India-born millionaire's arrest shakes up UK politics

His son Bhanu manages the family business, C&C Alpha Group, as its chief executive. The group runs hospitals and care homes across the UK among a string of other ventures, including real estate.

Personal links with the Choudhrie family are set to further embarrass the Lib Dems as it emerged that Clegg and his wife, Miriam, hosted their family charity Path to Success at Lancaster House, a UK government building, in 2011.

The Choudhries have regularly attended other events alongside Clegg and other senior Liberal Democrats, including Simon Hughes, the Lib Dem Justice Minister, who received a 60,000-pound donation from Choudhrie last year.

A Lib Dem spokesperson said the party was aware of the allegations but could not comment while the investigation is ongoing.

The SFO is probing whether Sudhir Choudhrie was an intermediary used by Rolls-Royce, two people familiar with the situation told the Financial Times newspaper.

According to some media reports, Indian authorities are believed to have recently dropped a separate investigation into Choudhrie as part of a probe into deals done by Italian consortium Finmeccanica. No charges were brought against him and he strongly denied all wrongdoing.