Jan.16, 2010, 9:30PM GMT

A research institute headed by Dr Pachauri will receive up to £10 million funding over the next five years from the Department for International Development (DfID).

The grant comes amid question marks over the finances of The Energy and Resources Institute's (TERI) London operation. Last week its UK head called in independent accountants after admitting 'anomalies' – described as 'unintentional' – in its accounts that have prompted demands for the Charity Commission to investigate.

The decision to resubmit accounts follows a Sunday Telegraph investigation into the finances of TERI Europe, which has benefited from funding from other branches of the British Government including the Foreign Office and the Department for Environment, Food and Rural Affairs.

Dr Pachauri, TERI's director-general, has built up a worldwide network of business interests since his appointment as chairman of the Intergovernmental Panel on Climate Change (IPCC) in 2002. The post, argue critics, has given him huge prestige and influence as the world's most powerful climate official.

The decision by DfID to fund Dr Pachauri's institute, based in Delhi, will add to growing concern over allegations of conflict of interest with critics accusing Dr Pachauri and TERI of gaining financially from policies which are formulated as a result of the work he carries out as IPCC chairman – a suggestion he strongly denies.

But Lord Lawson, the former Chancellor who now chairs the Global Warming Policy Foundation, a think tank which challenges the prevailing scientific view on climate change, said: "It is now a wholly legitimate concern to ask questions about possible conflicts of interests. The IPCC is a very influential body and he is obviously very involved in its leadership."

Ann Widdecombe, one of only a handful of MPs who have openly declared themselves climate sceptics, said: "I would have thought that in the interests of transparency and for the avoidance of doubt he probably should not perform both roles. It makes me uneasy."

Because Dr Pachauri's role at the IPCC is unpaid – although he does receive tens of thousands of pounds in travel expenses – he is exempt along with other panel members from declaring outside interests with the UN.

But he is paid an undisclosed salary by TERI while the institute has also received payments from a number of organisations and businesses he has advised in recent years including 100,000 euros (£88,400) from Deutcshe bank, $80,000 (£49,000) from Toyota Motors and $580,000 (£357,000) from Yale University, where he serves as head of its new Climate and Energy Institute.

The deal with DfID was announced in September at the British Council in Delhi with Dr Pachauri and Development Secretary Douglas Alexander in attendance. According to a press release issued by the British High Commission at the time, the "partnership will enable TERI to improve knowledge, policy analysis and development practice across a broad range of issues critical to growth, poverty reduction and environmental sustainability in India".

Dr Pachauri, who lives in a mansion in Delhi on the most valuable stretch of residential real estate in India, declared at the time: "This partnership will assist in creating capacity within TERI to undertake efforts by which poverty can be addressed through resource efficient solutions."

Asked last week what the money was actually for, a DfID spokesman said it would help "bring electricity and clean energy to millions of the world's poorest people".

The spokesman added: "TERI is a globally respected institution. Their accounts are externally audited and annually submitted to the Government of India. As is routine, DFID is undertaking a full Institutional Assessment of TERI as part of our due diligence process."

Mystery surrounds the financial affairs of TERI, which now has five overseas branches in North America, Japan, South East Asia, Dubai and Europe, since it does not make its accounts public even though it is a not for profit organisation. Its annual report only shows two pie charts representing its main areas of income and expenditure although these include no figures.

After two weeks of requests by the Sunday Telegraph, TERI revealed income for 2008 to 2009 of £10.7m, up from £6.8 million the year before. DfID said the first year funding of £2 million amounted to about 15 per cent of TERI's annual turnover.

TERI Europe has also attracted British Government and private funding and although no overall figures have been made available for the value of the contracts, they are reckoned to be worth substantial sums over several years.

But latest available Charity Commission accounts show income of £8,000 and expenditure of £3,000 in 2008 while separate accounts lodged at Companies House show a little over £60,000 in cash at the bank in June 2008.

Ritu Kumar, who runs TERI Europe, said in response to inquiries by this newspaper she had called in independent accountants Mazars.

Dr Kumar wrote: "As a result of this, Mazars has advised us that there are anomalies in the accounts filed with the Charity Commission. As soon as we learned of these anomalies, which were unintentional on our part, we informed the Charity Commission and immediately asked the accountant to prepare revised accounts, which will apply the correct accounting treatment."

In a letter published in today's Sunday Telegraph, Dr Pachauri denies any conflict of interest. He writes: "I am proud of my association with various organisations, of which I am happy to provide a complete list, but such associations are limited to me providing them with advice essentially on clean technologies and sustainable practices. There is no question of them influencing the functioning of TERI, the IPCC or myself.

"There is no conflict between these roles and my position as chairman of the IPCC. I advise several organisations on sustainable energy and related subjects, and any remuneration that is due to me from these organisations is paid to TERI, not to me.

"This is not for reasons of tax evasion or money laundering, but, to keep within the practices of TERI, of which I am a full-time, salaried employee. No part of these payments is received by me from TERI either directly or indirectly."