Government had concerns over Gurkha fees three years ago

MoD papers from 2007 reveal questions over relocation charges paid by veterans

The Government has been accused of doing virtually nothing about Gurkha veterans being charged "by unscrupulous middlemen" for advice on settling in Britain, despite being made aware of the allegations almost three years.

The issue was used, instead, by Defence minister Kevan Jones "in a cynical and opportunist way" to "smear" the actor and activist Joanna Lumley and other campaigners, it has been claimed.

Appearing before the Commons' Home Affairs Committee, Mr Jones – speaking under the protection of parliamentary privilege – criticised Lumley for not speaking out about the exploitation of Gurkhas. "Her deathly silence," he said, "frankly irritates me."

Mr Jones and the Prime Minister subsequently apologised to Lumley and stressed their commitment to upholding fair treatment for the Gurkhas who had risked their lives fighting for Britain. However, the Government has subsequently doubled the cost of visas for dependants of Gurkhas from around £750 to £1,500 – an increase which many of the veterans leading impoverished lives in Nepal simply would not be able to afford.

Their inability to bring over their relatives – on whom they rely for their welfare – has also effectively meant that the elderly veterans have to abandon hope of living in Britain. Gurkha welfare groups claim that this is the real aim of the price increase.

The latest official actions on Gurkha's rights have reignited the controversy which forced the Government into a U-turn last year, amid claims that ministers had deliberately tried to undermine campaigners.

At his appearance before the Home Affairs Committee in March, Mr Jones also ordered an inquiry into the veterans' payments, specifically naming the solicitors Howe & Co – part of Lumley's campaign team – as a firm which should face questions.

The Ministry of Defence (MoD) has set up a free advice centre in the Nepalese capital, Kathmandu, and "unscrupulous middlemen" were charging fees which were needless, the minister said.

Mr Jones was later forced to issue an "unreserved apology" to Lumley and the inquiry carried out at the behest of the minister by the Legal Services Commission (LSC) has now cleared Howe & Co. In a letter to the firm, the LSC said it had "found no evidence" of malpractice and "we trust that this satisfactory [sic] concludes the matter."

Gordon Brown was also involved in the controversy, offering his own personal apology to Lumley in a telephone call. The Independent has learnt that this was directly linked to a meeting the Prime Minister had held with three members of the Gurkha campaign – Joanna Lumley, Peter Carroll and Martin Howe, from the solicitors' firm – at Downing Street in May 2009.

During the meeting, the Prime Minister requested and obtained a promise from them not to be vocal on the issue, while in return he would ensure that changes they had demanded to the Bill allowing Gurkhas to settle in the UK would pass into law.

The Independent has also seen documents which show that a senior MoD official, Margaret Gilmour, was aware of allegations that the Gurkha Army Ex-Servicemens Organisation (Gaeso) had charged for advice on settlement three years ago.

In an email dated 4 September 2007, she wrote to Howe & Co to say that the matter had been raised with Gaeso whose "response was that they had every right to charge for their services and they saw nothing wrong in taking on such cases if people came to them."

However, in a statement yesterday the MoD said that Gaeso had denied charging fees at a public meeting where Ms Gilmour was present. "In 2007 MoD officials asked Gaeso to respond to a number of accusations. However, these accusations were strongly denied by the organisation during a public meeting and the MoD recognises that Gaeso is a legitimate ex-service organisation," the statement said.

A spokesman added that officials had visited Nepal over a number of years "to use trustworthy sources for information on immigration".

There appears to have been doubts even among government officials whether the inquiry ordered by Mr Jones would lead to a meaningful result. Howe & Co had, in fact, been in touch with the LSC, the body which was eventually to investigate them, after former Gaeso members contacted them to express their disquiet about the fees being charged.

On 2 June last year Davinder Sidhu, a solicitor at the LSC, said in an email: "I am not sure what we can do here. Could you express to Martin [Howe] that we do not want clients paying any organisation for a referral for services that they are or may be entitled to under the Access to Justice Act. Other than that I don't think there is much we can do from here in the UK."

Lumley was unavailable for comment last night, but a source close to her said: "What was particularly upsetting was that Joanna and the others agreed to work behind the scene at the request of the Prime Minister, maintain silence, and then we had Kevan Jones attacking her over that same silence. She will continue to help with the welfare of Gurkha veterans as she has always done."

Kieran O'Rourke, a partner at Howe & Co, said: "One can't help feeling that the actions of Kevan Jones were cynical and opportunist. If Gurkhas are being charged on settlement advice this should be properly investigated and not used as a political gimmick.

"We now have to face another very real problem, the increase in the visa fees, which is having a really damaging impact on the chances of veterans being able to come to this country."