AS THE wine flowed at a glitzy Washington fund-raising dinner for the London City Ballet back in 1990, a businessman let his arm slip casually across the back of the chair occupied by Diana, Princess of Wales - a lapse which has been portrayed since as a gaffe.
Perhaps Michael Ashcroft, whose ADT security company had flourished under Margaret Thatcher's regime, was simply enjoying the company of one of the world's most beautiful women. Or perhaps he had other things on his mind.
As he revelled in his proximity to the Princess, was he also perhaps contemplating the new financial laws he was promoting at the time in Belize? Those laws, he hoped, would give his BHI Corporation a 30-year tax exemption in the Central American state.
The multi-millionaire has always been something of an enigma, spending many hours jetting between continents, tying up business deals and meeting contacts. An acquaintance once described him as the "Scarlet Pimpernel" - always hard to pin down.
This is a man who can comfortably inhabit several worlds at once; a man who thinks little of completing a company takeover in the United States one day, attending a top-level social function in London and then relaxing with friends at the dog track or a Michael Jackson concert.
However, yesterday's allegations in the House of Commons by Peter Bradley MP, that Mr Ashcroft's name was linked with investigations into drug and money laundering while he rubbed shoulders with some of the world's most eminent public figures will still come as something of a shock.
When the businessman moved ADT to Bermuda in 1987, reportedly because he was fed up with sniping and snobbery from City of London figures, he did not cut his links with the British establishment. In fact he spent the late 1980s developing ever-closer friendships with senior Tory figures such as Cecil Parkinson and Kenneth Baker. He even flew back to Britain from the US to bid for a signed photograph of Margaret Thatcher at a Conservative Party ball.
At around the same time - in 1987 - he set up the charity Crimestoppers, whose list of trustees has since borne the names of many of Britain's great and good. Among those who run the charity are Sir Peter Imbert, the former Metropolitan Police Commissioner, and Sir Denis Thatcher, husband of Margaret.
Over the past 12 years the charity, chaired by Mr Ashcroft, has set up numerous anti-crime phone lines and has been responsible for 29,000 arrests.
His support of the London City Ballet amounted to pounds 300,000 between 1993 and 1995, and for many years ADT supported the London marathon.
Over the same years, though, according to Mr Bradley in the House yesterday, the businessman's own name featured in files compiled by US law enforcement agencies.
According to Mr Bradley, his name first appeared in 1989, in connection with a US Drug Enforcement Agency investigation spanning Europe, the US and Canada.
At around the same time, Mr Ashcroft, a Tory donor since the early 1980s, had begun to show an interest in becoming treasurer of the party. The appointment was blocked, however, partly by the outgoing treasurer Lord McAlpine.
It may well have been that the peer was concerned about a loose connection between Mr Ashcroft and the ongoing City scandal connected with the collapse of the Blue Arrow group.
Mr Ashcroft was not criticised in the DTI inspectors' report on the Blue Arrow affair, but was mentioned in connection with a number of share dealings.
One of Mr Ashcroft's friends, the businessman Tony Berry, faced DTI instigated legal proceedings arising from the company's failure, which could have resulted in his disqualification as a director. The action was dropped minutes before a court hearing.
Later, Mr Ashcroft found consultancy work in his company for Nicholas Wells, an investment banker who had been given a suspended 18-month prison sentence after being found guilty of conspiring to mislead the markets in connection with the Blue Arrow affair. The conviction was later quashed by the Court of Appeal.
As the Blue Arrow case dragged on and Mr Ashcroft's involvement in Belize affairs became more intense, he stepped in again to help a Tory contact. In 1991 he launched the ADT City Technology College in Wandsworth, south- west London with a pounds 1.7m donation.
Mr Ashcroft has continued to support the school ever since, though one of the charities through which he has done so is currently facing an investigation by the charity commissioners. The charity paid an unnamed member of staff at the school between pounds 140,000 and pounds 150,000 per year, according to its accounts.
The early 1990s were a busy time for Mr Ashcroft, but he still found time for relaxation. Between 1991 and 1992 he became friends with the model Paula Hamilton, who became famous when she starred in the Volkswagen car advertisements during the 1980s. He gave money to her charity, Tuskforce, and later paid for her to go into rehab for alcoholism treatment.
According to Mr Bradley, it was at about this time that one of Mr Ashcroft's business interests attracted attention when a man called Thomas Ricke was arrested and jailed in 1992 for laundering the proceeds of his crimes through Mr Ashcroft's Belize Bank.
In 1993, there was a change of government in Belize and the tax laws he had promoted came under threat from the newly-elected United Democratic Party government, rivals of the Ashcroft-funded People's United Party. Despite that, Belize Holdings reported record results that year.
Mr Ashcroft's tax advantages remained, though, after attempts to change them were blocked by the British Foreign Office. He also retained a 50 per cent stake in the company operating the country's "flag of convenience" shipping register.
The change of government coincided with a DEA investigation into Belize companies, according to Mr Bradley. Half those companies, 12 in all, were allegedly linked with Mr Ashcroft.
The following year, according to Mr Bradley in the House, the businessman's name cropped up again in a DEA file. This time, there were reports that he was observed taking a flight from the US to the Caribbean. The file is said to have referred to "possible air smuggling/ money laundering activities under way by Michael Ashcroft," Mr Bradley said.
