Bhanu Choudhrie, whose family is one of the biggest donors to Deputy Prime Minister Nick Clegg's Liberal Democrat party, bid 75,000 pounds for the privilege of playing against Boris Becker and Novak Djokovic, The Sunday Times reported. However, a week after the auction, Choudhrie, 35, and his father, Sudhir, 64, were arrested in dawn raids in London carried out by the Serious Fraud Office (SFO).
They were questioned for several hours over allegations of bribery and corruption involving defence contracts won by Rolls-Royce in Asia. They both have denied any wrongdoing.
The tennis prize was the most prestigious lot to go under the hammer at a fund-raising dinner attended by Prince Charles at the Victoria and Albert Museum earlier this month.
The event was organised by the British Asian Trust (BAT), a charity set up at Charles's behest to raise money for causes in India, Pakistan, Sri Lanka and Bangladesh.
A source close to the event was quoted by the daily as saying that no money had been received yet from Choudhrie and his gift would not be accepted.
It means the tycoon, whose business interests have included care homes, hospitals, luxury hotels and restaurants, will no longer be invited to Buckingham Palace.
Charles and Camilla, the Duchess of Cornwall, visited some of the projects backed by the charity during an official trip to India last November.
The BAT works with high-profile Asian celebrities and wealthy businessmen, and recently appointed Zayn Malik from the pop group One Direction as an ambassador.
The charity's dinner at the Victoria and Albert Museum was a star-studded affair and guests included Gurinder Chadha, the director of the film Bend It Like Beckham, Preeya Kalidas, the singer and former EastEnders actress, Ronnie O'Sullivan, the five-time world snooker champion, and Becker.
Indian-born Choudhrie, who lives in a 9 million pounds flat in Belgravia, central London, is understood to have been invited by another BAT supporter.
After Choudhrie had secured the prize, Becker went over to his table to congratulate him.
A spokesman for the Choudhries said: "Both Bhanu and Sudhir deny any wrongdoing and full co-operation will be given to the authorities. As far as Bhanu is concerned, he is of course prepared to honour his donation."
The BAT said: "We have never accepted any donation from Bhanu Choudhrie. We did not accept a donation in connection with our recent dinner at the V&A and neither have we accepted any other donation at any other time."