Labour seized on confirmation by the President of the Board of Trade that he had discussed the case with Christopher Morgan, described by Robin Cook, the Labour spokesman, as a 'PR consultant to Asil Nadir'.
In an apparent contradiction, Mr Cook said that Mr Morgan had denied discussing Nadir over the lunch. 'Clearly one of them did not think the lunch was entirely above board,' said Mr Cook.
Labour intends to exploit the high- level links and Conservative Party funding from Nadir to challenge the Tories' fitness to govern.
Mr Heseltine said he became involved by having a 'purely personal lunch with a friend of mine' - Mr Morgan. 'He told me he had become involved with Nadir and told me things about the conduct of the case which gave him cause for concern. I explained that I could have nothing to do with this sort of activity. It was entirely a matter for the proper authorities.'
However, Mr Heseltine mentioned it to his private secretary who checked that there was no longer anything going on in his department connected with the case. 'After all, it is a very serious matter, dealing with the conduct of the proper authorities and the whole regulatory process,' added Mr Heseltine.
'I thought to myself whether the things that had been said to me were of sufficient significance that I ought to mention it to a colleague in the Government who would be concerned. That was the Attorney.'
Mr Heseltine said: 'I saw the Attorney (Sir Nicholas Lyell, Attorney General) in the division lobby very soon after this and mentioned to him the things I had been told. He said if there was anything that anybody wanted to say to him, he would like to see it in writing and be able to consider it properly.
'I passed that message on to Christopher Morgan. We have heard nothing since. My own view is absolutely clear. What I did was right and if I had done anything less, it would have been wrong.'
Mr Heseltine confirmed in a BBC interview that he had discussed the issue with Michael Mates, the Northern Ireland Minister, who has been criticised for sending Nadir, shortly before he fled to Northern Cyprus, a watch bearing the message 'Don't let the buggers get you down'.
Mates future 'in balance', page 7Reuse content