The former Thai prime minister who is poised to buy Manchester City football club could be extradited from Britain to face corruption charges in his home country. The Thai embassy in London has confirmed that a warrant will be issued for the arrest of Thaksin Shinawatra if he refuses to return to Thailand.

Thaksin, who was overthrown by a military coup in September, is understood to be only days away from taking control of the Premiership club in a deal valued at £81m. He is said to be lining up Sven-Goran Eriksson, the former England coach, as the club’s new manager.

Inquiries by The Sunday Times have established that the financing of the deal is far from straightforward. The main shareholder in the company buying Manchester City is an obscure Bangkok property firm that is said to be “controlled” by Thaksin and his family, although he has no significant stake in it.

The property firm is understood to have received millions from the sale of Thaksin’s Shin Corporation – a transaction that is under investigation for potential breaches of the law.

The Thai authorities have indicated that they wish to know whether the money being used in the Manchester City takeover came from the proceeds of alleged criminal activity.

“If that is the case, the ownership of the football club must be questioned,” said Sunai Manomai-udom, head of the Thai justice ministry’s department of special investigations.

Thaksin, a 57-year-old billionaire, claims the investigations into his and his family’s financial affairs are without foundation and politically motivated. Many of his assets in Thailand have been frozen.

But his business dealings and chequered political record have caused concern in Britain. David Taylor, a Labour MP, raised the issue in the Commons last week. “If he passes the test that he is a fit and proper person to own a football club, then the Premier League’s rules must be too lax,” said Taylor. “He’s a flaky foreign financier.”

A former policeman, Thaksin built Shin Corporation into a giant conglomerate by exploiting a monopoly in the Thai mobile phone market. He used his wealth to bankroll his rise to political power as a populist “friend of the poor” taking over as prime minister in 2001.

His five-year premiership was often brutal – more than 2,500 people were shot dead by plain clothes policemen as part of a “war on drugs”. After the 2004 Muslim insurgency his security forces waged a reprisal “dirty war” that left almost 100 unarmed captives dead.

It was the sale of the Shin Corporation to a Singapore government company that led to a wave of patriotic indignation which ended with a bloodless coup.

He fled to London and took up residence in a Mayfair flat. Thaksin previously attempted to buy Fulham football club and made a failed bid for Liverpool.

The Manchester City bid has proved far more concrete. The club, which does not own its ground, is valued relatively cheaply at about £21m, the same price Chelsea paid for its former player Shaun Wright-Phillips.

Two weeks ago Thaksin’s newly created company UK Sports Investments (UKSIL) reached agreement with the Manchester City board to buy 55% of its shares and set about purchasing the extra 20% needed to take the club into private ownership. This weekend it effectively has 66% of the shares and is expected to pick up the remainder this week.

The takeover, however, coincides with increasing legal activity in Thailand. The country’s attorney-general has filed the first criminal charges against the former premier and his wife in a corruption case over a land deal.

Separately, investigators have issued a summons to the couple to return home to answer charges of violating Thailand’s securities and exchange act. They are alleged to have concealed their ownership of assets – a serious offence as it is a possible indicator of tax evasion or money laundering.

They have now been given a deadline to return by July 26 or face arrest and possible extradition. Thaksin’s lawyers say he will not return until after December’s democratic elections. He has been warned that his life could be in danger.

Thaksin’s company will take on the club’s £60m debt (hence the total deal value of £81m) and is to pay off £20m of it immediately. To cover the initial purchase cost UKSIL has borrowed £40m from its British holding company. But where did this money originate from?

Documents show that Thaksin only has a £5,700 stake in the UKSIL holding company which will effectively own Manchester City. By contrast his son Panthongtae and daughter Pintongta each own £280,000 of shares in the holding company.

The largest stake is owned by Pramaisuri property company, a business registered in Bangkok. On June 20 – after a number of Thaksin’s Thai-based assets had been frozen – the company bought a £25m stake in UKSIL. It is likely that this injection of cash was to facilitate the football club purchase.

Documents produced by UKSIL’s financial advisers say that Pramaisuri is controlled by Thaksin and his “immediate family”. The question of how Thaksin exerts that control, however, is a mystery as the document also states that Thaksin “now holds no significant stakes in any company”.

A spokesman for Thaksin could not elucidate further last week. “That is a question to which I don’t have an answer,” he said.

It has also emerged that Pramaisuri was one of many Thaksin-connected companies which received money from the Shin Corporation sale. The Thai assets scrutiny committee has been attempting to identify and freeze earnings from the sale pending an investigation into potential breaches of the law.

The UKSIL spokesman said it was able to use the £25m because it had been sitting in a British bank client account after being “routed” out of Thailand before the asset freeze.

He said the key transactions had been scrutinised by Seymour Pierce, its UK investment banker, which had taken legal advice in Thailand to ensure everything was above board.

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