Lobbying row: Cayman Islands cut ties with Tory peer Lord Blencathra by mutual consent after revelations by The Independent

Premier cites 'negative publicity' around the peer's appointment as director of the Caymans' Government Office in London as one of the reasons for ending the £12,000-a-month contract

The government of the Cayman Islands has terminated a lobbying contract with the Tory peer Lord Blencathra by mutual agreement after deciding that its terms were incompatible with new parliamentary rules.

The Independent and the Bureau of Investigative Journalism revealed details last month of the £12,000-a-month contract, signed in 2011, which stipulated that the former Conservative Chief Whip would “make representations” promoting the Cayman Islands’ interests to MPs and peers as well as ministers.

The contract was later altered to state merely that he would make representations to key stakeholders. Lord Blencathra – formerly David Maclean – maintains that he never lobbied either MPs or peers on behalf of the tax haven, whatever the contract might say.

The Caymans’ premier, Alden McLaughlin, cited “negative publicity” around the peer’s appointment as director of the Cayman Islands Government Office in London as one of the reasons for ending the agreement. Mr McLaughlin told the local news service Cayman 27: “We have concluded the provision in the existing contract is in conflict with the rules and we have no choice but to terminate the agreement.” He added: “None of us like negative publicity and it’s not good for the Cayman Islands.”

The premier was visiting London last Monday when The Independent published details of the 2011 contract. Lord Blencathra is now facing a second investigation by the Lords Standards Commissioner over the claims, having himself referred the matter to the Commissioner.

The Commissioner, Paul Kernaghan, scrutinised the peer in 2012 after the original lobbying allegations were printed in The Independent. He found there was “no evidence that Lord Blencathra exercised parliamentary influence on behalf of the Cayman Islands” or provided parliamentary services for gain.

But the Commissioner did not examine the peer’s contract as part of that inquiry.

After the Bureau revealed that the contract, worth more than £140,000 per year,  required the peer to promote Cayman interests to MPs, Lord Blencathra referred himself to Mr Kernaghan for a fresh investigation, which is now under way. “My compliance with the law, or Lords rules, takes precedence over anything which was in my contract,” he said last month. “I made clear that I would not be lobbying Parliament or MPs. Indeed, even that initial contract made no mention of lobbying. That was firmly understood between us.”