UK warns of 'Tamil Tiger fraud'

The British government has warned of widespread fraud scams across the country, which it says could be funding terrorist acts in Sri Lanka.

Foreign office minister Kim Howells told MPs intelligence reports indicated that fraudulently obtained money might be making its way to Tamil rebels.

Mr Howells also ruled out lifting the ban on the Tamil Tigers.

Earlier on Wednesday, parliament formed an all-party group to examine how to resolve ethnic conflict in Sri Lanka.

The parliamentary group wants to arrange a summit in London with the Sri Lankan government, the Tamil Tigers and Norwegian peace mediators.

It emerged last month that thousands of UK motorists who use a bank card to buy petrol were thought to have lost millions of pounds in an international criminal operation.

The Tamil Tigers said allegations that they were involved were no more than an example of the "spin doctoring of the Sri Lankan government".