The first sleaze row of the new government deepened today when a millionaire Tory donor, who successfully lobbied for the cancellation of a government loan to a promising engineering company, admitted he had wanted to invest in it himself.
Labour accused Andrew Cook – the Tories' largest donor in Yorkshire, who subsidised David Cameron's flights in opposition to the tune of £54,000 – of a conflict of interest after he wrote to the Conservative business minister Mark Prisk in May to warn that an £80m state loan to Sheffield Forgemasters might be illegal under EU law.
In an email to Prisk on 25 May, three weeks before the loan was cancelled, Cook, chairman of the engineering firm William Cook Holdings, said: "I stress that Sheffield Forgemasters is not a competitor of my business."
But in a statement issued today in response to the release of his email, he admitted that he had tried to establish a direct link with the company. "It is no surprise that I am strongly opposed to the previous government's handout to Forgemasters, particularly when I had already offered as a local businessman to help supply the funding they needed," he said. "My only intention was to highlight the illegal use of taxpayers' money by the previous Labour government."
Angela Smith, the Labour MP for Penistone and Stocksbridge, who named Cook in the Commons on Wednesday night, said his statement appeared to show that the businessman had a link to the company. Smith told MPs that the statement "seems like a takeover bid for the company".
Clive Betts, the Labour MP for Sheffield South East, who read out extracts from Cook's email to the Commons on Wednesday night, said his statement showed a conflict of interest.
"When ministers took the decision … were they aware of Andrew Cook's objections? Were they aware that Mr Cook was a major donor to the Tory party? Importantly, were they aware of his conflict of interest and that he was expressing an interest in personally investing in the company?"
Sir George Young, the leader of the Commons, replied that the MPs' questions had been dealt with by Prisk in the debate on Wednesday night. Labour believes the government is in trouble over the cancelled loan, arguing a series of explanations by ministers do not appear to be standing up to scrutiny.
Pat McFadden, the shadow business secretary, today accused Nick Clegg of making two mistakes. McFadden said Clegg claimed that "Lord Mandelson was writing out cheques to companies like Forgemasters which he knew would bounce" but a letter from the permanent secretary at the business department confirmed the previous government had followed proper procedures.
McFadden said Clegg was also wrong to say the directors of Sheffield Forgemasters had refused to dilute their own shareholdings.