The Mandelson loan: Tories query links to firms

PETER MANDELSON was under pressure last night to step aside from a number of DTI responsibilities, as the Tories alleged his links with some companies caused a conflict of interest.

Both the Secretary of State for Trade and Industry's connection with the Paymaster General, Geoffrey Robinson, and sponsors of the Millennium Dome have led to opposition protests. The Tories have already called for Mr Robinson to pay pounds 37m to pensioners who lost money through schemes raided by Robert Maxwell, because of the minister's links to Maxwell companies.

An inquiry by the Department of Trade and Industry into the Maxwell affair is still going on and although Mr Robinson has not been questioned, the Tories believe he should be.

Mr Robinson was chairman of a Maxwell engineering company, Hollis Industries, which went into administration owing pounds 16m to AGB International. AGB in turn went into administration, owing pounds 1.7m to the Maxwell pension funds.

In a letter to the Department of Trade and Industry's Permanent Secretary, Michael Scholar, the Conservative's trade spokesman, John Redwood, demanded to know why Mr Mandelson had not stood aside from the Maxwell inquiry.

"If, as the Secretary of State claims, he was insulated from any involvement or influence in the investigations being conducted by the DTI into the Paymaster General, which minister does have overall responsibility for them?" Mr Redwood asked.

Similar questions have been asked about the sponsors of the Dome. Although Mr Mandelson has publicly distanced himself from the fundraising for the project, he has been reported to be active behind the scenes.

Mr Mandelson has held five meetings recently with British Aerospace and GEC, both of whom are expected to be major Dome sponsors.

Mr Mandelson could also be responsible for a decision on whether to refer a proposed merger between the two companies to the Monopolies and Mergers Commission. Even greater unhappiness within the DTI has been sparked by the British Airways case.

Bob Ayling, the airline's chairman, is also chief executive of the New Millennium Experience Company, which runs the Dome, and a close friend of Mr Mandelson. BA is a major sponsor of the Dome and Mr Mandelson is the sole shareholder in the New Millennium Experience Company.

Mr Mandelson took legal advice on his role in the BA deal, but has not disclosed what position his officials took.

The Independent has been told that DTI officials expressed unhappiness at Mr Mandelson's decision not to step aside from a decision on BA's proposed merger with American Airlines.