Oflot chief's job at risk after MPs attack serious errors

Peter Davis, director-general of Oflot, the National Lottery regulator, was heavily criticised by an all-party group of MPs yesterday for taking free flights from one of the members of the Camelot consortium, the game's operator.

Mr Davis was on holiday and was unavailable for comment on the damning report from the powerful Commons Public Accounts Committee (PAC). National Heritage, the department Mr Davis answers to, said it would study the report and respond in due course.

While the report was not unexpected - Mr Davis was roasted by MPs when he appeared before them last December - the severity of the criticism, high by the exacting standards of the PAC and unprecedented for an industry watchdog, raises questions about Mr Davis's future.

To heighten his discomfiture, the committee not only said it was "unwise" of him to accept the free flights, and that he had made "serious errors of judgment", they were also "unimpressed" by his reasoning that the trips were made only after the lottery licence had been awarded by him to Camelot.

The report also fuelled the continuing row between Oflot and Richard Branson, the Virgin chief, over the rejection of his bid to run the draw, by highlighting questions over G-Tech, the lottery specialist and member of the Camelot group. "The committee were concerned at the information they had which raised doubts about the fitness of G-Tech ... This included suggestions of undesirable business practices by G-Tech in obtaining lottery contracts in the United States, including alleged corrupt payments in California, Kentucky and New Jersey made to various persons, including a state Senator."

It was vital, the committee said, that Mr Davis investigate any allegations of impropriety about the Lottery. They welcomed his decision to hold an internal inquiry into the claim by Mr Branson that Guy Snowden, chief operating officer of G-Tech had tried to bribe him. Last week, this inquiry cleared Mr Snowden of the charge. However, Mr Branson refused to give evidence. The bribery charge will now be settled in the courts when Mr Snowden's action for libel against Mr Branson is heard.

By then, Mr Davis may have lost his job. The committee said he was "unwise" to use a corporate aircraft owned by G- Tech - which has a 22 per cent stake in Camelot - on a fact-finding mission around the US in October 1994. Mr Davis's reasoning that it was cheaper for the taxpayer cut little ice.

The committee also criticised his decision to stay at the New York home of Carl Menges, head of a US investment firm with a 25 per cent holding in G-Tech. The MPs said they recognised that the friendship between the two men's wives pre-dated the creation of the Lottery. But they said: "We regard it as of vital importance that the director-general should be seen by the public to be completely impartial."

The MPs also said they were "unimpressed" by Mr Davis's argument that he had accepted the free flights only after he had announced his decision to award the licence to Camelot. "In our view, the director-general's decisions to use G-Tech corporate aircraft represented serious errors of judgement on his part," the report said.