Millionaire Lib-Dem donor arrested in fraud inquiry

A financier who gave a record £2.4m donation to the Liberal Democrats has been arrested over a string of charges relating to his business dealings.

Michael Brown, who became the largest backer in Liberal Democrat history, was arrested on Wednesday near his home in Esporles, Majorca, after being under surveillance for several months, police said.

The Crown Prosecution Service said 53 offences were listed on a European arrest warrant, including forgery, perjury, perverting the course of justice and obtaining a passport by deception. He appeared in court in Madrid yesterday and agreed to return to Britain to face charges.

The CPS issued the warrant on behalf of solicitors for the banking giant HSBC, which is taking a private prosecution against the businessman. Last month, HSBC went to the High Court to ask for Mr Brown's assets to be frozen in an action related to his business, 5th Avenue Partners.

Mr Brown withdrew financial support from the Lib Dems earlier this month, branding the party "muppets" and saying he was "outraged" by the ousting of the former leader Charles Kennedy.

The Electoral Commission launched an investigation last year over Mr Brown's donation after it emerged that Mr Brown was based in Switzerland and is not registered to vote in the UK. The commission found it was "permissible" for the party to have accepted the money from 5th Avenue, but said it should have made better checks to ensure it was not breaking rules that bar donations from foreign companies with no activities in the UK.

A Liberal Democrat spokesman said: "We are not aware that this has any connection whatsoever with the Liberal Democrats.

"Any further action is a matter for the police and the relevant authorities."