Blunkett and DNA Bioscience: The DNA of a troubled relationship

David Blunkett is in trouble again, for holding shares in a biotech firm that offers paternity tests (a special interest of his). Is the minister as unlucky in business as in love, or is he unfit for office?

Mr Blunkett, still Home Secretary at the time, must also have been intrigued at Mrs Siddiqi's job as the director of a firm offering DNA tests for a fee. Today his relationship with that firm, DNA Bioscience, is at the centre of a growing controversy that could force him from the Cabinet for a second time in a year.

Now Secretary of State for Work and Pensions, Mr Blunkett already has reason to rue the friendship he forged with Lucy Siddiqi and her husband, Tariq, that night. The Surbiton couple introduced him to Sally Anderson, a 29-year-old estate agent at Annabel's nightclub in Mayfair.

Ms Anderson dated the minister over the summer, then sold her account of their time together for a reported £50,000 this autumn. At first it seemed the story, while embarrassing, was mainly personal. But Mr Blunkett's relationship with Lucy Siddiqi and the firm of which she is a director proved to be the more damaging.

Mr Blunkett knows better than most how marketable DNA testing will become, having fought and won an access battle to see a son, William Quinn, he had had to prove was his. Indeed, the firm was founded by a man, like Mr Blunkett, desperate to establish the paternity of a child born to a former partner.

Avi Lasarow, a South African, set up DNA Bioscience because he was frustrated trying to find affordable paternity tests. The firm, nominated this week for a prestigious business award, employs a small team in offices near St Paul's, London.

Sometime in the first few months of the year, the firm hit on the idea of asking Mr Blunkett to join it as a non-executive director. Sources close to the firm say there was never any intention to use the former home secretary to win influence over government contracts. They hoped Mr Blunkett's presence would appeal to lawyers, the bulk of the firm's clients.

Mr Blunkett took up the job with DNA Bioscience on 21 April of this year and was pictured posing with Lucy Siddiqi and other members of the firm. Then on 6 May, just a day after Labour's general election victory, the Sheffield MP resigned his post when he was made Secretary of State for Work and Pensions.

But DNA Bioscience's motives for wanting Mr Blunkett are less interesting than his reasons for wanting to join the company. Perhaps the most curious aspect of the appointment is its timing in April 2005. For months it had been common knowledge that Tony Blair intended to call a poll in May and bring Mr Blunkett back to the Cabinet if Labour won re-election.

So why did Mr Blunkett take the post with DNA Bioscience when he knew that, in all likelihood, he would have to resign almost immediately?

Other questions have been raised. How did Mr Blunkett come to possess a 3 per cent share in the company? And doesn't it constitute a clear conflict of interest, given his present position as a cabinet minister?

That was brought into question after Ms Anderson sold her story. She claims Mr Blunkett often talked about the business with the Siddiqis during evenings they spent together at Annabel's.

"They were quite open about discussing the business of the DNA company and what David could do for them," she has been reported as saying. "I didn't pay much attention to much of it because it was so boring.

"Some weeks later, David told me he had made a number of important introductions for Tariq which had greatly boosted the business. I could tell this was the case because David was always going on about all the favours Tariq owed him. At one point he even offered to get Tariq to buy me a house, saying, 'Tariq will do it; he has lots of money and he owes me big time'."

But Mr Blunkett's friends will point out that Ms Anderson was paid to tell her story and, in any case, has failed to provide evidence of any wrongdoing. Yet her testimony has been used to paint a picture of a former minister's deepening interest in the business.

DNA Bioscience, through a partner firm, DNA Diagnostic Centre, performs tests in court custody cases for the Department for Constitutional Affairs. The firm has also been granted "preferred bidder" status by the Child Support Agency, a body for which Mr Blunkett is now responsible.

So far, he has been able to reject demands for an inquiry, claiming that he scrupulously followed the rules. He says he told the most senior civil servant in his department about his shares and included them in the register of MPs' interests.

