Fighting for the corporation and his job: the banker accused of being a crony

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Gavyn Davies's priority, until yesterday, had been to ensure that the BBC's Royal Charter - and with it the licence fee - was renewed in 2006. As the BBC battles to protect its journalistic reputation after David Kelly's death, the corporation's chairman could have a bigger fight on his hands: to save his job.

Mr Davies was dragged into the affair when the Secretary of State for Defence, Geoff Hoon, wrote to him claiming Dr Kelly was Andrew Gilligan's source. Mr Davies refused to identify the source, replying: "You will recognise that it is a cardinal principle of good journalism that sources should never be revealed, no matter how intense the pressure may be."

Questions will be asked whether Mr Davies should have made more strenuous efforts to find out the identity of Mr Gilligan's source before deciding to draw a line in the sand over the issue.

The stand-off is an ironic turn of events for the multimillionaire, often dismissed by political and tabloid critics as a government "crony".

Upon his appointment 22 months ago, Mr Davies, a close friend both of Tony Blair and the Chancellor, Gordon Brown, resigned his long-standing Labour membership, declaring: "I am absolutely confident the public will feel comfortable that the impartiality of the BBC is uppermost in my mind."

But the gibes have continued, not least because his wife, Sue Nye, is first political secretary at the Treasury. Mr Davies was a former adviser to Mr Brown, chairing an inquiry into the corporation's future financing two years before he was appointed chairman.

Until this storm erupted, the fiercest controversy he faced came when he attacked the BBC's "typically southern, white, middle-class" critics who "get more out of the licence fee than they put into it", suggesting the corporation should pay more heed to "the Asian teenager on the streets of Leicester".

Although Mr Davies was born in Wales, his early days were spent in Rhodesia, where his father ran a multiracial school. As tensions rose in the country in the early 1960s, the family returned to Britain, settling in Southampton, when Gavyn was 11.

He graduated in 1972 from Cambridge University with a first-class degree in economics and joined Harold Wilson's Downing Street policy unit two years later.

After Margaret Thatcher came to power, he moved into the City, eventually joining the investment banker Goldman Sachs, where he embarked on a successful, and massively lucrative, career. Some estimates put his personal fortune at more than £130m.