterday Mr Clegg dismissed a suggestion that the Liberal Democrats are morally obliged to give the money back.
He told BBC's Sunday Politics programme: "This was something that happened before I was even an MP, let alone leader of the Liberal Democrats. What I have been told is that the Electoral Commission, in 2009, looked at this exhaustively and they categorically concluded that the money was received in good faith and all the controls and checks that should have been made were reasonably made by the Liberal Democrats at that time." He added that he was "very pleased" that Brown is returning to face justice.
At his trial in 2008, Brown was convicted of posing as an investor to persuade people to part with money which he used to fund an extravagant lifestyle, including a Mayfair flat, a £2.5m private jet, and a personalised Range Rover.
Among his victims was the Manchester United boss, Martin Edwards, who gave him around £7m after being assured that the money would be invested and bring substantial returns.
After his conviction at Southwark Crown Court, Brown fled to the Caribbean, and was sentenced in his absence to seven years in prison.
In January, he was arrested by local police in the town of Punta Cana, in the Dominican Republic, on a separate fraud charge.
A City of London Police spokesman said: "Michael Brown was deported from the Dominican Republic and landed in Madrid on Saturday morning, accompanied by officers from the Dominican Republic.
"City of London Police will be taking the appropriate steps to bring him back to the UK, via a European Arrest Warrant." Detective Superintendent Bob Wishart said: "The City of London Police is pleased that after four years evading British justice, Mr Brown is a step closer to returning to the UK to start his prison sentence."
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