Former first minister Henry McLeish has voiced concerns over a £500,000 donation to the campaign to keep Scotland in the UK from oil trader Ian Taylor amid criticism of his firm's past dealings.

Mr McLeish said there needs to be "absolute transparency" from the Better Together group about the money given to it by Ian Taylor, who is president and chief executive of Vitol.

His donation was revealed last weekend by the Sunday Herald, and the SNP immediately raised questions about the multinational company, following allegations about deals in Iraq and the former Yugoslavia, which are disputed by the firm.

Vitol has acknowledged making some payments to Saddam Hussein's regime outside the scope of the UN's oil-for-food programme, but rejects claims they were anything other than surcharges demanded by the state oil company.

The firm was accused of being linked to an oil deal involving Serbian criminal Arkan, who led paramilitary forces in the former Yugoslavia in the 1990s.

But Vitol rejects any suggestion of illegal conduct and says it was not investigated by any government or authority.

Mr Taylor gave about half of the £1.1 million raised so far by the official No campaign group.

Former Scottish Labour leader Mr McLeish said: "We have to be very careful about what kind of money should be used (in the campaign).

"The unionist campaign has got to respond to legitimate questions and the criticism that's been put forward. We need absolute transparency."

Angus Robertson, the SNP's Westminster leader and defence and foreign affairs spokesman, said: "Alistair Darling's refusal to return this donation pending further investigation - and his refusal to outline what he knew of these matters before accepting the money, when he met Mr Taylor - is completely undermining the credibility of the No campaign.

"Labour former first minister Henry McLeish is absolutely right when he calls for clarity about the type of finance that we want."

Alistair Darling, head of the Better Together campaign, said: "Ian Taylor is a respected figure in Scotland and in the UK.

"He has made a big contribution to Scottish life, including a personal investment which has revived the Harris Tweed Industry in the Outer Hebrides.

"Ian has made clear his reasons for supporting Scotland as a strong part of the UK.

"For our part, we are pleased to have his support and we think that people who care about Scotland should be able to speak out against the nationalists without facing these kind of personal attacks."

A spokesman for Better Together said previously: "This was a donation from a private individual. It was given and received in good faith."

Responding to wider allegations, a spokeswoman for Vitol has said: "The company has taken legal advice and will take whatever steps are deemed necessary to have these inaccuracies corrected, and to prevent their further publication."