A businessman embroiled in an insider-trading case is the face of the University in Hong Kong, it has emerged.

Sir David Li resigned from the Executive Council of Hong Kong after an investigation into insider trading, but is still a key fundraiser for the 800th anniversary campaign, raising questions about the ethical filters present in Cambridge's latest funding drive.

Li, who is head of the alumni organisation Friends of Cambridge in Hong Kong, was investigated by the Security and Exchange Commission for illegally tipping his friends about the News Corporation's buy-out of Dow Jones in 2007. He was ordered to pay $8.1m in an out of court settlement.

Li declined to comment on the issue for legal reasons.

"Li is hardly the kind of figure the University should want to be associated with. There are plenty of prominent, qualified and rather more dignified Cantabrigians to be found in the city," said a source based in China.

Mark Fletcher, CUSU president said: "As students we want to know that the money we are receiving from the 800th anniversary campaign is from an ethical source, and we want the University to be above board and clear about where the money is coming from."

The University said that while the insider-trading controversy was unfortunate, they have drawn a line under it, and emphasise Li's other qualities that make him suitable for the post.

"A line has been drawn under the Dow Jones affair," said a University spokesman. "He is still the chairman of the Bank of East Asia. He was knighted by the Queen four years ago for services to education. He received a BA from Selwyn College in 1964. He is a member of the Guildhall of Benefactors, for people who have donated a considerable amount of money. The main lecture theatre in the law faculty is called the David Li lecture site. He is a great friend of Cambridge, and a philanthropist both to the university and to his former school in Uppingham."

The Friends of Cambridge in Hong Kong is one of the 200 alumni groups around the world who run events and, in many cases, raise funds for the University. The Cambridge Thai Foundation is headed by Anand Panyarachun, a former prime minister of Thailand.

Many of these organisations are fundraising for the Cambridge 800th Anniversary Campaign, which is seeking to raise £1 billion by 2009 to "help secure Cambridge's edge in excellence for the future". Earlier this year the campaign reached £663 million after £155 million was made in the last financial year.

The Friends of Cambridge University in Hong Kong (known as ‘The Friends') was founded by Sir David Li in 1981. As well as fundraising, The Friends raise and manage a scholarship fund called The Prince Philip Scholarship. The Prince Philip Scholarship is a non-means tested cash award of 2,500 pounds per annum, so a promising student from Hong Kong can study at Cambridge.

By Michael Stothard