Jowell fights for her career as row over mortgage intensifies

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The Culture Secretary Tessa Jowell last night was fighting for her political survival after questions remained unanswered over how she became embroiled in corruption allegations against her husband David Mills, a coprorate lawyer to Silvio Berlusconi, the Italian Prime Minister.

Ms Jowell, 57, said she did not ask questions when she agreed to sign a joint application with her husband for the remortgage of their £700,000 home in Kentish Town, north London for £400,000. It is claimed that the loan was paid for within a month by money which her husband is alleged to have received as a "gift'' from Mr Berlusconi.

"I didn't ask for how long the charge would remain for. My husband pays the mortgage so I was perfectly happy in the division of our finances to sign the charge," she said in a BBC interview. "What I did was to sign a form that enabled the bank to take a charge on our house in order that my husband could then buy some investments that he wanted to do.

"I did that because (we have two houses) both our houses are in our joint names. It's as simple as that. It's not an unusual thing to do. It's not improper to do."

She said the money to pay off the loan did not come from Mr Berlusconi. She added: "If I felt I or my husband were harbouring some guilty secret, I would be very worried indeed," she said.

"This is a very tough time. It would be a hell of a lot tougher if I felt that I had done something wrong."

Her signature on the form has dragged her into the Italian corruption scandal, and yesterday overshadowed her joint launch with the Prime Minister of a report on the women's pay gap.

Ms Jowell is a well-liked ally of Mr Blair, but Downing Street was last night unable to answer key questions about the affair. These included when the Culture Secretary had discussed the issue with her permanent secretary and whether the deal breached codes of practice that forbids ministers causing a conflict of interest between public duties and their private affairs, including those of those of their spouses.

There was a further damaging revelation last night when it was reported that five separate mortgages had been taken out on the property.

Mr Mills, an international corporate lawyer, is being investigated by Italian prosecutors over allegations of accepting bribes from Berlusconi, which he denies. Mr Mills said he wanted the money to invest in a hedge fund.

Mr Berlusconi has attacked the prosecution as being politically motivated, He is facing a general election which he could lose.

One of Ms Jowell's closest friends, the constitutional affairs minister Harriet Harman, said the pursuit of Ms Jowell was taking on the appearance of a "witch hunt".

However, Downing Street will be worried that the affair is dragging on, deflecting the Government from Mr Blair's fightback against David Cameron, the Conservative leader, and Labour rebels opposed to his reform agenda.

The Prime Minister's official spokesman relied on assertions by Ms Jowell that in her view she had not breached the code of practice for ministers. The spokesman said Mr Blair still had complete confidence in Ms Jowell, but refused to say whether Ms Jowell had consulted her permanent secretary before applying for the remortgage in September 2000. "She has talked to her permanent secretary to ensure she does not break the ministerial code, " said the spokesman.

Ms Jowell's permanent secretary, Sue Street, a former director of the criminal policy group at the Home Office, was appointed in October 2001, after the mortgage was taken out. The spokesman refused to say whether she had consulted Ms Street's predecessor, saying: "I am not going to give a running commentary."

The shadow Leader of the House, Theresa May, called for an inquiry by Sir Gus O'Donnell, the Cabinet Secretary. He will respond before the end of the week.

Leak of letter increases pressure on Mills

* A damaging letter by Mr Mills was leaked in full last night, challenging his claim that it described a hypothetical case. Part of the letter, which was dated 2 February 2004, said: "The brief relevant facts are these.

In 1996 I ended up with a dividend from Mr B's companies of around £1.5m after all the tax and fees had been paid.

This was all done on a personal basis: I took the risk, and kept my partners right out of it.

Wisely or otherwise, I informed my partners what I had done and, since it was a substantial windfall, offered to pay them (I think) around £50,000 or £100,000 each as what I though [sic] was a pretty generous gesture...

They (B people) knew, in particular, how my partners had taken most of the dividend; they also knew quite how much the way in which I had been able to give my evidence (I told no lies, but I turned some very tricky corners, to put it mildly) had kept Mr B out of a great deal of trouble that I would have landed him in if I had said all I knew.

At around the end of 1999, I was told I would receive money, which I could treat as a long term loan or a gift. $6000 was put in a hedge fund and I was told it would be there if I needed it.

At the end of 2000 I wanted to invest in another fund, and my bank made a loan of the amount, secured on my house etc., of around 650,000 euros. I paid it off by liquidating the $600,000. I attach a copy of the dollar account.

I regarded the payment as a gift. What else could it be?''