Former LibDem leader Paddy Ashdown has stepped into the row over a controversial £500,000 gift to the pro-UK Better Together campaign by condemning payments the donor’s trading firm made to a war criminal and corrupt politician.

Lord Ashdown said companies such as Vitol, whose president Ian Taylor gave the money to the Alistair Darling-led anti-independence group,were guilty of naivety and that critics of the donation have a legitimate complaint.

Mr Taylor, who is also a Conservative Party backer, agreed to fund the group after meeting the former Labour chancellor. The donation accounts for almost half the £1.1 million Better Together have received to date.

Calls have been made at Holyrood and Westminster for Better Together to return the sum because of Vitol’s links to Serbia, Iran, Iraq and Libya.

The world’s biggest oil trader paid $1m (£660,000) to Serbian warlord Arkan to facilitate a deal, insisting no law had been broken in doing this.

It then signed a supply deal with the Bosnian Serb government in 2003 just months before Milan Bogicevic, the minister involved, was stripped of office by Lord Ashdown for harbouring war criminals.

Lord Ashdown was UN High Representative for Bosnia and Herzegovina from 2002 to 2006, responsible for pursuing war criminals in the former Yugoslavia.

The oil firm insisted last week: “Vitol dealt with Milan Bogicevic in his capacity as minister of economy, energy and development in the legitimate government of the time and in relation to a state-owned refinery. Vitol had no way of anticipating the subsequent decision of the Office of the High Representative taken in July 2004.”

But Lord Ashdown, who stopped short of calling for the donation to be returned, said: “Anybody who did business in the Balkans who didn’t realise there were networks of corruption that extended into any and all governments was naive.”

The peer said he was a supporter of the campaign to maintain the Union but added he could understand why critics were making an issue of Mr Taylor’s donations to both the Tories and Better Together.

“It’s a basic principle that I appreciate and understand. Wherever you are coming from, it’s a perfectly legitimate line to pursue,” he said.

A spokesman for Better Together said: “Ian Taylor has made a significant contribution to Scotland. We are pleased to have his support.”

SNP Westminster leader Angus Robertson said: “Paddy Ashdown’s powerful comments can only add to the demands of those who have been asking the No campaign to hand back the money from Ian Taylor. Lord Ashdown knows better than most the circumstances of the Balkans at that time and his views must be taken seriously.”

Arkan, who died in 2000, was responsible for directing ethnic cleansing and murder during the Yugoslavian wars.

Vitol also pled guilty to grand larceny in a deal with the Manhattan District Attorney after paying what is said were surcharges to Iraqi officials in Saddam Hussein’s regime under the UN oil-for-food programme. They were described by prosecutors as kickbacks.

The donation by Mr Taylor to Better Together has continued to prove controversial, being mentioned on the floor of both Holyrood and Westminster last week.

No-one at Vitol was available for comment last night.