The stake, on which he is reported to have made a paper profit of £280,000 after a stock market float in the new year, is being held in trust for his sons. But, crucially, his denials of wrongdoing have related only to his shareholding in the firm. And Mr Blunkett broke anti-sleaze rules just by taking up the appointment as a director without seeking clearance from the relevant watchdog.

He ignored Section 5.29 of the rules of the Ministerial Code (A Code of Ethics and Procedural Guidance for Ministers). Published by John Major in the early 1990s, the rules were tightened after growing fears at the speed with which former Conservative ministers were taking lucrative public sector jobs. Lord Wakeham, for example, became of director of NM Rothschilds merchant bank six months after he left Cabinet despite having awarded it a multimillion-pound contract when he was energy minister.

To deal with potential abuse, Lord Nolan's report on standards recommended creating the Advisory Committee on Business Appointments to regulate the flow of former ministers and civil servants taking jobs in the private sector. Now the independent watchdog approves most appointments but occasionally suggests former ministers delay starting work to ensure they could not be accused of improper behaviour.

The committee's advice is voluntary but the need to seek it is not. This is explicitly stated in Section 5.29: "On leaving office, ministers should seek advice from the independent Advisory Committee on Business Appointments about any appointments they wish to take up within two years of leaving office."

The code sets out that while it is in the public interest that former ministers should be able to move into business life, "it is equally important there should be no cause for any suspicion of impropriety about a particular appointment".

As we report today, Mr Blunkett, deliberately or inadvertently, overlooked Section 5.29. Tony Nichols, the clerk to the committee told The Independent on Sunday: "David Blunkett did not seek the committee's advice about DNA Bioscience." Lord Maclennan, who is on the seven-member committee, also confirmed Mr Blunkett's failure to consult. "It is advisable that former ministers should seek our advice," he added.

A source close to the committee said: "Given all Mr Blunkett had been through with an official inquiry into his conduct as a minister leading to his resignation, it is extraordinary that he was not punctilious in following the rules subsequently."

Mr Blunkett is believed to be the first minister to have failed to seek the committee's advice since it was set up 10 years ago. That failure is all the more extraordinary given that he had been explicitly reminded of the rules by the committee's chairman, Lord Mayhew, just a month before he took up his position on the board of DNA Bioscience.

Correspondence obtained by The Independent on Sunday shows Mr Blunkett was reminded about the rules on 21 December 2004. Lord Mayhew restated the guidelines on 2 March 2005 after Mr Blunkett had started working for a lobbying firm, Indepen.

Mr Blunkett wrote back to Lord Mayhew on 3 March 2005 insisting his failure to register the appointment had been a "misunderstanding". He added: "It was my belief that I should seek your advice if I had any doubt about the nature of the employment and its connection with my role as a government minister.

"My apologies for not realising that, on a voluntary basis, I should have consulted you, irrespective of this."

Yet a month later, Mr Blunkett became a non-executive director of a firm bidding for government work but, for the second time and despite warnings, failed to abide by a key tenet of the Ministerial Code. Unless Mr Blunkett can offer a convincing explanation of why he ignored the rules, the Prime Minister may struggle to save his friend for a second time in 12 months.

The exposure of Mr Blunkett's failure to abide by the rules brought condemnation from the Tories. Chris Grayling, the shadow Leader of the House, said: "There now needs to be an urgent inquiry into Mr Blunkett's conduct in relation to his business interests. There are just too many questions gone unanswered for it not to be looked at properly.

"Mr Blunkett's position is now increasingly untenable. I really don't see how he can carry on as a cabinet minister given all that's gone on in recent days."

Mr Grayling has written to both the Cabinet Secretary, Sir Gus O'Donnell, and the Prime Minister, demanding they investigate the breach.

Mr Blair faces particularly acute embarrassment over the affair since he is the final arbiter of how the Ministerial Code is to be applied. If he treats Mr Blunkett leniently it will fuel demands for immediate reform of the rules on sleaze.

Sir Alistair Graham, the chairman of the Committee on Standards in Public Life, has already voiced irritation with Downing Street for failing to make a promised change to the rules that would mean alleged breaches would be investigated by an independent body.