Tropical storm hits Ashcroft

Prime Minister of Belize steps up campaign to unravel billionaire Tory donor's business interests

Michael Ashcroft, the Conservative peer who is funding a key part of David Cameron's election campaign, is caught in the middle of a legal and political storm in the Central American haven of Belize, where many of his businesses are based.

In an interview with The Independent the country's Prime Minister, Dean Barrow, has accused the billionaire Tory party deputy chairman of operating a monopoly and of trying to obscure his interests through a byzantine web of subsidiaries and trusts. Lord Ashcroft has rejected the claims, which he says are politically motivated. But Mr Barrow has vowed to pursue the peer and unpick a series of commercial deals that he claims he has used to "soak" the country in the manner of a colonial overlord.

In particular, he says Lord Ashcroft controlled both of the country's telecoms firms, and brokered deals that, in effect, left Belize's taxpayers subsidising his company's profits.

And according to the Belize's foreign minister and mission staff, one of Lord Ashcroft's closest business associates, Mel Flores, has been thrown out of the Belize mission to the United Nations in New York, after the US authorities questioned whether he was a real diplomat.

Mr Barrow, a former lawyer for Lord Ashcroft and the recipient of his political contributions, says he turned on his former ally after discovering the existence of sweetheart deals that the peer negotiated with the previous administration.

"He is a colossus here," Mr Barrow told The Independent. "It's never been my understanding that because you contribute to a politician, you own that politician, and I will always do my best to defend the interests of the people of Belize. When that conflicts with any expectations that some political donor might have of me, well I'm sorry for that political donor."

Lord Ashcroft is one of the Conservative party's biggest donors and has used his money to fund a highly targeted campaign to win key marginal constituencies for the party.

His problems in Belize are an unwelcome distraction at a time when the peer – who is also the Conservative's deputy party chairman – is preparing for an election early next year.

The Prime minister of Belize specifically used Lord Ashcroft's high profile role in the UK to attack the peer: "You would think that government in the UK is so powerful and so diverse that he could not exercise the kind of influence he has been able to here. But there must be a warning in this: if he can he will. Based on my experience, he fully expects that he who pays the piper plays the tune."

In turn, Lord Ashcroft has turned on the Government of his adopted homeland, accusing the Prime Minister of lying to score party political points. He has no economic interest in telecoms in Belize, he says, and has not had any since selling out in 2003.

The row focuses on Belize's two telecoms companies – Telemedia, which once had a monopoly in the country, and SpeedNet, a newer rival. The ownership of both firms is obscured by a series of trusts, but in Parliament Mr Barrow claimed both are "ultimately controlled" by Mr Ashcroft.

An agreement in 2005 with a previous Belize government guaranteed Telemedia a certain level of profitability, and the ability to claw back tax if it didn't reach it. Mr Barrow alleges that since then SpeedNet has been undercharged for using Telemedia's cell towers and for routing calls through Telemedia's infrastructure.

In other words, according to the government, SpeedNet's profits were inflated at Telemedia's expense, safe in the knowledge that any reduction in profitability at Telemedia can be clawed back from the public purse.

Mr Barrow says he has followed a paper trail that shows that Lord Ashcroft ultimately controls SpeedNet: "77.38% of Speednet is owned by three companies – Callerbar Limited, Riddermark Ventures Limited, and Heaver Holdings Limited. These three companies are ... controlled by two of the now notorious Trusts owned by Michael Ashcroft.

The peer's spokesman, Alan Kilkenny, refused to answer questions about Lord Ashcroft's relationship with Telemedia and SpeedNet, except to say that Telemedia had been owned by trusts acting for the benefit of charities and its employees.

Last night he launched a personal attack on Mr Barrow. "Normal standards of behaviour, where you can believe what a prime minister says, have gone out the window in Belize," he said. "You should not believe that Lord Ashcroft is in any way connected. He has had no economic interest in telecoms in Belize for years. If you start from the assumption that Lord Ashcroft is inextricably involved, you are going to end up in completely the wrong place. The Prime Minister knows what the position is. This is a man who has put his son on the new board of the telecoms company. Nothing should be taken at face value."

The row over Lord Ashcroft's power in Belize has upended politics in the country. He has been a major figure there since the 1980s, having falling in love with it as a child, when his father, a diplomat, had been posted there by the Foreign Office. The peer made his fortune in the security business, through buying and selling companies, including selling the firm ADT to Tyco International of the US for $5.6bn.

He took citizenship in Belize and his businesses here include the most luxurious hotel complex in the financial capital, Belize City, and the country's largest bank.

Mr Flores, who has sat on corporate boards and been a trustee for Lord Ashcroft, was trying to renew his diplomatic passport in the spring but officials from the State department's office of foreign missions telephoned to query his status as an attaché. Mr Flores is described as a "financial consultant" in documents filed by Lord Ashcroft's companies at the London Stock Exchange.

Mr Barrow said Mr Flores' diplomatic status was "a fiction" and that he had been using the mission as a business office since Lord Ashcroft was the country's representative to the UN and funded the office himself. He ruled that the mission should not pursue the renewal of Mr Flores' diplomatic passport, and he departed in July. He did not return a message left for him in the Turks and Caicos islands yesterday.