MPs heard that one file from the United States Drug Enforcement Agency referred to "possible air smuggling/money laundering activities under way by Michael Ashcroft". The file reported that in 1994 Mr Ashcroft had been observed taking a flight from the US to the Caribbean on a plane owned and piloted by two suspected drug traffickers.
The allegations brought a storm of protest from the Conservatives, who accused the Labour MP Peter Bradley of abusing parliamentary privilege to put allegations about the Tory treasurer in the public domain. Last night Mr Ashcroft issued a writ against The Times over an article printed yesterday about the Drug Enforcement Agency files held on him.
In an open letter to the editor of The Times, Mr Ashcroft wrote: "Enough is enough... I have nothing to hide... This co-ordinated campaign - this conspiracy - to smear me at a crucial point in the run-up to an important by-election is disgusting."
Mr Bradley used an end-of-term parliamentary debate to lay out a series of claims connected to Mr Ashcroft. "To be caught up in one drugs investigation may just be bad luck - a big man in a small place at the wrong time. But there is more," he said.
As long ago as 1989, Mr Ashcroft's name was linked to a DEA drug trafficking inquiry that stretched across Europe, the United States and Canada, Mr Bradley said.
In 1992, he went on, a man called Thomas Ricke was arrested and jailed for organised crime, the proceeds of which were paid into the Belize Bank, belonging to Mr Ashcroft.
In 1993, the DEA investigated a number of businesses in Belize, about half of which - 12 in all - had links with Michael Ashcroft.
Three years later Mr Ashcroft's name appeared in connection with yet another investigation, Mr Bradley said, and in 1997 a man arrested in Holland on suspicion of drug offences gave the same address in Belize as Mr Ashcroft's BHI Corporation.
Mr Bradley stressed he was not claiming that Mr Ashcroft was guilty of any offence, but added that William Hague, the Conservative Party leader, should be concerned about the allegations.
"It is extraordinary that the Leader of the Opposition has taken no action about it... There is only one man who can decide his fate, and that is the man who says he runs the Conservative Party. The question is, does he dare? Does he have the courage? Does he have the power to sack Michael Ashcroft? Michael Ashcroft is the man who owns the Conservative Party," he said.
Later, another Labour MP, Dennis Skinner, delivered an even more serious attack on Mr Ashcroft, which caused uproar among Conservatives and cheers from his colleagues.
"The Tory opposition are receiving a million pounds a year from one of the biggest drug runners in the West. Isn't it high time that the Leader of the Opposition had the guts to get rid of him?" he asked.
Tim Loughton, Conservative MP for Worthing East and Shoreham, accused Mr Bradley of a "smear" against a man unable to answer. The US State Department had stated it had never raised any concerns about Mr Ashcroft either with Belize or with British ministers, he said.
At Prime Minister's Question Time, Tony Blair responded to a question on the issue by announcing that the Government would publish a draft Bill next week banning foreign donations to political parties. "We should not forget this is brought about as a result of recommendations by the Neill Committee.
"The Conservatives, when in government, consistently blocked any independent inquiry into political financing at all," he said.
But the Bill will not prevent Mr Ashcroft, a joint British, Belize and Turks and Caicos citizen who lives in Florida, from giving money to the Conservative Party.
Recommendations from the Neill Committee on Standards in Public Life, on which the Bill will be based, said people with the right to vote in Britain should be able to make political donations here.
Mr Hague responded: "After Formula One and fox-hunting there is only one political party in which a donation is followed by a change in policy and that is the party over there," he said.
In a recent statement, Mr Ashcroft said: "I have never been involved in drug trafficking or money-laundering. My business affairs are entirely proper and no amount of smear, rumour, or innuendo will alter that fact."Reuse content