Alex Salmond agreed to hand over £215,000 for an Islamic festival in Scotland following a meeting with a former military commander of the Palestinian terrorist group Hamas.

Documents obtained by The Sunday Times reveal Salmond approved the grant following the meeting between culture minister Linda Fabiani and Mohammed Sawalha, who is alleged to have directed terror operations in the West Bank.

The meeting, in January, was also attended by Osama Saeed, founder of the Scottish Islamic Foundation (SIF) and an SNP activist who is expected to contest the Glasgow Central seat at the next Westminster election. Sawalha was invited to take part in the meeting to discuss the funding of IslamFest in Glasgow next year.

The event, being organised by the SIF, is modelled on London’s IslamExpo, run by Sawalha. IslamExpo was boycotted by UK ministers earlier this year because of its links to Hamas.

The £215,000 Scottish government grant for the Islamic festival was given to the SIF, which has so far received £415,000 of taxpayers’ money. Sawalha, president of the British Muslim Initiative, was named in US court documents as a leading militant in the early 1990s “in charge of Hamas terrorist operations within the West Bank”.

The documents alleged he met two “conspirators” accused of laundering millions of dollars to finance the group’s activities. In 2006, the BBC’s Panorama accused him of directing funds to Hamas’s armed wing.

The cleric, who arrived in Britain 17 years ago and was given indefinite leave to remain, has refused to denounce the terrorist group. Last night, the Community Security Trust, a charity fighting anti-Semitism in the UK, criticised the decision to meet Sawalha.

“There are many representative and moderate voices within Scotland’s diverse Muslim communities, promoting integration and harmony, and condemning terrorism in every context,” said a spokesman.

“It is these brave voices that need reinforcing from government, not those of former Hamas activists and international Islamist networks.”

Frank McAveety, the Labour MSP, said: “Linda Fabiani’s judgement on this issue is in doubt. We need to know what information she had before the meeting.”

Sawalha set up IslamExpo in 2006, claiming its aim was to introduce the British public to Islam as a global culture.

But this year a number of senior politicians, including Stephen Timms and Shahid Malik, pulled out of the event at the last minute despite having accepted invitations to speak.

Sawalha said he attended the meeting at the Scottish parliament to offer his views on setting up a similar event in Scotland. “I have to speak to \ to see what is the situation now. We trust Osama. We will find a way to work with him,” he said. “But £200,000 is not enough. The budget in London was £1.5 million.”

Asked if he denied his involvement with Hamas, Sawalha said: “I am supporting the Palestinian cause. This is not something I am ashamed of. I’ve been here 17 years. I’m working in this country for good relations between Muslims and non-Muslims.”

Murdo Fraser, deputy leader of the Scottish Conservatives, said: “I’m alarmed that a Scottish government minister was prepared to meet someone like Mohammed Sawalha.”

A spokesman for the SIF said: “IslamExpo Ltd were invited to take part in discussions on the opportunities and successes a separate IslamFest project could provide in Scotland.”

A spokesman for Fabiani added: “It would be inappropriate to have routine matters determined by unproven allegations against any individual who has not been questioned in this country for any wrongdoing.”

* A Scots businessman is planning to establish a leadership academy to steer young Muslims away from radicalisation.

Glasgow-born financier Azeem Ibrahim, 32, is to chair the academy in Birmingham and hopes to attract 5,000 students from across Britain.

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