Peter Duncan revealed he quit his role at the Scottish Unionist Association Trust (SUAT) ten days ago because he wanted “more separation” between its work and his role as a lobbyist.
But he denied the trust was being used to conceal the source of political donations, and said the nearly £319,000 given to Tory campaigns over 17 years had been generated from the “historic proceeds of raffles and tombolas”.
Political opponents have urged Ruth Davidson to reveal the source of the donations after the scale of financial support emerged.
Under electoral law, unincorporated associations are not required to register with the Electoral Commission or declare where they receive their money from provided they donate less than £25,000 per calendar year to political parties and candidates.
The elections watchdog has said it is reviewing whether SUAT has “complied with their reporting requirements as set out in law”.
An investigation by the Ferret website revealed that between April 2001 and February 2018, SUAT donated £318,876 to the Conservatives. At last year’s general election, the trust made donations to the campaigns of Tory MPs John Lamont, David Duguid and Douglas Ross.
Mr Duncan, who served as MP for Galloway and Upper Nithsdale from 2001 to 2005, told the BBC: “The suggestion that this is in some way dark money is a bit like suggesting the WI is some KGB front organisation. This is historic proceeds of tombolas and raffles throughout the west of Scotland going back 50 years.
“They were transferred into a trust with the express purpose, not of spending it, but actually investing it long-term.
“And that’s what the trust has done since about the time I was born. It has invested that money with the objective of growing its capital base and making some of the proceeds available on a semi-regular basis to the party’s campaigns.” He added: “I was satisfied, and remain satisfied, that the trust is a permissible donor and that this is in no way dark money.”
Theresa May said all donations to the Scottish Tories had been “accepted and declared in accordance with the law” when the SNP’s Westminster leader Ian Blackford challenged her over the issue at PMQs earlier this month.
SNP MP Pete Wishart claimed last week that “serious questions are now piling up at Ruth Davidson’s door over the dark money that is funding the Scottish Tories”.
The Scottish Conservatives have said the party “always works closely with the Electoral Commission on the permissibility of donors”.