Labour demand Conservatives return donations from Asil Nadir

Nadir's office in Mayfair earned him the nickname of the Sultan of Berkeley Square (Getty Images)

Labour tonight demanded that the Conservatives honoured a pledge to return hundreds of thousands of pounds of donations from the company owned by the fraudster Asil Nadir, following his conviction for theft.

Nadir, who was found guilty on Wednesday of 10 charges of theft from the former conglomerate totalling £29m, was one of the Conservative party's biggest benefactors under Margaret Thatcher, when party donations did not have to be publicly declared.

Accountants investigating Polly Peck found that a subsidiary had made a series of donations to the Conservative party between 1985 and 1990, seemingly without the knowledge of the company's board or shareholders.

Touche Ross, the administrators of Polly Peck, wrote a letter to the party's central office claiming that £365,000 came from money defrauded from the Polly Peck empire.

"It is the contention of the administrator that Mr Nadir is liable to repay the sums concerned as a result of his fraud and/or breach of fiduciary duty and/or malfeasance as a director,” the letter concluded.

"I would urge you to return the donations to Polly Peck so that the creditors can at least obtain some small measure of compensation from this unfortunate affair."

An investigation by parliament in 1993 led to the then Conservative Chairman Norman Fowler (now Lord Fowler) telling the home affairs select committee that the money would be returned should it emerge it had been stolen from shareholders.

"If it is proved that that money was stolen, then clearly that money will be returned. We have absolutely no intention of keeping money of that kind,” he said. His assurance was repeated by the then Prime Minister John Major in 1993.

But today the party seemed less than keen to honour the commitment - saying that it would have to be "proved" that the specific £365,000 in donation had been stolen.

In a statement they said: "We have seen no evidence that money donated to the Conservative Party from the Polly Peck group was stolen. But we have consistently said, as Norman Fowler, then Party Chairman, did in 1993, ”obviously if it is proved that that money was stolen it will be returned'."

However they seemed unclear as to how this could be done to their satisfaction.

Labour called for the Tories to repay the money immediately. In a letter to the Conservative Party Chairman Baroness Warsi the Labour MP Simon Danczuk said it was imperative that she honoured her predecessor's pledge.

"Before the General Election, David Cameron said that our political system "is looking ever more ragged and broken” and that we must act to restore "trust and confidence in politics"," he wrote.

"I hope that you will deliver on both the spirit of the Prime Minister's words and the clear commitment made by your predecessor and the former Prime Minister by repaying these donation."