16/04/2012 13:38 BST

Lord Ahmed: 'Obama Bounty' Accusation A 'Complete Lie'

Lord Ahmed has dismissed the allegation that he put a £10m bounty on President Obama's head as a "complete lie".

The Labour peer was suspended from the party late on Sunday night after reports emerged in the Pakistani press that he was offering a reward for the capture of the US president.

According to Pakistan's Express Tribune, he told an audience in Pakistan last Friday: “If the US can announce a reward of $10 million for the captor of Hafiz Saeed, I can announce a bounty of 10 million pounds on President Obama and his predecessor George Bush."

He was said to be reacting to the US decision to offer a $10m reward for Hafiz Mohammad Saeed, the founder of the islamist terrorist group Lashkar-e-Taiba.

The militant Pakistani group has been accused of orchestrating the 2008 Mumbai terror attacks which killed 174 people.

However speaking to the BBC after returning to Britain on Monday, Lord Ahmed said it was a "fabricated quote" and that he had video to prove it.

"I have no idea where they got it from," he said. "I've never used 'bounty', I've never used President Obama."

He said he would release the video of him speaking if it was "necessary".

During a visit to a job support service in Stratford, east London, Ed Miliband said: "He's been suspended pending an investigation into what he said.

"We need to know if his comments were accurate and that's what we're investigating."

Speaking from Pakistan before he returned to the UK, Lord Ahmed acknowledged he had spoken about the situation in the region but flatly denied he had offered a bounty.

"I did not offer a bounty. I said that there have been war crimes committed in Iraq and Afghanistan and those people who have got strong allegations against them - George W Bush and Tony Blair have been involved in illegal wars and should be brought to justice," he said.

"I do not think there's anything wrong with that," he said - adding that he was equally concerned that anyone suspected of terrorism should face justice as well.

Pakistan born Lord Ahmed was made Britain's first muslim peer in 1998 and is no stranger to controversy. In 2007 he criticised Tony Blair's decision to award author Salman Rushdie a Knighthood, saying he had "blood on his hands".

On Monday Respect MP George Galloway said that Labour's decision to suspend Lord Ahmed was "suicide" and suggested the peer defect to his party.

"I think the suspension of Lord Nazir Ahmed indicates that New Labour is on some sort of suicide mission so far as the Muslim vote goes," he said.

"Lord Nazir is a great figure - not politically close to me - among the Asian heritage population of Britain and is now suspended from the Labour party, as I myself was.

"So let me extend to him an invitation to fill in an application form and join Respect."

But Lord Ahmed said he respected the Labour Party and its leadership and had no intention of leaving.