Businessman who gave £2m to Lib Dems is jailed

A businessman who donated more than £2m to the Liberal Democrat party has been sentenced to two years' imprisonment for what a judge described as a "deliberate" and "well thought-through" fraud.

Michael Brown, 40, pleaded guilty to one charge of perjury and another of passport deception. His arrest in Majorca earlier this year followed concerns by his former bankers, HSBC, about the management of accounts opened in the name of his Swiss-based bonds trading company.

The Glaswegian bonds trader, whose £2.4m donation last year helped the Liberal Democrats to bankroll their general election campaign, fled Britain after HSBC began investigating his business affairs. He had falsely claimed in an affidavit in the investigation that $10m paid into the accounts had been generated by dealing in bonds.

As part of the investigation, HSBC successfully applied for a number of orders, including one freezing his assets worldwide. He also had to surrender his passport while the investigation continued.

At this point, Southwark Crown Court heard yesterday, he decided to flee to Spain, where he and his wife have a villa in the town of Esporlas, on the island's west coast. In order to do do, Brown lied to the authorities to get a new passport, claiming that his old one had disintegrated in a washing machine.

In May this year, dozens of Spanish and British detectives descended on the villa and detained him as he prepared to celebrate his 40th birthday.

Judge Geoffrey Rivlin QC said: "I make it clear I'm dealing with you today only for the two offences to which you have pleaded guilty. I must not and I do not pay any regard at all to the initial alleged fraud of which you have been suspected and which is currently under investigation. Neither do I pay any regard to the well-publicised substantial contribution you have made to the political party."

The judge said that, had his dishonest affidavit in the HSBC investigation been accepted, it "could well have had a very real impact on the bank and therefore on the court's attitude to your situation".

By fleeing abroad he had managed to evade justice for some time and put many people to "considerable effort and some inconvenience" to extradite him."You have now admitted this statement was a deliberate lie. In truth there were no trades and the so-called completed trade tickets provided by you were false."

Just before he was led to the cells, the judge added that Brown would have to pay £80,000 towards the HSBC prosecution costs.

The defendant's barrister, Nicholas Purnell QC, told the court that his client's dishonesty was carried out against the background of a "nightmare" of anxiety over his reputation and plans to adopt a child. "He and his wife, married for 13 years, had been unable to have children of their own but were desperate to have a family," he said. Brown, he added, was "utterly remorseful" about what he had done.

The Liberal Democrats sought last night to distance themselves from their disgraced donor, insisting that they had acted "properly" in all of their dealings with Michael Brown.

A spokesman said there was "no connection" between the party and the financier's offences. Party officials insisted they were under no obligation to repay the donation, despite reported threats of legal action from Brown's former business associates.