Liberal Democrat donor Sudir Choudhrie accused of brokering Israeli arms deal
London-based Indian businessman denies claims of massive illegal kickbacks
- The Observer, Sunday 19 April 2009
- Article history
One of the Liberal Democrats' most generous donors has been accused of accepting tens of millions of pounds in kickbacks from an arms deal between an Israeli company and the Indian government.
Sudhir Choudhrie, who has personally donated £95,000 to the party and whose relatives' companies have donated a further £475,000, was named as a key arms broker in foreign reports.
Nick Clegg outside the Houses of Parliament. Photograph: Luke MacGregor/Reuters
The allegations have been rejected by Choudhrie, an Indian citizen based in Chelsea, west London. A source close to the family denies that he has ever profited from the arms industry.
This is the second time that Choudhrie, 59, has been accused of being paid an illegal commission from a major arms deal in India. The allegations are said to be politically motivated, and to coincide with the country's general election.
The timing of the allegations is embarrassing for Nick Clegg, the party leader, who called for a curb of the arms trade and a boycott of sales of arms to Israel earlier this year. The claims that one of their donors is an arms broker will concern senior Liberal Democrats, who are still smarting from the exposure of their biggest ever donor, Michael Brown, as a convicted serial fraudster in 2006.
The party may yet be forced by the Electoral Commission to pay back £2.4m it received from Brown's non-trading company, 5th Avenue Partners, and is awaiting the outcome of an inquiry.
The Mumbai-based newspaper DNA has alleged that Choudhrie was paid a share of £80.5m in illegal business charges from the sale of medium-range surface-to-air missiles by an Israeli company to the Indian government.
Payments were supposedly part of a £1.3bn deal struck in January between the Indian defence ministry and the arms company Israel Aerospace Industries (IAI), DNA claimed. The use of middle men to facilitate an arms deal is banned under Indian law. Choudhrie was also named as a key broker between the Israel defence industry and India by the Israeli newspaper Haaretz
Indian police are investigating the deal, according to media reports. The businessman was previously implicated in a police inquiry into kickbacks from another Indian arms deal with the same Israeli company, in 2006, but Choudhrie was not charged with any offence.
An Indian Central Bureau of Investigation inquiry revealed that Choudhrie and his companies "received a number of suspected remittances to the tune of millions of dollars from IAI Israel during the year 1998 to 2001". It suggested that IAI had a close relationship with two of Choudhrie's companies - Magnum International Trading Co and Eureka Sales Corporation.
Sources close to the family believe that Choudhrie is the victim of a campaign to discredit him. "These allegations, as well as the ones from earlier, are completely and utterly unfounded. He has never been involved in arms deals of any sort," said a source.
"He did have a role in Magnum but the company was involved in the export of tea and car parts, while Eureka was involved in building ships in Singapore. The confusion may have arisen because an Israeli company that Magnum once had business links with later became an arms company," he added.
Choudhrie is believed to have moved to Britain in 2002 with his wife and lives in a £4m apartment in Chelsea. He first donated £50,000 to the Lib Dems in August 2006 and has followed this up with payments of £25,000 and £20,000.
Two companies controlled by Choudhrie's son Bhanu and his nephew Dhruv - Alpha Healthcare and C&C Business Solutions - have donated a total of £475,000 to the Lib Dems.
Choudhrie and his son are known to be non domiciled for tax purposes and base many of their business interests in tax havens, where businesses do not have to declare their accounts publicly.
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