The Ashcroft Affair: Offshore tycoon with a mean streak who makes the Tory party nervous

"HE IS CRUEL and he seems to get sadistic pleasure from beating the other guy to the deal. He is driven not so much by the money as by the skill it takes to get it."

This is how a close former colleague of Michael Ashcroft remembers him, with fear and awe, and it provides a glimpse into the kind of dark shadows threatening to end his hopes of political influence.

Mr Ashcroft, 53, is Britain's 14th richest man, a billionaire child of the Thatcher years who made his money in a series of audacious, flamboyant deals that shocked the City and brought huge wealth. From the Eighties onwards, he is rumoured to have made considerable donations to the Tory party, including pounds 2m over the past two years. It is the kind of generosity that has earned him the title of party treasurer and with it the ear of William Hague and the Conservative chairman, Michael Ancram.

He is a friend of Lord Parkinson and Sir Denis Thatcher. But he has enemies, too, Tories who despise or envy his new-money success and view with suspicion his growing influence over party finances.

"You only have to look at his rollercoaster business dealings to know he's going to be trouble one day," said one party grandee. "He is not an altruistic person but he is a person who pursues power. That worries many of us."

Chichester-born Mr Ashcroft is a consummate dealmaker. He began his own cleaning business at the age of 26 with a pounds 15,000 bank loan and, within four years, had sold out to Reckitt and Colman for pounds 1m. He then turned his attentions to Hawley Goodall, an ailing stock market-listed tent maker which he used as a vehicle for acquiring a host of other companies.

Business boomed but many in the City disapproved of his style, an attitude that eventually drove him to Florida and his companies to Bermuda where he could operate free from what he regarded as snobbishness. The move, however, brought even more disapproval from his less successful peers.

In 1987 he bought ADT, the security and motor auctions group, for pounds 635m. In 1997, he sold out to Tyco International, a US and Bermuda-based fire and safety systems specialist, for $4bn - his share was pounds 154m. He still retains a 0.5 per cent interest in Tyco, worth $312m and a place on the board, for which he is paid $65,000 a year.

The fact that Mr Ashcroft lives abroad is one factor that worries some Tories. More are concerned with his links to a political party in the central American country of Belize, where he owns the Bank of Belize and a host of other business interests.

He made large donations - rumoured to be up to $1m - to the right-wing People's United Party (PUP) while it was in opposition. Last year, it defeated the centre-left United Democratic Party and took power. When it did, a raft of legislation was introduced, some of it influenced by representatives of Mr Ashcroft, which was beneficial to his holding company, the offshore-registered Belize Holdings Inc (BHI).

One such piece of legislation, The International Business Companies Act, gave some companies, including BHI, tax-exempt status.

Then came a deal in which the Bank of Belize was given exclusive rights to set up offshore companies for British and American citizens. It also saw the establishment of the International Merchant Marine Register of Belize, a flag of convenience that was subsequently described by the International Transport Workers Federation as one of the "shabbiest, shoddiest and most unscrupulous" in the world.

In a recent interview with The Independent, Manuel Esquivel, the UDP leader and former prime minister of Belize, said: "Before the PUP came to power the last time, in 1989, Mr Ashcroft was concerned that they opposed him and he felt it important that he should have a dialogue with them. Since then, he is rumoured to have given them at least $1m and now he wields enormous influence. What happened to us should be a lesson to you."

On top of all the beneficial deals, Mr Ashcroft was made the country's ambassador to the UN. He has dual British and Belize nationality, and is also a "belonger", a citizen of the Turks and Caicos Islands.

After much criticism of the shipping register, BHI recently sold its 50 per cent stake in the company that managed it for the government, but not before his links had done much to damage the businessman's reputation. Mr Esquivel estimates that the income generated for the people of Belize from the register was "a fraction" of the amount earned by Mr Ashcroft's company.

Mr Ashcroft recently consolidated his presence at Conservative Central Office by buying a house in nearby Great Peter Street with his second wife, his former secretary Susie. He has three children from an earlier marriage. How much time he will spend at his new home is a moot point, given that he is a tax exile, but the purchase alone made some Tories feel uncomfortable.

That feeling has been present in Conservative ranks since the days of John Major's government. One senior Tory said Mr Ashcroft was seen very little in Central Office in those days but came to London once or twice a year with his wife.

"It was a seasonal thing," he said. "He would hold these dinners in his Belgravia house.They would do this for a couple of weeks, a couple of times a year, just to keep up contacts."

He was in America yesterday - and still pays no tax in the UK - but his presence is felt more keenly in Smith Square these days. He has a new office just round the corner, whose establishment came in tandem with the new house.

Just how long Mr Ashcroft will continue as a force in the party remains to be seen. In spite of the sustained attacks on his character, he shows no sign of letting go.

"He's a fighter," said a Parliamentary confidante yesterday. "It would take more than a little criticism to make him run away."

The Key Players

Douglas Hurd

Foreign secretary from 1989 to 1995, Lord Hurd of Westwell (right) is now a member of the Honours Scrutiny Committee which recently blocked Mr Ashcroft's nomination for a peerage. Although it is not known whether he was aware of his department's intervention on the Tory donor's behalf, he was in charge of the department when it took place. One of the most highly-regarded members of the Thatcher and Major governments, he was enobled in 1997.

Charles Drace-Francis

The former head of the Foreign Office's West Indian and Atlantic Department (WIAD) whose memo to a colleague about Michael Ashcroft was leaked this week. Mr Drace-Francis, 56 is an Oxford-educated career diplomat. He was seconded to British Aerospace between 1991 and 1994.

William Hague

Since becoming Conservative leader in 1997, Mr Hague, 38, has been struggling to pay off a party overdraft of pounds 3.6m and loans of pounds 7.6m. Mr Ashcroft made the welcome offer of pounds 2m over two years to keep the party afloat and despite opposition to the move from some party grandees, Mr Ashcroft became partytreasurer last Autumn.

Gordon Baker

British High Commissioner to Belize since 1995. Mr Baker, now 58, is said to be more conservative than Mr Drace-Francis, who succeeded him as head of WIAD. Mr Baker had a less conventional route to the top, joining the Lord Chancellor's Department at 18 and the Foreign Office at 25. He went to the University of Bradford when he was 34 for a sabbatical at the Postgraduate School of Industrial Technology.

Lord McAlpine of West Green

Former Tory party treasurer, reported to have said that Mr Ashcroft would take on the post "over my dead body". Lord McAlpine has denied making the remark but does say he was uncomfortable with the businessman's desire to take on a senior role. Lord McAlpine, 57, was treasurer under Margaret Thatcher, whose husband, Sir Denis, is a good friend of Mr Ashcroft.

Manuel Esquivel

Former prime minister of Belize until last year, when his party, the UDP, was defeated by the People's United Party. The PUP is rumoured to have been supported to the tune of about $1m by Mr Ashcroft. In an interview with The Independent last year, Mr Esquivel said that that money was vital in marginal constituencies where, unknown to Mr Ashcroft, some was used to buy votes.