Liberal Democrat donor 'was in arms deal probe'

Watch the investigation in full

By Richard Watson
BBC Newsnight

One of the biggest donors to the Liberal Democrats has been caught up in a long running Indian police investigation into illegal arms deals, a BBC Newsnight investigation has found.

The donor, Sudhir Choudhrie, strongly denies what he calls the "unsubstantiated allegations" made against him in the Indian police documents.

Mr Choudhrie is an Indian businessman who now lives in London. He and his family's companies have given more than £750,000 to the Liberal Democrats over the past six years.

An Indian Police report, obtained by the programme, alleges he was paid around $150,000 commission as part of an arms deal with the Israeli company Soltam, and that he was part of a criminal conspiracy with officials of the Indian army.

Gun deal allegations

The allegations are set out in an Indian court document known as a First Information Report. This is a summary of alleged facts and suspicions and was filed in 2007 by Delhi police's Central Bureau of Investigation.

It concerns a contract to upgrade artillery guns from 130mm to 155mm calibre. It alleges that "Sudhir Choudhrie... received US$156,940 from Soltam after signing the contract on 7th March 2000 as commission".

The allegations you mention are wholly denied by Mr Choudhrie and are unsubstantiated Liberal Democrats

The Delhi police also allege "unknown officials of the Indian army and the MoD abused their official position and entered into a criminal conspiracy with RK Jain of the Samta Party, Sudhir Chaudhrie (sic)... and Soltam, Israel and caused undue pecuniary advantage to Soltam and themselves".

Another First Information Report filed at court in Delhi in 2006 alleges Mr Choudhrie and some of his former companies received "a number of suspected remittances to the tune of millions of dollars" from another Israeli arms firm called Israel Aircraft Industries.

This was in connection with a deal to supply seven "Barak" missile systems and 200 missiles to the Indian Navy.

Both Israeli companies mentioned in the documents deny any wrongdoing.

M Choudhrie is believed to have left India for London in 2002. He now lives at one of the most desirable addresses in Chelsea.

In July 2007 the Indian Central Bureau of Investigation formally asked Britain for help in their investigation into the Israeli "Barak" missile deal.

Newsnight obtained a copy of the legal letter they wrote and it is clear that their investigations were ongoing at that time.

British taxpayer

Sudhir Choudhrie is a London-based businessman

Mr Choudhrie declined to be interviewed, but a spokesman told Newsnight: "The First Information Reports to which you refer date back to 2006 and 2007 and Mr Choudhrie strongly denies the unsubstantiated allegations made in them.

"They have not resulted in any charges being brought against him despite extensive investigations by the relevant authorities."

Mr Choudhrie's spokesman later suggested to Newsnight that the Soltam artillery case might have been closed. The programme contacted the Delhi police but they did not confirm this. An Indian government source said the case was still open.

Mr Choudhrie is no longer a UK company director but he is a British taxpayer, his spokesman said. His sons run a complex network of companies in healthcare, aviation and hotels from an office in Westminster.

The Liberal Democrats, whose conference starts tomorrow, have pledged support for sweeping reforms in the way political parties are funded.

Only last week Deputy Prime Minister Nick Clegg said: "The association between money and politics has tested people's trust in politics to destruction."

But funding is tight and the party still relies on big single donors.

The Liberal Democrats issued a statement saying: "As a party we have formal procedures to assess all donors and potential donors... Mr Choudhrie has completed this approval process.

"The allegations you mention are wholly denied by Mr Choudhrie and are unsubstantiated."

On the issue of his donations to the Liberal Democrats, Mr Choudhrie's spokesman said: "Mr Choudhrie, as a taxpayer in the United Kingdom, makes donations, which are duly registered, because he supports the aims and policies of the party."