NICOLA Sturgeon is facing calls to "shred" an investment deal with a Chinese firm due to its links to corruption.

Concerns have been raised after it emerged that one of two companies the First Minister signed a memorandum of understanding with, which opens the door to £10 billion of investment in Scotland, is owned by a firm mired in bribery scandals.

Norway's oil fund blacklisted China Railway Group Limited (CRG), which owns and controls China Railway No. 3 Engineering Group Co., Ltd, (CR3) after its ethics council found there is "unacceptable risk that the company is involved in gross corruption." Evidence suggests that huge bribes were paid by the parent firm to win lucrative rail and housing projects - two areas highlighted as possible areas for partnership in Scotland.

Willie Rennie, the Scottish Liberal Democrat leader, said: "Nicola Sturgeon confirmed that she had no knowledge of the ties between CR3 and a company which has been accused of corruption on an industrial scale.

"She should shred this agreement and start again. Basic checks were not carried out. This is an extraordinary way to do business. The First Minister needs to send a clear signal that she was wrong to sign up when she was in the dark."

The SNP leader has confirmed that she was "not aware" of the corruption links before she signed the agreement and that full due diligence was not carried out before she put pen to paper. The Scottish Government has said it was "not necessary" to perform full due diligence because no firm investment deal has been agreed, with talks still at an early stage.

The agreement, details of which first emerged in China, states that the parties will be "mutually supportive" of each other in building a relationship "that could lead to a program of investment into Scottish priority projects and infrastructure to the value of £10bn."

Mr Rennie said ditching the agreement "until we know exactly who we are dealing with" was now the right thing to do.

He added: "She needs to order an immediate halt to the Scottish Government money that is being used to support a firm 100 per cent owned by a parent company that has been blacklisted in Norway.

"This whole process has been shrouded in secrecy since the start and it is clear that the proper due diligence was not done before the First Minister put pen to paper. We all want to see new investment coming to Scotland to support jobs and growth. But that should not mean ignoring allegations of corruption."