Meanwhile Labour warned that any 'sacrifice' of Mr Mates would not be enough to end the scandal over the wider issue of secret donations to the Tory party.
It is evident that his request last month to Christopher Morgan, Nadir's PR adviser, for the loan of a car for his estranged wife Rosellen broke Questions of Procedure for Ministers, Whitehall's ministerial code.
It was also pointed out yesterday that long before the Nadir affair serious concerns were raised in ministerial circles and at the Ministry of Defence over links between Mr Mates and defence contractors during his tenure as chairman of the Commons Defence Select Committee.
The ministerial procedure guidelines state that 'no minister . . . should accept gifts, hospitality or services from anyone which would, or might appear, to place him or her under an obligation. The same principle applies if gifts, etc are offered to a member of their family.' The rules go on to say that a minister in doubt or difficulty over whether to accept should seek the Prime Minister's guidance - a matter over which John Major will face a parliamentary question to be tabled today by John Denham, Labour MP for Southampton Itchen.
Mr Mates insists the car was returned after 10 days, but the rules say all gifts should in any event be declared to the minister's departmental permanent secretary. Neither Mr Mates nor the Northern Ireland Office could be contacted yesterday for confirmation that that had been done.
Past concerns about his judgement arose during his chairmanship of the defence committee from 1972 to 1992, during which time he would have received confidential information which the MoD traditionally supplied for background use. One ministerial source said: 'There were some quite serious concerns about whether he was able to use information in a way which would be helpful to his consultancy work. There was certainly anxiety inside MoD.'
No impropriety has ever been proved. But the source said the links appeared to be part of a pattern of misjudgement that culminated in the gift of a watch to Nadir.
The minister described as 'fanciful' Mr Mates's reported claim that the pursuit of Nadir on fraud charges in connection with his Polly Peck empire was inspired by MI6 because his economic success in northern Cyprus was an obstacle to an American- backed plan to unify the island.
The comments reveal a degree of ministerial impatience. A senior Tory closely in touch with backbench views said opinion was in favour of Mr Mates resigning in the next few days: 'He should do the honourable thing.'
John Major, arriving in Copenhagen last night for the EC summit, refused to comment about Mr Mates's future. But the Prime Minister said that money given to the Tory party by Nadir would be returned if it was illegally donated.
The protest over the secrecy of Tory party financing has been further fuelled by reports that Touche Ross, the accountants winding up Nadir's business affairs, have established on a balance of probabilities that pounds 365,000 he donated to the party had been stolen from Polly Peck, and that a second fugitive tycoon, Octav Botnar, secretly donated at least pounds 100,000 during the Thatcher years. Mr Botnar, the former head of Nissan UK, lives in Switzerland, from where he cannot be extradited to face tax fraud charges brought by the Inland Revenue.
Robin Cook, Labour's trade and industry spokesman, said the revelation about cash from the Polly Peck empire finding its way to Tory party coffers was not just a private problem for Mr Mates but 'a disgrace for his party, and needs a political answer, not a personal sacrifice'.Reuse content