Call for anti-sleaze rule rejected

The Prime Minister has rejected an anti-sleaze demand that companies employing MPs should not be allowed to bid for public contracts. The Independent has learned that at least three former ministers are linked to companies associated with bids for the pounds 1.6bn sale of Ministry of Defence married quarters.

The deal prompted the Tory MP Richard Shepherd to urge John Major to act, to counter any perception of sleaze. The Prime Minister declined.

While there is no suggestion of any impropriety in the latest cases, and the present parliamentary and Whitehall rules on MPs' conduct and Government commercial contracts make no reference to the issue, Lord Nolan has recently been asked by the Opposition spokesman Derek Foster to investigate the involvement of Tory interests in companies bidding for contracts.

Witnesses at a recent hearing of the Commons Select Committee on Defence revealed that Electra Fleming - currently under attack for the terms of its purchase of Her Majesty's Stationery Office - was one of the backers for the lease-back deal, led by the Japanese bank Nomura, for 2,370 MoD homes. The committee was told the agreement had Mr Major's personal approval.

Electra Fleming was part of an unsuccessful consortium which bid for the MoD estates. Having succeeded, the Japanese company Nomura laid off some of its liability with the US-based finance company Black Rock, which in turn laid off pounds 6.3m of liability with Electra Fleming.

Tom King, former Secretary of State for Defence, is on the board of Electra Investment Trust plc, and the former government Chief Whip Tim Renton is a consultant to Robert Fleming Holdings - the parent companies which each own a half stake in Electra Fleming.

A spokesman for the investment bankers Merrill Lynch Europe Ltd told The Independent that it was in an unsuccessful consortium bidding for the estates. Sir Archibald Hamilton, another former defence minister, is a parliamentary consultant with Merrill Lynch.

A senior member of the defence committee, the Liberal Democrat Menzies Campbell, told The Independent last night: "The committee would have had to peruse the register of companies in microscopic detail to establish whether there was any connection between a serving MP and any of these bids."

A similar complaint was made by Mr Shepherd last October in a letter to the Prime Minister, when he said: "A reading of the Register of Members' Interests would not necessarily indicate that a member might be in such a position."

Mr Major recently replied: "A blanket ban on firms employing MPs might well result in the rejection of suppliers able to offer good value for money."

But in a Commons debate last Tuesday, Mr Shepherd complained of the "curse of commercial confidentiality" - and cited the sale of MoD housing as an example of unnecessary secrecy. "I understand that members of the Select Committee on Defence were given information that was not available to other members of the House ... However, the information was available to members if they had commercial associations with commercial companies that wished to make a bid," he said. "That is wildly inappropriate."

Mr Renton told The Independent that as a consultant to Robert Fleming, he was not involved in bids made by Electra Fleming. Sir Archibald was not available and Mr King did not return The Independent's call.

A Commons motion tabled by the Labour frontbencher Brian Wilson says that the pounds 54m sale of HMSO to Electra Fleming was "hopelessly tainted and against the public interest". Robert Fleming had given pounds 527,000 to the Tory party, while Electra Investment Trust, with Mr King and the Tory peer Lord Vinson as board members, "has chipped in at least pounds 40,000".

BBC poll row

The BBC was forced to close the first round of polling for its annual Today Programme Personality of the Year award yesterday after discovering an "organised attempt" by Labour staff to distort the voting in favour of the party leader, Tony Blair.

Page 3

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