Sir Mark Thatcher was last night facing a legal battle to avoid a lengthy jail sentence after being arrested and charged in South Africa with helping to finance a failed attempt to overthrow the president of a tiny but oil-rich west African state. Lady Thatcher's son, whose business dealings have been the subject of repeated controversy since the 1980s, suffered a humiliating day which began when an elite police squad known as the Scorpions knocked on his door at 7am and arrested him in his pyjamas. Police said they had "credible evidence" that he was involved in backing a coup attempt in Equatorial Guinea.
His appearance at a nearby magistrates court was then delayed, apparently because Sir Mark was robbed in his holding cell by other prisoners who, according to a court official, stole his mobile phone, shoes and jacket. All belongings were later returned.
Last night, he was confined to his home in the upmarket Cape Town suburb of Constantia after being released on strict bail conditions which require him to remain under virtual house arrest until he has posted bail of 2m rand (#165,000). He was also ordered to surrender his passport and stay in the Cape Town area until another court appearance on November 25.
In a statement after his release, he denied any involvement in the coup plot.
"I am innocent of all charges made against me. I have been, and am, cooperating fully with the authorities in order to resolve this matter. I have no involvement in any alleged coup in Equatorial Guinea and I reject all suggestions to the contrary."
The drama began when the Scorpions arrived at the gates of Sir Mark's large Cape Dutch-style house. They were met by his armed security guard and then Sir Mark himself.
He was allowed to shower and dress as the officers began to search his home and computer, seeking evidence linking him to an alleged plot to topple the president of Equatorial Guinea, Teodoro Obiang.
The coup attempt was foiled on March 8 when 70 men were arrested after flying into Harare from South Africa and attempting to collect weapons. They are accused of having planned to fly them to Malabo, the capital of the west African country.
All are now facing trial in Zimbabwe, including the al- leged coup leader, Simon Mann, a former SAS officer and close friend of Sir Mark. They deny being mercenaries and say they were buying weapons to protect mines in Congo.
The Guardian has seen a copy of a letter written by Mr Mann from his Zimbabwe prison cell to his wife, demanding that his financial backers use their influence to get him released. In the letter, he appears to suggest that he was expecting $200,000 from Sir Mark using his nickname Scratcher for an unspecified "project".
A friend of Sir Mark, who inherited the baronetcy of his late father Sir Denis last year, described the charges as a "contrived plot".
"He has been dealing with the authorities for the last two weeks, in fact he went back to South Africa specifically to do that," the friend said. "They have acted precipitously in arresting him; he was giving them everything they wanted."
He said Lady Thatcher, on holiday in America, was aware of the charges against her son. They had not discussed the situation by yesterday evening but were expected to speak soon.
Sir Mark's lawyer, Peter Hodes, said the businessman was arrested on suspicion of providing financing for a helicopter linked to the coup plot. "He will plead not guilty," Mr Hodes said.
The alleged plotters were said to be hoping to exploit Equatorial Guinea's massive oil reserves by installing their own leader, Severo Moto, who is in exile in Spain.
A police spokesman, Sipho Ngwema, said: "We have evidence, credible evidence, and information that he was involved in the attempted coup. We refuse that South Africa be a springboard for coups."
A further 19 men alleged to have been involved in the plot are currently on trial in Equatorial Guinea. Another defendant died in custody in suspicious circumstances.
Nick du Toit, a South African arms dealer who was leader of the Malabo contingent, testified in court yesterday that Sir Mark met Mr Mann in July 2003. He said Sir Mark had showed interest in buying military helicopters for a mining enterprise in Sudan, but the meeting was a "normal business deal" unrelated to any coup plot.
Equatorial Guinea's justice minister, Ruben Mangue, played down suggestions they might seek Sir Mark's extradition. He told BBC Radio 4's The World at One programme: "Let's first give an opportunity to the South African authorities and the South African legal system to handle the situation."