David Cameron told he has a 'moral duty' to return Asil Nadir's party donations

David Cameron has been told by a former treasurer of the Conservative Party that he has a "moral duty" to hand back "tainted" money previous Tory leaders accepted from the corrupt tycoon, Asil Nadir.

Nadir, who is beginning a 10-year jail sentence for stealing nearly £29m from his Polly Peck business empire, once boasted that he had given the Tories £1m through different routes.

Margaret Thatcher's long-serving press secretary, Sir Bernard Ingham, said he thought she would have repaid the money.

Echoing comments made by Lord McAlpine on the former Tory leader's wishes, he said: "They are going on her general sense of propriety. They can't do more because I'm afraid she doesn't have any short-term memory. They're saying that it's in line with the way she conducted affairs, and I don't think you can say any more."

Lord McAlpine, who was Conservative treasurer from 1975 until 1990, told the Daily Mail: "If Margaret Thatcher was still leader of the party I am absolutely certain she would have ordered the party to repay the lot. I can hear her barking down the phone, 'Alistair, we can't keep that man's money'."

He added: "It is tainted money and it shames the Conservatives if they hang on to it. They have a moral duty to give it back."

Charles Powell, Lady Thatcher's former foreign affairs adviser, echoed the belief that she would have wanted to see the money repaid.

Giving back the money also appears to have support among Tory backbenchers. One told the Financial Times: "It seems the decent and honourable thing to do. We shouldn't just give it back – we should stop having to go to the Asil Nadirs of this world to fund politics. We should be knocking on activists' doors and raising funds like Obama does."

Nadir fled the UK after his business empire collapsed in 1990, and took refuge in Northern Cyprus.

During the years when he was beyond the reach of British law, he told The Independent on Sunday: "The Tories were constantly pestering me for money. I was donating on average £50,000 a time, four times a year. They were always after more."

In 1993, the then Tory chairman, Norman Fowler, confirmed that Nadir had given the party £440,00 via Polly Peck International. He told a Commons committee: "Obviously, if the money was stolen, it will be returned." Lord Fowler did not return calls yesterday.

Sir John Major, who was then the Prime Minister, also told MPs: "If it proves to have been dishonestly obtained and dishonestly remitted to us then of course we will return it." Sir John was abroad yesterday and could not be contacted.

In 1996, it was reported that City accountants Touche Ross, who were responsible for tracking down the money Nadir stole, had written to the Conservatives alleging that £365,000 of the money donated to the party had been stolen from Polly Peck. But a party spokesman said yesterday: "We have no copy of this Touche Ross report – if it ever existed. We have seen no evidence that money donated to the Conservative Party from the Polly Peck group was stolen."