Election '97: The strange case of the diamond dealer and the pounds 20, 000 gifts

A millionaire diamond dealer who gave more than pounds 20,000 to John Major's Conservative constituency association was later invited to go on a prestigious trade mission to Israel and Jordan with the Prime Minister.

According to correspondence leaked to The Independent, Willie Nagel, who also owned a lobbying company called Punchlines, attempted to interest Mr Major in an unmanned aircraft developed by Israel, even though there was an arms embargo for Israeli equipment at the time. Mr Nagel also lobbied him on a number of other matters before going on the trip in March 1995.

The disclosures will reopen questions about Tory links with big business and party fund-raising efforts.

Mr Nagel is one of only five official diamond brokers for De Beers, the South African mining conglomerate, and claims to have extensive business connections throughout the European Union, Eastern Europe, Israel and the US.

He was introduced in the early 1990s to Peter Brown, Mr Major's constituency agent, by Benjamin Perl, a friend of Mr Major. Mr Perl runs a picture- frame factory in the Prime Minister's Huntingdon constituency, but Mr Nagel has no connection with the constituency.

Mr Brown was taken to Wimbledon and sent various gifts, including a magnum of champagne. They also met for lunch. According to a letter from Mr Brown, Mr Nagel then offered sponsorship of pounds 10,000 for two local Tory party events following the 1992 election victory.

The subsequent invoice is for "advertising in brochures for at least two major functions in the year 1992 and to include regular political briefings and new bulletins". Such a formulation means the donations do not have to be revealed as political contributions. At another lunch, Mr Nagel talked with Mr Brown about the Pioneer, an unmanned aircraft project by Israel Aircraft Industries.

He then wrote to Mr Major passing on the material and saying: "I'm not suggesting that any action could be taken upon this, but I wonder whether you might pass the information on to any department concerned with such equipment."

However, at the time - November 1992 - there was an arms embargo for equipment from Israel. After it was lifted in May 1994, the Ministry of Defence considered the Pioneer as an alternative to the Phoenix project, which had been delayed by technical problems. RAF officers went to Israel in 1995, but in October 1996 the MoD decided to stick to the Phoenix.

His efforts to befriend Mr Major appear to have become unwelcome and a memo from Mr Brown to Mr Major in August 1994 raises the problem of how to deal with Mr Nagel, who at one point was accused of being a "telephone trespasser", because he called the Prime Minister at home.

Relations appear to have been repaired, as Mr Major invited him on the trade mission to Israel in 1995.

Mr Nagel did not return The Independent's calls last night.

A spokesman for Conservative Central Office said: "I very much doubt the Prime Minister knew about who was going on the trip. The list was put together by the DTI and No 10."