The Liberal Democrats’ biggest and most controversial political donor has been arrested in Spain on 53 charges of forgery and dishonesty, it emerged today.

Michael Brown, a businessman who gave £2.4 million to the party before the last election, was detained by Spanish police in Majorca on Wednesday, the Foreign and Commonwealth Office said.

"He was arrested on April 19 following an extradition request and our consular official has visited him in prison in Majorca on April 20," said an FCO spokesman. "Next-of-kin have been informed."

Mr Brown was flown to Madrid last night, where he appeared in court today and agreed to the extradition procedure, which will be dealt with by the Audiencia Nacional, Spain’s highest court. A fast-track extradition takes around 40 days.

Proceedings started in January when HSBC, Mr Brown's bank, launched a private criminal action in the UK. The 53 charges allege forgery, perjury, dishonesty, perverting the course of justice and obtaining a passport by deception.

The Crown Prosecution Service applied for a European arrest warrant for Mr Brown on behalf of the HSBC, which is conducting private criminal proceedings itself under the Prosecution of Offences Act. The Serious Organised Crime Agency confirmed today that the 40-year-old Scot’s arrest was not linked to any investigation by British police.

The arrest warrant was issued by an English court, andwas carried out earlier this week by the Spanish police.

This is not the first time that Mr Brown has found himself under investigation. Last year the Electoral Commission investigated after it emerged that Brown had bankrolled the Lib Dems’ election campaign, despite not being registered to vote in the UK.

The elections watchdog is still deciding whether it was "permissible" for the party to have accepted the cash from the financier’s Swiss-based company, 5th Avenue.

Charles Kennedy, then party leader, ordered an internal party inquiry into the controversial £2.4 million donation, and as a result the party agreed in November to tighten its procedures on vetting donors.

Mr Kennedy himself also came in for criticism after The Times revealed that he had failed to declare that he and his wife had accepted £30,000 of free flights from Mr Brown.

Mr Brown, a Glasgow-born tax exile who claims to be worth more than £10 million, said in a letter to The Times that he gave the huge donation because he believed in Mr Kennedy’s ability as a future prime minister "but not the muppets who purport to serve him".

Mr Kennedy has since been replaced as Lib Dem leader by Sir Menzies Campbell.

A Liberal Democrat spokesman said today: "We are not aware that this (arrest) has any connection whatsoever with the Liberal Democrats. Any further action is a matter for the police and the relevant authorities."

The pony-tailed real estate entrepreneur, teetotal son of a Scottish whisky executive, spent some of his childhood in the US.

Now he and his wife are based in Majorca, where home is a sprawling rural house in a village near Palma. In the town centre, he has an office covering half a floor of a prestigious block.

In the past, the Lib Dems have defended accepting money from Mr Brown. Asked last October whether he would accept more money from Mr Brown, Sir Menzies said: "Well, now everything is out in the open, then the answer is probably yes. Why not?"

A spokeswoman for the CPS said: "We applied for a European arrest warrant on behalf of solicitors acting for HSBC. We obviously don't act in private prosecutions: they are taken on by individuals or bodies themselves. We deal with European arrest warrants all the time, and they asked for our assistance."

The CPS has the right to intervene and take over a private prosecution at any time, although in this case it has not chosen to do so. A policy statement on its website states: "The CPS recognises that the right to bring a private prosecution should remain and that The CPS should not take over a private prosecution unless there is a good reason to do so."

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