Northern Rock accused of seeking funds in Harare

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The Government has been forced to scour Northern Rock's records for details of its dealings with Zimbabwe after it emerged that the newly nationalised bank had been touting for business in Robert Mugabe's pariah state.

Civil servants demanded answers from the bank's management last Thursday after the Foreign Secretary, David Miliband, was confronted with details of Northern Rock's efforts to attract funds from investors in Zimbabwe, where violence has continued after the run-off presidential election 10 days ago which has been internationally denounced as a sham.

Northern Rock (Guern-sey), a wholly owned offshore investment arm of the UK bank, had been advertising new accounts available to a select group of nations, including "Egypt, South Africa and Zimbabwe", until the end of last week. The bank's website replaced Mr Mugabe's state with Kenya on Thursday evening, shortly after Mr Miliband was challenged over the arrangement in the House of Commons.

A Northern Rock spokes-man later claimed the bank had not solicited new business from Zimbabwe for some time, although it still maintained existing accounts from Zimbabwean citizens. But the shadow Foreign Secretary, William Hague, has now written to Mr Miliband to demand full details of the bank's current business with Zimbabwe and investments dating back several years.

The Conservatives want to know whether the Rock has accepted money from President Mugabe and 131 members of his Zanu-PF ruling elite placed on a banned list under the "smart sanctions" regime agreed by the European Union.

The revelation that a bank nationalised after being rescued from crisis in February has been touting for business in Zimbabwe is an embarrassment for the Government as it attempts to encourage British companies to invest ethically in the country – or reconsider doing business there at all.

The IoS revealed last week that six Tory MPs and one Liberal Democrat had invested hundreds of thousands of pounds in companies with significant business in Zimbabwe. The Lib Dems last night confirmed that their MP Sir Robert Smith had agreed to keep his Zimbabwe-linked investments "under active review" after he was summoned to explain himself to his leader, Nick Clegg.

The Foreign Office minister Lord Malloch-Brown responded to the revelations by warning that the "game is changing" and firms would find it harder as sanctions tighten.

Mr Mugabe told a rally on Friday: "The British are threatening to withdraw their companies. We say: the sooner you do it the better. Please, Mr Brown, withdraw all your companies from Zimbabwe."

President Thabo Mbeki of South Africa arrived in Harare yesterday to meet Mr Mugabe and a breakaway faction of the Movement for Democratic Change (MDC). Its support could give Mr Mugabe a parliamentary majority over the main MDC, whose leader, Morgan Tsvangirai, refuses to accept Mr Mbeki as mediator.