The sleaze report: Scandal that changed the face of politics

The cash for questions affair permanently changed the face of British politics. It led to the demise of three ministers, and it resulted in the setting up of the Nolan Committee on Standards in Public Life, and the creation of a Parliamentary Commissioner, Sir Gordon Downey, whose report was published yesterday.

The hero/villain of the affair is Mohamed al Fayed, the owner of Harrods. The villain, because it was largely his patronage that led many MPs to err by accepting money to ask questions in Parliament. The hero, because it was his information that led to the first publication of the details of the affair.

Certainly, without Mr Fayed's information, Mr Hamilton, Mr Smith and the rest would probably still be respectable MPs; Jonathan Aitken, who was also downed by Mr Fayed's information, might be the Tory leader, and Ian Greer Associates would still be advertising its wares on the back of Vacher's Parliamentary Companion.

The story starts with the battle between Tiny Rowland, who then owned the Observer, and the Fayed brothers, for control of Harrods, which culminated in their successful bid in 1984.

Mr Rowland retaliated, using the Observer to publish attacks on Mr Fayed who, in turn, responded by employing the political lobbyist, Ian Greer, to counter the criticisms. Mr Greer enlisted the help of numerous Tory MPs, including Neil Hamilton. Other MPs who helped included Tim Smith, Sir Michael Grylls and Andrew Bowden.

Mr Fayed poured cash into Ian Greer Associates, which was disbursed to 40 mainly Tory MPs for election expenses - not, in itself, against the rules. He was also generous in his hospitality, particularly to Mr Hamilton, who ran up a bill of pounds 4,221 at the Paris Ritz in September 1987.

Mr Fayed wanted to be a British citizen, but his application was being blocked. He couldn't understand why all the money he had paid out had not reaped any benefits. Eventually he began to tell his tales to journalists.

In September 1994, he summoned Brian Hitchen, then editor of the Sunday Express, to his office and told him the tales of cash for questions. He specifically named Neil Hamilton and Tim Smith.

Mr Hitchen alerted John Major to the allegations, and the Prime Minister set up an inquiry headed by Sir Robin Butler. Five days before Sir Robin's inquiry was published, towards the end of October, the Guardian, which had been alerted by Mr Fayed, ran a story about cash for questions involving Mr Smith and Mr Hamilton.

Mr Hamilton and Mr Greer launched a libel action against the Guardian, but days before it was due to reach court in October 1996, first Mr Greer then Mr Hamilton pulled out. It gave the media the opportunity to run the stories over and over again.

The matter was referred to the Commons Standards and Privileges Committee, along with the behaviour of two Tory ministers, David Willetts and Andrew Mitchell. Mr Mitchell was cleared, but Mr Willetts had to resign as Paymaster General after the committee found he had "dissembled". Sir Gordon was expecting to present his main findings just before the election, but John Major's decision to prorogue Parliament prevented publication.

The Guardian responded by publishing documents resulting in the resignation of Mr Smith as a parliamentary candidate. Mr Hamilton wobbled but stayed on, only to be defeated by Martin Bell.

It looked, to the electorate, that Mr Major had avoided publishing the report before the election, and certainly its damning contents would not have helped the Tories' cause. But neither did withholding it, and all the MPs investigated who were standing lost their seats.

Leading article, page 19