'Insane' tycoon's £8.3m gift to Tories is overturned in court

Branslav Kostic was a multimillionaire Serbian businessman who rated Margaret Thatcher the "greatest leader of the free world in history". So it was unsurprising that when he died in 2005 he left the Conservative Party £8.3m. He said he believed that Baroness Thatcher would save the world from the "satanic monsters and freaks".

However, a High Court judge ruled yesterday that Mr Kostic's passion for Lady Thatcher was so irrational that his will should be overturned. His son, Zoran, 50, told the court his father was "deluded and insane".

The donation had seemed like the answer to a prayer for the Conservative high command. In the aftermath of the 2005 general election, the Tories were struggling to make ends meet and the party was deeply in the red.

Mr Justice Henderson ruled that Mr Kostic, who was born in Belgrade, would not have left the money to the Tories if he had been "of sound mind". He said the decision to leave the estate to the party was "in part the product of the state of his mind".

Expressing relief at the judgment, Zoran said: "In 1984 my father became mentally ill. He was diagnosed as suffering from paranoia. He was tormented by delusions that I and other members of my family were part of a worldwide conspiracy of terrorists and criminals who were trying to kill him.

"My father refused medical treatment, because he feared that doctors would harm him. In the grip of his delusions, my father turned to the Conservative Party for help to fight the conspiracy that he imagined."

He added: "He gave them donations and eventually made two wills leaving them everything that he owned."

The Conservative Party strongly contested the case, arguing that Mr Kostic was far from delusional. There were rational reasons the party argued, why Mr Kostic, who made his fortune in the pharmaceutical industry and became a British national in 1975, left his son out of his will when it was rewritten in the late 1980s.

Lawyers for the Conservative Party Association told Mr Justice Henderson that Mr Kostic and his son had become estranged.

The party's barrister, Andrew Simmonds QC, said there was also Mr Kostic's "great and long-standing affection for the Conservative Party and his admiration for Mrs Thatcher".

Clare Montgomery QC, representing Mr Kostic's son, said the Tories "only benefited because the testator became mentally ill".

Mr Simmonds said that while it was accepted that Mr Kostic had a delusional disorder, it was not accepted that this made him incapable of making a will.

Mr Kostic's son said he had worked part-time for his father in 1984 and 1985 at his Transtrade business in London, where the two shared a partitioned office.

"During the last months [at his father's office] my father stopped speaking to me completely and would ignore me when he came in the morning," he told the court. He said he last saw his father in 1985 and could not contact him after because he did not know where he was. He said at that time his father was "living like a nomad".

Zoran said before 1984 his father had been "perfectly normal" but he than began behaving erratically. He said: "He also began to have paranoid delusions about the female members of his family at this time and slandered my aunt and grandmother, who were both living in Zurich.

"My father was paranoid that the female members of my family were trying to poison him."

The Conservative Party played down judge's decision, claiming the money had never gone into the party's accounts.

"If the judgment had gone the other way, it would have been a bonus. But we never counted on it," a spokesperson said.

"We still have a £10m election fighting fund. We have liabilities of about £9m but that is a huge improvement on the previous year."