An Irish businessman wanted by police in Britain to face fraud charges dating back 25 years is suing the Irish State for €1.5 million following its decision to extradite him to face trial.

Robert Stapleton, founder of 4th Millennium Limited, an Irish software company, has made the claim in an appeal lodged with the European Court of Human Rights (ECHR).

Papers filed with the Strasbourg-based court say the publicity surrounding the European arrest warrant issued by Britain has caused a dramatic decline in the fortunes of his family business.

Mr Stapleton and his wife have also suffered a deterioration in their health due to the stress following an extradition request and his arrest by gardaí in 2005, they say.

Mr Stapleton is wanted by Lincolnshire police in connection with more than 30 offences involving a fraud perpetrated between 1978 and 1982 related to the collapse of his firm, Ultraleisure.

The firm, which marketed foldaway squash courts, collapsed, leaving a division of the British department of trade and industry (DTI) - the Export Credit Guarantee Department, which had guaranteed loans given to the company - out of pocket by £3 million.

The British police allege that the fraud involves company directors drawing up bogus invoices and supporting documents to show that Ultraleisure had exported goods and services to foreign buyers. Its banks - Lloyds Bank and Coutts - then advanced funds to Ultraleisure in the belief that the transactions represented on the documents were genuine.

When Ultraleisure had to repay the loan, a larger advance was obtained on similarly false documents and part of that was issued to repay the earlier borrowings. Ultraleisure therefore had to borrow larger sums of money to hide the fraud.

Mr Stapleton's wife was convicted in 1986 in Britain for participation in elements of the fraud and given a suspended sentence. Mr Stapleton had left Britain for Spain prior to this trial.

Spain did not have an extradition warrant with Britain. He returned to live in Ireland in 1994.

Mr Stapleton fled Ireland shortly before the Supreme Court ruling in July 2007 which ordered him to be extradited to Britain to face trial. This overruled a High Court ruling in 2006, which found that sending him back to Britain for trial may breach his fundamental rights, given the length of time that has passed since the alleged fraud took place.

Mr Stapleton says he would not get a fair trial in Britain because key evidence that would prove his innocence had been withheld by the British police and due to the length of time since the alleged fraud took place. He also claims he is the scapegoat for a fraud that was engineered by the DTI's Export Credit Guarantee Department (ECGD).

He alleges ECGD regularly helped British firms circumvent EU state aid rules to enable them to compete with foreign rivals.

The ECGD, which is now a British state agency, denies the fraud allegations. It does admit, however, that it changed its procedures in 1983 to become compliant with EU laws on state aid.

The European Commission has so far refused to comment on whether it adequately investigated claims made by Mr Stapleton against the ECGD over its provision of cheap loans to firms trading within the EU in the early 1980s.

Mr Stapleton's application to the ECHR says that, if he returns to England to face trial, he could face at least one year, and probably more, in prison awaiting trial.

It alleges that the British police will not make available to his defence team key evidence that would prove his innocence. It says the British police withheld this evidence during his wife's trial on similar charges in the 1980s due to a public immunity order.

Mr Stapleton (64) says he is not running away from the charges. "But how can I fight a case when the evidence I want to produce is not available to me? It is held by the police," he told The Irish Times in an interview.

Derek Canton, a British police investigator in the case, says all the evidence would be made available to the defence and has called on Mr Stapleton to return to Britain to face trial.

The ECHR is expected to decide whether to hear the application by Mr Stapleton in coming weeks. The court application has asked Britain to be invited as a third party in the case.