Clarke faces new pressure over BAT 'smuggling' claims

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Kenneth Clarke's involvement with the tobacco company BAT came under renewed scrutiny last night as investigations into the firm's alleged cigarette smuggling focused on the period since he was appointed deputy chairman.

As Mr Clarke hit back at criticism from Baroness Thatcher – who said he would bring disaster on the Tories if he was leader – accusing her of being more disloyal to former prime minister John Major than Ted Heath ever was to her, it emerged that internal BAT documents, obtained from the company's public depository in Guildford, Surrey, indicated the firm was involved with distributors that supplied contraband cigarettes in Latin America after Mr Clarke was appointed deputy chairman in 1998.

Mr Clarke, who publicly denied in front of a Commons select committee last year that the company knew of tobacco smuggling, will again face potentially damaging questions about the extent of his knowledge of the illicit trade. He previously claimed BAT was "victims of smuggling". The BAT documents are likely to be included in a formal Department of Trade and Industry inquiry into BAT's alleged role in smuggling.

After the cross-examination by MPs last year, Mr Clarke promised an internal investigation. However, this was dropped after the Government announced its own inquiry.

Mr Clarke's ties with BAT have dogged the former chancellor during his leadership bid. He was forced to defend his £100,000 non-executive role and was put under pressure over a visit to Vietnam, representing the cigarette maker, in June.

He will face renewed pressure to launch an internal inquiry into the allegations.

Meanwhile, he hit back in the Tory leadership verbal skirmishes, accusing Lady Thatcher and his rival, Iain Duncan Smith, of being "extreme" and "disloyal" and saying Mr Duncan Smith was her "prisoner". He also claimed Lady Thatcher was "heavily involved" in encouraging MPs to rebel against Mr Major's Maastricht Treaty

Mr Major will step into the debate for the first time today to highlight how his predecessor connived with Eurosceptic rebels under his leadership.