Critics are calling on the London School of Economics to withdraw a doctorate it granted to the son of Libyan dictator Muammar Qaddafi as he donated £1.5 million to the university.
A Libyan protester holds a sign during a demonstration against Libyan ruler Moammar Gaddafi in Benghazi.
Director of LSE Sir Howard Davies has admitted that he is “embarrassed” about the university's relations with the Qaddafi family saying they should not have accepted the research funding.
"We looked at the pros and cons of engaging with someone like Saif Qaddafi and with the problems in North Africa and we decided that we would do so," Davies told the BBC Radio 4.
The LSE also said it will examine the allegation that Saif al-Islam's cheated to get his PhD degree.
This comes as angry students at the central London campus have called for an independent inquiry into the issue saying the LSE may have given a doctorate to Qaddafi's son to ensure it gets the £1.5 million funding.
Saif al-Islam offered the reward to the university in 2008 shortly after he received a degree from the university's Centre for the Study of Global Governance.
According to Professor David Held from the center there were always concerns at the time of Saif al-Islam's studying there that his work was not his own.
"After he handed in the thesis there was a rumour that he may not have been the sole author. I wrote straight away to his supervisor but there was no substantial evidence," Held said.
This comes as a spokesman for the LSE Students Union said they are “angry” about the issue.
"LSE students are angry and upset that university officials are using degrees at the LSE to raise vast sums of money. There are serious questions about Saif al-Islam's PhD, and we call for an external investigation," the spokesman said.
The questions about the LSE's links to Qaddafi family and the validity of his son's degree were further strengthened when a video emerged showing senior university officials praising the Libyan dictator in a closed door meeting through video link two months ago.
The video shows Qaddafi expressing offensive views about Lockerbie and hitting out at former world leaders including former British PM Margaret Thatcher and former US president Ronald Reagan.
The student who made the video public said the “sycophantic Qaddafi address was held in secret because it was all about keeping money from a tyrant flowing into the LSE”.
"Now that his regime is facing collapse, it's only right that this love-in should be made public," she said.