Wife of Lebanese businessman involved in 1995 military equipment deal donated £30,000 to Conservative Party

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The Conservatives received a £300,000 gift from the wife of a billionaire Lebanese businessman involved in deal for the sale of military equipment with the former Tory defence minister, Jonathan Aitken.

Details of the donation emerged as David Cameron neared the end of a tour of the Gulf in which he was forced to defend weapons sales to authoritarian regimes in the Middle East.

The money was handed over by May Makhzoumi, whose Lebanese husband, Fouad, is a businessman, politician and philanthropist. It was among the largest gifts to the party, which received more than £3m in the last three months of 2010, new figures from the Electoral Commission disclosed yesterday.

Mr Makhzoumi forged business links in the 1980s with the Conservative MP Jonathan Aitken, who went on to become Defence Minister. In 1992 the two men negotiated an Anglo-Lebanese arms deal, including the sale of 3,000 second-hand rifles. Mr Aitken quit the Government in 1995 to fight a series of allegations about his business interests – including the accusation that he failed to declare his ties to Mr Makhzoumi – and was jailed for perjury four years later.

A Tory spokeswoman said: "Mrs Makhzoumi donated to the party in a personal capacity as a Conservative supporter as she has done in the past. All donations accepted by the Conservative Party are fully permissible and declared to the Electoral Commission."

But the Labour MP Tom Watson said: "The more that is revealed about the Conservative Party's mysterious donors, the more it becomes clear that David Cameron and his mates are the same old Tories. There are uncomfortable questions for David Cameron to answer, echoing the dark days of 1990s' Tory sleaze."

The close relationship between the new Government and major arms and aerospace companies such as BAE Systems, Qinetiq and Thales was highlighted this week during Mr Cameron's tour of the Middle East. The Prime Minister has been accompanied on the trip by representatives of eight defence firms on his four-day visit to the region.

At the same time, Defence Minister Gerald Howarth and 50 British companies were flying the flag at an arms export show in the United Arab Emirates, which was attended by Libyan generals.

Yesterday it emerged that Britain had approved the export of sniper rifles to Libya.

An export licence was granted to let "a small quantity" of the long-range weapons be shipped out in November for exhibition or testing. Four licences were approved for the rifles, along with assault rifles and semi-automatic handguns, with cleaning kits. They were signed off by officials in the Department for Business but it is not known whether ministers were involved in the decision.

The Electoral Commission figures disclosed that the Conservatives received £3.26m in the final quarter of 2010, against Labour's £2.55m and the Liberal Democrats' £464,000. Other large donations to the Tories included £335,000 from Lord Glendonbrook, the former boss of the British Midland airline, £100,850 from the hedge fund manager Chris Rokos and £83,000 from the City financier Michael Farmer.

Nearly 90 per cent of Labour's donation came from the unions, more than double the proportion in the same quarter of 2009.

Earlier this month, it emerged that Conservatives are now reliant on the financial sector for more than half its annual income. Since David Cameron became leader in December 2005, the amount of money the City has given has risen fourfold, to £11.4m a year. Over those five years, the City has donated more than £42m to the party. The proportion of City funding rose from 25 per cent of its total donations in 2005 to nearly 51 per cent in 2010.

Regional round-up: What's happening elsewhere

Saudi Arabia

King Abdullah returned home yesterday after a three-month medical absence and unveiled benefits for Saudis worth about $37bn, in an apparent bid to insulate the nation from the anti-government protests that have gripped the region. The 87-year-old king had been convalescing in Morocco after back surgery in New York.

Before King Abdullah arrived, state media announced an action plan including pay rises to offset inflation, unemployment benefits and affordable family housing. Saudi Arabia has so far escaped popular protests against poverty, corruption and oppression that have raged across the Arab world, but ominous signs are looming for the leaders of the world's top oil exporter.

Hundreds of people have backed a Facebook call for a Saudi "Day of Rage" on 11 March to demand an elected ruler, greater freedom for women and the release of political prisoners. Reuters

Bahrain

Bahrain yesterday released 308 prisoners including 23 Shia Muslims accused of trying to topple the island's Sunni monarchy, as the authorities try to quell protests that threaten the ruling royal dynasty. The prisoner release was a further concession to the mainly Shia protesters who took to the streets last week to demand a constitutional monarchy and an elected government. Thousands of people remain on the streets of the capital Manama.

The prisoner release comes ahead of the expected return to Bahrain of Hassan Mushaimaa, leader of the hardline Shia Haq party, one of two people tried in absentia for his part in the alleged coup plot.

King Hamad bin Isa al-Khalifa, meanwhile, was in Riyadh to welcome home Saudi Arabia's King Abdullah, a sign of close ties between the Bahraini royals and their Saudi counterparts. Reuters

Yemen

Thousands streamed into a square in Yemen's capital Sana'a yesterday, trying to strengthen the hold of anti-government protesters after club-wielding backers of President Ali Abdullah Saleh tried to drive them out.

One person was killed and at least 12 injured in the clashes on Tuesday near Sana'a University, medical staff said. A human rights group gave a higher toll, saying two people were killed and 18 hurt. Seven legislators who belong to Mr Saleh's ruling party have also resigned to form their own independent bloc. The resignations raise to nine the number of legislators who have left Saleh's Congress Party since protests began.

The US-backed Mr Saleh, in power for 32 years, has said he will step down after national elections are held in 2013. But a widening protest movement is demanding that he leave office now. AP