Sir Menzies Campbell says that the party has no intention of returning a £2.4 million gift from Michael Brown and has already spent the money, in its general election campaign.

His defiant attitude follows disclosures in The Times that Mr Brown, 39, was arrested three times in Florida, accused of bouncing 12 cheques for a total of $7,000 (£3,925).

The Lib Dems took the money from a newly formed British-registered company wholly owned by Mr Brown’s parent business in the Swiss tax haven of Zug. Mr Brown, a Scotsman living in Majorca, is not on Britain’s electoral roll. The party used his aircraft and senior figures, including Charles Kennedy, made £30,000 worth of flights during the campaign. It won a record 62 seats using its biggest-ever donation.

The Electoral Commission may yet call in prosecutors and force the Lib Dems to surrender the money for failing to make sufficient checks that the business was trading at the time that it made the donation.

Sir Menzies, who took a high moral tone in a 2002 Labour funding controversy, is grilled about the donation on Channel 4’s Morgan and Platell, to be broadcast tonight. Piers Morgan, co-presenter of the show, asks: “Given what you now know, would you take more money from this guy?”

Sir Menzies replies: “Well, now everything is out in the open, then the answer is probably yes. Why not?”

Amanda Platell asks whether that means the party will keep the money. Sir Menzies: “As far as I know, there is no intention to give the money back.”

Yet Sir Menzies took a hard line in 2002 when a British diplomat passed a letter from Tony Blair to the Romanian Government supporting a bid for the Romanian national steel company by Lakshmi Mittal, a businessman who had given £125,000 to Labour. Mr Mittal denies that the letter and donation were linked.Sir Menzies said then that British diplomats owed allegiance to the whole country, not any one company. “Where questions of party donations arise, the issue is even more sensitive, ” he said.

In tonight’s programme, Sir Menzies says: “We were given the money for the election campaign and it was spent in the election campaign. I’m happy about the fact that he made us a donation which we accepted in good faith and which is regarded as being legitimate.”

The controversy over the gift has renewed internal concerns about the hands-off way in which Mr Kennedy runs his party. When Mohamed Al Fayed, the owner of Harrods, offered the Lib Dems £1 million for the 1997 election campaign, Paddy Ashdown, then the party leader, turned it down. A senior party source said that Mr Ashdown and Lord Holme of Cheltenham opposed taking the money but Lord Razzall, then the treasurer, disagreed, as did Lord Carlile of Berriew, then an MP, who was close to Mr Fayed.

Mr Kennedy stays aloof from day-to-day fundraising. The existence and size of Mr Brown’s donation seem to have been known only to a small circle inside the Lib Dem machine.

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