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The Attack on Sleaze: Report reveals findings of the Butler inquiry

The Cabinet Secretary, Sir Robin Butler, explains in his report that he was asked on 30 September to look into certain allegations of impropriety against members of the Government that had been brought to him the previous evening and appeared to emanate from Mohamed al-Fayed.

The informant said Mr Fayed wanted a meeting with Mr Major 'principally because of Mr al-Fayed's wish to have the Department of Trade and Industry inspectors' report on the takeover of the House of Fraser revised or withdrawn'.

The report said: 'He had made a number of allegations against government ministers and was contemplating passing them to others.'

The Prime Minister told Sir Robin that in those circumstances it would be impossible for him to meet Mr Fayed. He added that if ministers had been guilty of wrongdoing he would not make any sort of deal 'regardless of the cost to the Government's reputation'.

On 3 October, the Prime Minister instructed Sir Robin, and later the Chief Whip Richard Ryder, to investigate the allegations - some of which were old, and about which inquiries had already been made.

On 18 October, Mr Major concluded that Tim Smith's offer of resignation from the Government should be accepted once inquiries were complete.

On 20 October, the allegations that Mr Smith and Neil Hamilton were paid to raise questions in the Commons on Mr Fayed's behalf were published in the Guardian.

Sir Robin said that he could not discuss the allegations against Mr Hamilton in the report as they were now the subject of legal proceedings.

Mr Smith volunteered to Sir Robin that he received payments from Mr Fayed between 1987 and 1989 without declaring the information in the Register of Members' Interests until near the end of that period.

'He acknowledged that he should have done so earlier. He offered his resignation from the Government,' the report said. It added that Mr Hamilton had emphatically denied throughout Sir Robin's inquiries that he had received any payments deriving from Mr Fayed. 'I have found no evidence which controverts Mr Hamilton's assurances,' Sir Robin wrote.

Mr Hamilton confirmed that he had received hospitality from Mr Fayed 'as a private guest, as he believed' before entering the Government. He had not, however, thought it necessary to declare it in the Register of Members Interests. He showed Sir Robin a copy of a letter he had written more than a year ago to the editor of the Guardian explaining his reasons for not doing so.

He also passed to Sir Robin an exchange of correspondence on the subject with Sir Geoffrey Johnson-Smith, chairman of the Select Committee on Members' Interests.

The report said that when Mr Hamilton became a DTI minister, he declared his previous interest in matters concerning Mr Fayed and stood aside from any ministerial involvement in issues involving the House of Fraser group, which includes Harrods.

With regard to other allegations made by the informant, Sir Robin said he had looked at them and put them to the ministers concerned.

'In some of them there are patent inaccuracies and all have been denied explicitly, unequivocally and in writing,' Sir Robin wrote. 'I have found nothing which would cause me to throw any doubt on the validity of those denials.

'Moreover, the fact that there is reason to think that these allegations too have now been made available to others who have so far chosen not to publish them suggests that they too may have found that there is a lack of evidence to establish their validity.

'In those circumstances, while confirming that I am confident that the allegations either are demonstrably false, or, so far as I have been able to establish, are entirely unsubstantiated . . . I do not think it appropriate to give them further currency by listing them.'