At around that time, Mr Ashcroft felt confident enough of his standing in the region to take four Conservative MPs on a trip to Cuba, the Turks and Caicos, Belize and Panama.
In 1996, as the next UK general election came into view, the businessman's name was again mentioned in connection with another investigation, according to Mr Bradley. That autumn, having recently become a citizen of the Turks and Caicos islands, he flew into London and hired the Grosvenor House Hotel for a pounds 300,000 50th birthday bash.
Trouble was looming, however. A few weeks after the party Charles Drace- Francis, a Foreign Office mandarin, met Mr Ashcroft for breakfast and found him looking "hung-over" and with a shirt button missing.
The businessman had $1bn (pounds 625m) cash "burning a hole in his pocket," the official reported, and he wanted to open a bank in the Turks and Caicos because he could not put it in his Belize Bank. Mr Ashcroft had threatened to get politicians in the Turks and Caicos to "stir up trouble for us" if he did not get his way, Mr Drace-Francis said in a note of the meeting.
As the Tories contemplated the loss of power in 1997, another diplomat weighed in. Gordon Baker, former British High Commissioner in Belize, advised against making Mr Ashcroft the next chairman of Caritag, a trade quango. "Nor I am any nearer to knowing the truth of the rumours about some of Ashcroft's business dealings. But those rumours do cast a shadow over his reputation which ought not be ignored," he wrote in a memo.
In 1997, Mr Bradley told the House, a man was arrested in Holland on suspicion of drug offences who then allegedly gave his address as Mr Ashcroft's Belize company headquarters.
By now, Mr Ashcroft's donations to the Tories had risen to pounds 1m per year, and by October 1998 he had taken over as treasurer of the Conservative Party. This was not his main activity though - in the very next month he launched a bid to return to the British stock market with his new company, Carlisle Group. He also took time out to host an anniversary party for Crimestoppers.
But within months, the fortunes of a man who had always lived at the heart of controversy began again to slip. First there were allegations about his role in Belize, then murmurings of discontent from some senior Tories.
By the time the affair began to build to a crescendo, Mr Ashcroft's nomination for a peerage had already been rejected by the Honours Scrutiny Committee. His friends said he would never give up without a fight, and last night he was preparing for one.
PETER BRADLEY, Labour MP for The Wrekin, told the Commons that the files he had seen were from the US Drug Enforcement Administration (DEA), the FBI and the International Narcotics Bureau and had also been seen by The Times newspaper, which first published allegations over Michael Ashcroft's Belize-based interests.
Mr Bradley told MPs yesterday: "In 1989 Mr Ashcroft's name was linked to a DEA drug-trafficking inquiry that stretched across Europe, the US and Canada ... "
In 1992 a man "was arrested and jailed for laundering money gained from organised crime through Michael Ashcroft's Belize bank.
"In 1993 the DEA conducted an investigation of Belize- linked businesses, half of which were connected to Michael Ashcroft. Twelve of the 20-odd that they investigated had links to Michael Ashcroft.
"In 1994 the DEA file reports observing Michael Ashcroft taking a flight from the US to the Caribbean and it referred, and I quote, to `possible air smuggling/money- laundering under way by Michael Ashcroft'.
"And it reported also that the plane was owned and piloted by two suspected drug-traffickers."
Mr Bradley continued: "In 1996 he was the subject of another investigation.
"In 1997 a man arrested in Holland on suspicion of drugs offences gave as his address the same address in Belize as Mr Ashcroft's principal company, Belize Holdings. These are serious matters. I do not claim that Michael Ashcroft is guilty of any offence. I simply do not know."
However, he said, nor did the Tory leader, William Hague, "but he above all should be concerned about these allegations. The drip, drip, drip of disclosures is becoming a torrent which threatens to engulf the Conservative Party.
"And it is extraordinary that the Leader of the Opposition has taken no action about it." Mr Bradley demanded that Mr Hague refer Mr Ashcroft to his party's integrity and ethics committee, sack him as treasurer and return donations he had made to Tories in recent years.
"Michael Ashcroft says he will not go, so there is only man who can decide his fate and that is the man who says he runs the Conservative Party," declared Mr Bradley.
"The question is, does he dare? Does he have the courage? Can he afford, does he have the power, to sack Michael Ashcroft, because Michael Ashcroft is the man who owns the Conservative Party. His is the party that says that sleaze is a thing of the past but is running its campaign in Eddisbury on money from Belize, which tomorrow will ask the people of Eddisbury to place their trust in it.
"Does the Leader of the Opposition want it said that Michael Ashcroft is the man who defines the Conservative Party?" The saga was a "real test" of Mr Hague's leadership qualities and "he has a big decision to make".
Mr Ashcroft - who, Mr Bradley claimed, was motivated by "the ruthless pursuit of his bottom line" rather than political convictions - has said he was aware of one investigation by the DEA.
He said he believed it had concluded in 1992 and the principal interest was Belize rather than him. Mr Bradley said, before raising the new allegations: "To be caught up in one drugs investigation may just be a matter of bad luck - a big man in a small place at the wrong time. But there is more. I have seen documents, documents also seen by The Times ... all of them refer to Michael Ashcroft and to his business interests.
"I have no reason at all to believe that they are forgeries: they are taken from the files of the US investigation, intelligence and enforcement agencies and they make disturbing reading."