Ashcroft Affair: Deal ends `running sore' for the Tories Times

ASHCROFT AFFAIR: Newspaper and Conservative Party treasurer settle out of court in libel case over drug-running allegations

THE ASHCROFT affair was a running sore for the Tories which William Hague wanted healing as quickly as possible.

The deal with The Times gave the Conservative leader what he wanted. The allegations surrounding the party treasurer had forced the Tories on to the defensive since it emerged on 5 June that Michael Ashcroft, a tax exile, had donated pounds 3m to the party and was planning to give another pounds 1m. Although the payments were legal, Mr Hague had promised to clean up party politics and end foreign donations.

He was haunted by the prospect of the Tories being dogged by sleaze allegations under his leadership. Within two days it was confirmed the Tory leader had nominated Mr Ashcroft for a peerage, but it had been turned down by the honours scrutiny committee.

Peter Bradley, a Labour MP, tabled a Commons motion on 15 July expressing surprise that the Tories should have as their treasurer a British tax exile domiciled in Florida conducting his principal business activities in Belize and serving as that country's UN representative.

The Tories had hoped to make inroads into Labour's lead in opinion polls after their successful showing in European elections, but the Ashcroft affair dragged them down. They were drawn into a summer of denials and rebuttals, and Mr Hague's personal standing failed to close the gap with Tony Blair.

Peter Stothard, the Times editor, also had his neck on the line, and was expected to be dismissed by Rupert Murdoch if it had lost the libel action.

Baroness Thatcher backed Mr Ashcroft on 19 July after reports that the US Drug Enforcement Administration had files naming him. On 20 July the US State Department released a confidential briefing note stating it had never raised concerns about Mr Ashcroft with the British or Belize governments. Mr Bradley used a Commons debate on 21 July to restate the claims that Mr Ashcroft had been linked to a DEA drug-trafficking inquiry that stretched across Europe, the US and Canada. Mr Blair announced plans to introduce a Bill to ban foreign donations to political parties.

Mr Ashcroft waited for his moment to strike back on 22 July, the eve of the Eddisbury by-election, after fresh allegations in The Times. He focused his action on a report based on DEA files suggesting he was suspected of drug-trafficking and money-laundering. As a financial supporter of Crimestoppers and an anti-drug-addiction charity, he felt forced to sue for libel.

The Times confirmed last night that it had no evidence that Mr Ashcroft or any of his companies had been suspected of drug-related crimes or money- laundering.

The discovery that he had paid his donations on foreign bank cheques sparked more controversy. On 25 November he wrote in The Independent that he had never made any secret of donations to the Tories. "So why the fuss now? I have no doubt that this is a smear tactic," he wrote. He compared himself to another international businessman with assets and influence in a number of countries - Mr Murdoch, owner of the The Times. "To attack him for the way he runs his life would be absurd. So why is one of his newspapers attacking me for the way I run mine?"

The key figure in brokering the deal was, reportedly, the widely respected editor of Sunday Business, Jeff Randall. Mr Randall's reputation as a safe pair of hands for the peace deal was enhanced by a formidable network of City contacts garnered from his days as PR to top Square Mile firms and for seeing home "market moving" finance stories as a journalist.