A former Thailand MP who is now the secretary general of the Thai chamber of commerce is facing a £16m legal claim from Tesco for speaking out against the retailer in his home country.

In a speech to 150 activists, Jit Siratranont, 56, described the retailer's expansion into Thailand under the name Tesco Lotus as aggressive, but admitted that he made an error saying that the firm made 37 per cent of its income from the Far Eastern nation. But his speech, he claims, urged conciliation between Tesco and small retailers to head off the prospect of riots over the store's rapid incursion into the country.

Siratranont said: 'The aggressive policy of expanding business in Thailand, not only in the big cities but also in the districts and sub-districts, is a contentious issue. The large-scale expansion of the big retailers must be exercised with great care - not too aggressively and too rapidly - to reduce the potential tension, which could lead to serious conflict. There is also the need for the small retail traders to adjust to changes. Tesco Lotus must take all of this into account.'

Separately, Kamol Kamoltrakul, an academic, is also facing a legal claim for £2m from Tesco Lotus for an article he wrote in Bangkokbiznews. Kamoltrakul also criticised Tesco's 'aggressive' expansion but admitted he repeated the mistake of saying Tesco Lotus contributes 37 per cent of Tesco revenue.

The action has sparked criticism from British campaigners accusing the giant supermarket of being heavy-handed. Claire Melamed, at poverty campaign group ActionAid, said: 'It is worrying that, rather then enter into a dialogue with campaigners over the effects of its expansion, it seems Tesco would sooner just slap them with a lawsuit.'

A Tesco spokesman said: 'We have issued proceedings against two individuals in connection with a sustained campaign of false and misleading statements about Tesco Lotus in Thailand. The suggestion that profits from Tesco Lotus are not reinvested in Thailand is blatantly untrue. The reality is that we have invested well over £1bn. While we believe people are entitled to their opinions, it is our belief that in these cases Tesco Lotus was seriously defamed. Both cases are being dealt with by the Thai courts and we await the outcome. We regret that we have had to resort to this action and hope the matter can be resolved by agreement.'

Tesco's expansion in Thailand has attracted significant opposition and has become a major political issue.

Problems in Thailand for the UK's top retailer come as analyst reports suggest Tesco's new California-based convenience stores are missing sales targets by as much as 70 per cent.

Separately, analysts at Goldman Sachs have downgraded the retail giant, urging investors to sell Tesco shares, which fell to 386.75p on Friday, their lowest level since October 2006.