Lord Mandelson in conflict of interest row over oligarch

Euro MP queries decision on Russian friend's firm

Lord Mandelson was under pressure yesterday when it emerged that his close friendship with one of Russia's richest men – the oligarch Oleg Deripaska – has prompted accusations of a conflict of interest.

The row centred on calls for a fresh investigation into his part in a controversial decision that exempted his friend's aluminium company from trade tariffs. The now Business Secretary and the Russian businessman were introduced several years ago by a mutual friend, Nat Rothschild. Their friendship was cemented over dinners in Moscow since 2004, and the closeness of the two men was highlighted when Lord Mandelson, 56, holidayed on Mr Deripaska's luxury yacht off Corfu last year.

As reported in The Independent on Sunday last July, their friendship developed at a time when Mr Deripaska's company Rusal was lobbying for exemption from tariffs imposed by the European Commission in 2001 after allegations of Russian and Chinese producers flooding the market with cheap aluminium foil. Yesterday it was revealed that, in December 2005, Lord Mandelson, at that time the EU trade commissioner, personally signed the decision to exempt Rusal.

Now Dr Ingeborg Grässle MEP, a member of an EU committee that has examined the commissioners' code of conduct, wants an investigation. In an interview for Channel 4's Dispatches – investigating links between Russian oligarchs and British peers – being broadcast tomorrow, she said: "This is a completely improper doing... I didn't know that he has signed the decision himself... That means that I will also go on with questions to the commission. Because I think that these kind of things we really do not need."

Dr Grässle added: "I will ask the question: what was his role in this decision? Because for me it is a conflict of interest, when you have a close friend who profits from your decision. What else can you say but that it is a conflict of interest?"

Speaking to The IoS yesterday, she added: "I couldn't believe that somebody took this decision for the company of a good friend. Either he's somebody who doesn't believe in anything or somebody who is rather naive."

Dr Grässle criticised Lord Mandelson's role as being "incredible" and "unethical". "When I talk about the Mandelson case now, and when I tell that Mandelson he has a friend, and sometime after the friend got this decision, everybody is smiling; nobody believes that these things have nothing to do with each other."

A spokesman for Lord Mandelson said the allegations ignored the fact that EU decision-making is "based on a college system where decisions are taken by 27 commissioners. The idea that one individual can influence the process is laughable". The spokesman added that commissioners were not subject to any code of conduct when Lord Mandelson was in Brussels.

Last week Lord Mandelson was criticised by relatives of the Lockerbie victims when he attended a shooting party along with Saif al-Islam Gaddafi, son of the Libyan leader.