Fraudster donor Michael Brown held in Caribbean

Brown was convicted in his absence in November 2008

A fraudster and Lib Dem donor who went on the run has been arrested in the Dominican Republic, police have said.

Michael Brown was sentenced in his absence to seven years in jail in 2008 for stealing £36m from clients including nearly £8m from Manchester United's ex-chairman Martin Edwards.

He posed as a bond dealer and claimed royal connections to steal the money, Southwark Crown Court heard.

Brown gave some £2.4m to the Lib Dems ahead of the 2005 general election.

City of London Police said they were "pleased" to hear he had been detained and were establishing contact with authorities in the Caribbean country, which has no extradition treaty with Britain.

'Buffer zone'

"Clearly, at some stage we will look for his return to the United Kingdom, so he can serve the sentence for the fraud offences for which he has been convicted in this country," a spokesman said.

The British Foreign Office said it was aware of the reports of his arrest.

Brown used investors' money to fund the money he gave to the Lib Dems' election war chest - its largest ever donation.

Charles Kennedy, who was leader at the time it was made, said in September his party went the "extra mile" to check Brown out before accepting his money.

"We were very careful, we always were in the Lib Dems, to keep a distance, a buffer zone, over donations," he said.

The Electoral Commission ruled in 2009 the party could keep the money.

A Lib Dem spokesman said: "The Electoral Commission inquiry in 2009 found that the party accepted the donation in good faith, and were in no way at fault.

"It cleared the party of all wrongdoing and accepted that at the time of the donation, Michael Brown was a permitted donor.

"There is no indication that the Electoral Commission will revise its opinion in this matter but any arrest abroad should lead to his extradition to the UK."