Clarke in fresh row over Burma links

Kenneth Clarke faced new embarrassment over his post at British American Tobacco last night after he admitted feeling "uncomfortable" about investment in Burma, where the company runs a factory with the country's military regime.

The former Tory Chancellor, who is deputy chairman of BAT, owned up to his misgivings in a letter to a constituent. He added: "The problem in Burma arises when companies start collaborating with an extremely unpleasant regime which is totally contrary to our notions of civil liberties and democracy."

Pro-democracy campaigners seized on his remarks and challenged him to resign from BAT. They also renewed calls for the company to leave Burma, which is subject to trade and investment boycotts by Britain and the European Union.

BAT's Burmese subsidiary, Rothmans of Pall Mall Myanmar, is a joint venture with the Union of Myanmar Economic Holdings, which is owned by Burma's military junta. BAT pays workers in Burma 23p a day – 37p below the UN's definition of extreme poverty.

Burma Campaign UK's director, John Jackson, said: "BAT's collaboration ... is helping to keep this brutal dictatorship in power. Mr Clarke should get them to pull out."

Vera Baird, Labour MP and head of the all-party parliamentary group on Burma, said: "He should clearly – if he's a man of conscience – either resign, disengage completely from BAT or he should use his influence to withdraw."

Mr Clarke claimed it was impossible to have a blanket law banning British firms from doing business with dictators because dictatorship "unfortunately continues to be the form of government in large proportions of the globe".