Conservative Party co-chairman Lord Feldman told the High Court yesterday that banker Nathaniel Rothschild introduced him to Russian oligarch Oleg Deripaska, right, during a holiday in Corfu.
Lord Feldman had been served with a witness summons by Associated Newspapers, which is fighting a libel action brought by Mr Rothschild over a May 2010 story in the Daily Mail.
Mr Rothschild, 40, is seeking "very substantial" damages from Associated Newspapers over being portrayed as a "puppet-master" who brought together Lord Mandelson, then a European Trade Commissioner, and Mr Deripaska in January 2005.
In evidence, Lord Feldman said that in August 2008, the last day of a family holiday, he accepted a social invitation and joined Mr Rothschild and MP George Osborne at the Swiss-based financier's villa.
While discussing British and American politics, Mr Rothschild asked about his involvement in the party – Lord Feldman had just become chief executive - and suggested that his friend, Mr Deripaska, could be interested in making a party donation, the court heard. Lord Feldman said he had not met Mr Deripaska previously and was not aware who he was, but Mr Rothschild explained that he was a Russian businessman who had been visiting him.
"I explained clearly to Mr Rothschild that there are very strict rules on donations to political parties in the UK," Lord Feldman told the court. "At no point did Mr Osborne or I solicit or ask for a donation, suggest ways of channelling a donation or express any wish to meet with Mr Deripaska to discuss donations."
He said that three weeks later Mr Rothschild suggested the possibility of him hosting a dinner for the Conservative Party. Mr Rothschild mentioned that Leyland DAF was interested in making a donation to the party.
Lord Feldman said: "I said that I was not sure if such a donation was appropriate... Later that day it was decided after consultation with senior party officials that it would not be appropriate to accept such a donation."
Mr Rothschild made it clear in oral evidence earlier on in the week that he stood by his recollection of the events in Corfu as set out in his letter to the Times on 21 October, 2008, which differed to Lord Feldman's recollection of events.