The Cash-for-Questions Affair:Fayed says he gave pounds 250,000 to Conservatives

MOHAMED al-Fayed, the Egyptian financier who owns Harrods and whose allegations about payments to MPs for asking parliamentary questions has severely embarrased the Government, made a personal gift to the Conservative party of pounds 250,000 in the mid-1980s it emerged yesterday.

Michael Cole, a Harrods director, confirmed Mr Fayed had given the money to Lord McAlpine, the then honorary treasurer of the party, after he and his two brothers acquired the House of Fraser, which owned Harrods, in 1985. The gift was made 'some considerable time' before the Department of Trade and Industry began an investigation into alleged misconduct during House of Fraser takeover.

Pressure was mounting last night for Neil Hamilton, the corporate affairs minister, to resign after two moves to inquire officially into his failure to declare the gift of a holiday from Mr Fayed.

Alex Carlile, a Liberal Democrat frontbencher, yesterday lodged a formal request for the Commons Select Committee on Members' Interests to investigate Mr Hamilton's failure to declare the six-night stay with his wife in the Ritz hotel, Paris, in September 1987.

Meanwhile, David Alton, the sole Liberal Democrat representative on the Committee of Privileges' 'questions for cash' inquiry, formally notified Tony Newton, the Leader of the House and the committee's chairman, of his wish for it to encompass the actions of Mr Hamilton and Tim Smith, who resigned his Northern Ireland ministerial post on Thursday. Amid speculation yesterday that the inquiry by Sir Robin Butler, the Cabinet Secretary, had covered at least one more minister, Mr Carlile put down a priority written question to John Major asking how many ministers were being, or had been, investigated.

As Downing Street backed Mr Hamilton's claim that he had the Mr Major's 'full support', two members of the Members' Interests Committee, Bill Michie and Terry Lewis, confirmed Mr Hamilton's failure to declare the Ritz holiday had never been properly investigated. Mr Michie said yesterday: 'We didn't investigate it. They are avoiding the issue.'

Mr Smith said yesterday he had made the 'painful personal decision' to resign 'in the interests of the Government and Prime Minister'.

But Mr Hamilton, opening a school in his Tatton, Cheshire, constituency yesterday, lived up to his reputation for irreverance by flourishing a ginger biscuit and promising to declare it in the register.

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