The money is compensation for a sugar business that Guyana nationalised in 1975.

The cash-strapped country, which is so poor that the international financial community has written off 90 per cent of its debts, has already paid back £6m of what was a £13m debt.

But it defaulted on repayments in 1989 following the Latin American currency crisis. Now interest has swelled the debt to £12m.

Repaying it would cripple the country, a spokesman for the President's office said. 'It would have serious implications in our budget capacity. It would compromise our social services and economic obligations.'

The group's turnover, at £5.2 billion, dwarfs Guyana's GDP, which stands at £2.15bn. Its government's entire annual income is just £120m - and Big Food Group is demanding a tenth of that.

The group is refusing to back down and has forced Guyana to a binding World Bank arbitration tribunal hearing which will take place at the end of this month in London.

The nationalised Guyanese sugar business was originally owned by Booker, the cash-and-carry firm which merged with Iceland in 2000. Booker had made provisions for the Guyanese debt. It accepted it may get a chunk of the debt following a privatisation of the sugar business. But privatisation is not on the Guyanese government's agenda and the group's management, led by Bill Grimsey, has decided to pursue it.

Big Food Group claims that the nationalised sugar business is worth £1bn, that Booker contributed much to Guyanese society, and that it has not forced the company into arbitration.

But aid workers are furious. An alliance of the Jubilee Debt Campaign and the World Development Movement is to hold protests later this month.

Ashok Sinha, of Jubilee, said: 'The bottom line is that this is predatory behaviour. In the UK, taxpayers have accepted that this country is entitled to debt relief. It is trying to haul itself from the brink and now the Big Food Group are saying they should be exempt.

'This country hasn't been granted debt relief just so that Big Food Group can pick up a slice of the proceeds. Money from this relief needs to be spent on attacking poverty.'

Big Food Group is used to being at the centre of controversy. It has had a troubled two years following a disastrous move into organic food and difficulties merging the two businesses. Its share price has plummeted.

But it still makes healthy profits, which last year came in at £12m before tax. It was recently criticised for keeping a corporate jet at a cost of £400,000 a year when it was ruthlessly cutting costs. And former founder Malcom Walker was castigated for selling £13.5m worth of shares ahead of a serious profit warning.