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In a note to Scotland Yard, he reported that a 100-strong international vice ring was attempting to poison him, and told a detective that he had deposited their names in a yellow tennis bag.
However, he saw the Conservatives as a bulwark against the "satans" and wrote to his Tory MP, David Mellor, asking for help against the "dark forces" that had led to his car phone being used without authority.
Mr Mellor responded by expressing concern about "these difficulties" and asserting that he was "always ready to help". Other figures in the Conservative Party would humour Mr Kostic by commenting that they found his deluded ramblings "very interesting reading", the family claimed.
The court also heard that Mr Kostic wrote to Mrs Thatcher at Downing Street in 1985, telling her: "I believe you are the only person in the free world who can save us from the bestial monsters. It seems to me that someone (not Gaddafi, IRA, Palestinians or Mafia, they are only the marionettes) organised many years ago a type of international university to study human weakness . . . I am sending a cheque for £5,000 to fight the evil wicked demons and SATANS and I am fully at your disposal."
Although Tory policy was to refuse donations if there were any doubts about a benefactor’s capacity, it was claimed that Mr Kostic’s offerings were accepted. He once gave £13,000 "in the name of the magic number 13", the court heard.
Mr Kostic had made a will in 1974 leaving his riches to Zoran, at that time 17. But in 1987 he wrote to Mr Mellor: "I have to make my will . . . It is important to me that this wealth doesn’t finish up in the hands of destructive people — satanic monsters." Mr Mellor declined to assist.
However, it was claimed that Mr Kostic was introduced to the Tory-connected legal firm of Trowers & Hamlins through party channels.
Through the firm, he signed a fresh will giving his fortune to the Conservatives, but then asked for it to be destroyed because he would rather die intestate than leave them his money. Soon afterwards, the court heard that a final will was executed leaving Mr Kostic’s entire estate to the Conservatives following a long lunch at Simpson’s in the Strand.
The Tories had argued in court that there were rational reasons why Mr Kostic had left them the money, and that he had "great and long-standing affection" for the party.
Concluding today's hearing, however, Mr Justice Henderson said the old man suffered from a serious and untreated mental illness from at least mid-1984 onwards.
The judge added that he lacked "testamentary capacity" when he cancelled his earlier will, and declared it invalid.
Following the judgment, Zoran said that he was "relieved" the case was over.
"In 1984 my father became mentally ill. He was diagnosed as suffering from paranoia," he said.
"He was tormented by delusions that I and other members of my family were part of a worldwide conspiracy of terrorists and criminals who were trying to kill him.
"My father refused medical treatment, because he also feared that doctors would harm him. In the grip of his delusions, my father turned to the Conservative Party for help to fight the conspiracy that he imagined.
"He gave them donations and eventually made two wills leaving them everything that he owned."
Tory Party sources stressed today that the party had not been budgeting for the cash and that the loss of a potential £10m windfall would not leave it financially short-changed.
A Conservative spokesman said that the party had not yet decided whether to appeal against the ruling.
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