Andy Coulson held shares in News Corporation while he was David Cameron's head of communications at Downing Street, at a time when the Government was deciding whether to approve the company's takeover of BSkyB, it is revealed today.
Mr Coulson, who faces a tough time when he gives evidence to the Leveson inquiry this Thursday, was awarded the blue-chip shares as part of his pay-off when he resigned as editor of the News of the World over the phone-hacking scandal in 2007.
The revelation raises difficult questions for the Prime Minister over whether he knew about Mr Coulson's financial interests.
Crucially, Mr Coulson was in possession of the shares when he was among those advising Mr Cameron over the PM's decision to hand responsibility for News Corp's bid to take over BSkyB to Jeremy Hunt in December 2010, The Independent on Sunday has learnt.
Mr Coulson's shareholding means that he stood to gain financially from News Corp's planned takeover of the digital broadcaster, because Rupert Murdoch's company would have seen its stock soar. In the end, Mr Murdoch withdrew the bid in July 2011 when the company was grappling with the fallout from the revelation that the News of the World had hacked Milly Dowler's phone.
It is not known whether Mr Coulson declared the potential conflict of interest to the then Cabinet Secretary, Gus O'Donnell, or whether the matter arose when he was appointed communications chief, first by the Conservative Party in 2007, and in May 2010 when he started work at No 10.
Mr Cameron and George Osborne, who was central to the hiring of Mr Coulson, have already been criticised for failing to carry out sufficient checks on what the former editor knew about hacking.
But the fresh disclosure about Mr Coulson's shares will put further pressure on Mr Cameron over whether he carried out "due diligence" in appointing Mr Coulson in May 2007. Questions for the Prime Minister include whether he, as a former executive for Carlton, a major media company, should have asked Mr Coulson whether he had been given any shares as part of his severance package from News International. Mr Coulson's pay-off from the media company also included severance payments which were staggered over time and continued when he began working for Mr Cameron. News International sources indicated the compensation package was "generous".
Mr Coulson was subject to a type of vetting before starting work for the Tories and again before he entered No 10, but this would not have picked up on financial interests. Mr Coulson resigned as Mr Cameron's director of communications in January 2011.
The shareholding could be picked up by Lord Leveson this Thursday.
All special advisers are classed as civil servants under the Civil Service code, which states that conflicts of interest must be declared to senior management. Civil servants must declare "to their department or agency any business interests... shares or other securities which they or members of their immediate family [hold]... which they would be able to further as a result of their official position".
No comment was available from No 10 or Mr Coulson.