A wealthy Scottish fund manager and grouse moor owner has been given the largest penalty ever handed out under farm laws after police found toxic and illegal pesticides on his estate.

John Dodd, the multimillionaire owner of the 10,000-acre Glenogil shooting estate, near Kirriemuir, Angus, has had his farming subsidy cut by £107,000 by the Scottish Executive after claims that pesticides found on his land were being used to kill protected birds of prey.

Mr Dodd, co-founder of the Edinburgh-based Artemis investment bank and hedge fund, was found to have pesticides on poisoned baits, game bags and soil and plant samples on his estate in 2006.

Investigators from the Royal Society for the Protection of Birds (RSPB) found an illegal compound - a combination of carbofuran and isofenphos pesticides that have not been licensed for use in the UK - on a dead rabbit staked out on a hillside close to Glenogil in April 2006.

The find led to a raid organised by Tayside Police, which involved 80 officers from several forces, alongside RSPB investigators and officials from the rural payments division of the Scottish Executive.

The police raid uncovered the same combination of pesticides on a dead pigeon laid out as bait on the estate, on game bags used by estate staff, and in soil and plant samples. As a result of the investigations, officials in the rural payments division of the Scottish Executive in Edinburgh have docked Dodd's large farming subsidies for 2006 by £107,650.

James Reynolds, spokesman for the RSPB, said yesterday: “Agricultural grants to landowners rightly come with conditions in order to protect the public interests. Some of these require that those receiving public payments protect our national heritage, and that includes birds of prey.

“Where there is good evidence that landowners are killing birds of prey illegally, we think it's correct that financial penalties are imposed. If they are rigorously applied by the statutory authorities then these financial penalties should be a sufficient deterrent for others.”

It is the largest ever civil penalty imposed under strict EU “cross-compliance” legislation, which makes protection of wildlife a condition of the subsidy. The regulations make it an offence to have illegal pesticides such as carbofuran on the land, or commit offences against birds of prey including the use of illegal traps or poisons.

The Wildlife and Countryside Act makes it a criminal offence - punishable by a six-month jail term and/or a £5,000 fine - to kill or attempt to kill a bird of prey.

Glenogil was last year also implicated in the disappearance of a rare sea eagle, one of 15 birds that had just been released into the wild in eastern Scotland under a government-sponsored reintroduction programme.

Witnesses suggest that the bird may have been killed on the estate but the allegation remains unproven and Mr Dodd, 47, threatened Tayside Police with legal action after the force issued an appeal for information that implicated the estate. He has insisted that his staff are innocent.

Mr Dodd, who has received £829,664 in single farm payment subsidies for his farm at Glenogil, is understood to be contesting the Scottish Executive's decision to dock his 2006 subsidy by £107,650. He denies that there has been persecution of birds of prey on his estate but would not comment on the Scottish Executive's penalties against his estate.

The Artemis investment bank, which takes its name from the Greek goddess of the hunt, markets itself as “the profit hunter” and uses cartoons of hunters with shotguns and gundogs in its advertising. Its co-founder, Dodd, has become an influential figure in the Scottish shooting world and the local community since 2003 when he bought his 3,913-hectare (9,670-acre) estate for £4.5million.

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