Amid the yachts and penthouses, Dame Shirley finds her millions in jeopardy

On a normal day, the view from Dame Shirley Porter's luxury penthouse in northern Israel is breathtaking. Flags flutter atop the yacht masts in the crowded marina of Herzliya Pituach, the sun beats down on the nearby beach, and beyond them both stretches the deep blue of the Mediterranean.

But yesterday, as Westminster City Council announced it had frozen up to £30m of her assets, even the usually ebullient Tesco heiress must have realised that clouds were finally gathering on the horizon.

More than 14 years after she was accused of masterminding Britain's biggest local government scandal, the so-called Westminster "homes for votes" affair, Dame Shirley's estimated riches of £300m looked to be in danger for the first time.

The Independent has learnt that a series of "sham trusts" allegedly set up to conceal the former Tory council leader's wealth will form the centrepiece of a fresh legal battle to recover the £36m fine imposed for her role in the scandal.

However, Westminster's legal chief warned that despite the breakthrough in identifying and freezing her assets, it could take another year to 18 months to recover the money owed.

In late 2001, Dame Shirley was found guilty by the House of Lords of trying to gerrymander local elections by selling flats intended for the homeless to potential Tory voters. She was ordered to pay £27m, the largest surcharge imposed in Britain, which was later increased to £36m to include interest and costs.

Although listed as one of the 100 richest women in Europe, Dame Shirley admitted having only £300,000 in assets and has not paid a penny of the fine.

Dame Shirley has always insisted that her departure from Britain in 1994 was not an attempt to avoid the surcharge, claiming instead that she simply wanted to be closer to her daughter after the death of her grandson in a car accident.

Regardless of her motives, the location of her home reflects the affluent lifestyle to which Dame Shirley appears to have become accustomed during her self-imposed exile.

Her apartment block is one of the most exclusive addresses in Israel. Only yards from the glass-fronted foyer of the block is a private beach where visitors have to pay to mingle with the rich and the beautiful. Further along is a beachfront tennis club, complete with immaculate green asphalt courts and an equally upmarket clientele. A stretch of air-conditioned restaurants overlooks the crowded masts of private yachts in the nearby marina ­ one of which is owned by her husband Sir Leslie.

However, nine years after she moved to Israel, her lavish lifestyle may now be under threat following a painstaking hunt by private investigators and debt recovery specialists, a feud between her son John and a rival businessman, and not least a succession of court cases in London, Guernsey and the British Virgin Islands.

The first breakthrough came one week after Westminster council won a court order in February which insisted that Dame Shirley disclose her riches.

On 18 February a fax from Israel arrived at the council's offices declaring for the first time that she had given up defending the case and intended to ignore the court order. The fax, which has been used in court cases against her ever since, triggered a series of freezing orders in March against third parties believed to have stored her assets, the most important in Guernsey.

A key development was evidence in e-mails, balance sheets and shareholding details that arose after a dispute involving her son John's investments and Redbus Interhouse, a data housing business founded by Cliff Stanford.

Mr Stanford hired an investigator called George Liddell, who managed to extract e-mails allegedly revealing that Dame Shirley's fortune is hidden in offshore investments in the British Virgin Islands and Guernsey, and in Swiss bank accounts.

Millions were also alleged to have been loaned through offshore trusts to a dotcom business, i-spire, run by Mr Porter.

To ensure secrecy, gagging orders were imposed and 14 trusts and other companies were not allowed to inform their clients that their accounts had been frozen.

Those gagging orders were lifted in recent weeks to allow Westminster councillors to approve new moves today to serve writs on Dame Shirley in Israel. The writs, which have to comply with Guernsey and Israeli law, will be served in the next few weeks.

The council will seek a declaratory order in the Guernsey courts. But John Fordham, of the debt recovery specialists Stephenson Harwood, revealed that it would take up to 18 months even to bring the case to trial.

"We've tried to be very focused on what might produce significant recoveries for Westminster and that, at the end of the day, is the whole purpose of the exercise," he said.

"Some information put in the public domain was useful, although we had already been amassing a number of disclosure orders. We now have a wealth of information."

The lack of clear common rules with British courts makes progress difficult.

"As we followed the paper trail, we found clear evidence that trusts in Guernsey were vulnerable to attack," Mr Fordham said. "Other assets, including the Porter Foundation, are not so easy."

Colin Wilson, Westminster's legal services director, said it was "frustrating" that the council could not reveal the progress it had made until now, but it wanted nothing to impede the recovery action. "We've made substantial progress, but it isn't the end of the road and there is a long way to go yet," he said.

A SPECTACULAR FALL FROM POWER

May 1986: Tory majority on Westminster council cut from 26 to four in local elections.

14 March 1987: Secret strategy developed to sell council flats intended for the homeless to potential Tories.

1988: Richard Stone, a GP, notices many flats being boarded up and complains.

1989: John Magill, a district auditor, asked to investigate.

1993: Dame Shirley leaves Westminster council.

January 1994: Mr Magill's early findings show Dame Shirley and others engaged in unlawful activity. Dame Shirley moves to Israel.

May 1996: Mr Magill's final report finds Westminster "engaged in gerrymandering". December 1997: Dame Shirley loses High Court appeal.

April 1999: Dame Shirley wins in Court of Appeal.

December 2001: House of Lords overturns Court of Appeal decision.

July 2002: Dame Shirley found guilty of breach of trust.

11 February 2003: Westminster wins for wider seizure and disclosure order to seize transferred assets.

25 March 2003: First of several freezing orders.

June 2003: E-mails to and from her son John give clues to hidden riches.

November 2003: Westminster approves move to declare third party assets as belonging to Dame Shirley.