Tipster now a central figure in tale

Leading Conservative who spread stories about Labour minister now finds himself accused of political sleaze of his own

LONDON - OCTOBER 21:  Conservative Party Shadow Chancellor George Osborne talks to reporters on October 21, 2008 in London. The oppostion Conservative Party have denied claims that they tried to solicit donations from Russian businessman Oleg Deripaska.  (Photo by Peter Macdiarmid/Getty Images) *** Local Caption ***  GYI0056005352.jpg
Powered by automated translation

LONDON // An old-fashioned story of political sleaze - involving a Russian billionaire meeting top UK politicians aboard his luxury yacht in the Mediterranean - is providing the British with some much-needed relief after weeks of gruesome economic news. It all started last week when several newspapers reported that Peter Mandelson - so recently and so controversially brought back as a government minister by Gordon Brown, the British prime minister - had dined with Oleg Deripaska, a Russian billionaire, while the two were holidaying in Corfu this summer. The problem was that, at the time, Mr Mandelson was the EU's trade commissioner whose department was responsible for setting tariffs for aluminium imported from Russia. And Mr Deripaska had, in part, built his huge fortune by exporting aluminium to Europe, with the latest, favourable changes in EU import duties earning him an extra £50 million (Dh311m) a year. Accusations were levelled at Mr Mandelson - and subsequently totally denied - that he might have influenced the setting of these tariffs to give his new Russian friend a bit of a financial boost. Next, The Sunday Times revealed that at the time Mr Mandelson was being entertained on the Queen K, Mr Deripaska's luxury yacht, he was staying as a guest at the Corfu villa of Nat Rothschild, a millionaire countless times over thanks to his co-chairmanship of Atticus, the New York hedge fund. Mr Mandelson had used the Rothschild private jet on various trips, the newspaper said, and had stayed at Mr Rothschild's other holiday retreat in the Caribbean. And, the newspaper added, Mr Mandelson had helped clear the way in the EU for a controversial takeover that Atticus had a stake in. But on Tuesday, just as the innuendo began to thicken around Mr Mandelson, Mr Rothschild broke cover to reveal that the Labour minister was not the only friend staying with him during the summer. George Osborne, the Conservative's shadow chancellor of the exchequer and an old friend from university days, had been there at the same time. More than that, Mr Rothschild claimed in a letter to The Times, Mr Osborne - accompanied by Andrew Feldman, a Conservative Party fund-raiser - had visited Mr Deripaska on his yacht and had asked if he fancied chipping in £50,000 to Conservative Party funds. According to Mr Rothschild, Mr Feldman later proposed that the donation be channelled through one of Mr Deripaska's British companies because political funding by foreign donors is illegal under UK law. This week both Mr Osborne, who was responsible for spreading the initial story about Mr Mandelson's dinner with Mr Deripaska, and Mr Feldman were the ones on the defensive, denying they had solicited funds from Mr Deripaska. In a statement the Conservatives said Mr Osborne had not discussed donations with Mr Deripaska but that "on September 18, Mr Rothschild suggested to Andrew Feldman that Mr Deripaska wanted to make a donation to the party through one of his British companies... The offer was not taken up. For clarity - the Conservative Party has neither sought nor received any donations from Mr Deripaska nor any of his companies." However, sources close to Mr Deripaska have denied the Russian ever initiated discussions about making a donation to the Conservatives. He never had any intention of making a donation to any UK political party, they said. Mr Rothschild was in no mood to back down yesterday, saying he was willing to go to court to substantiate his story. He also said that another friend - James Goodwin, a New York fund manager and former adviser to Bill Clinton - was at the villa gathering and was willing to testify about Mr Osborne's actions. Mr Osborne said he had met Mr Deripaska twice and "on both occasions, we didn't ask for money". He promised to publish a full chronology of his meetings with Mr Deripaska, one of which had occurred while Mr Mandelson was also there. He added: "I certainly regret all the fuss and the misunderstanding that has come out of the trip to Corfu." Yet political journalists in Westminster remained a bit surprised that Mr Osborne should regret "all the fuss" as he was the one who started it by initially spreading tales of Mr Mandelson's behaviour in Corfu. "It's clear that Mr Mandelson's friend, Nat Rothschild, became angry with his old Oxford chum George Osborne for breaching the privacy of his summer party," said Nick Robinson, the BBC political editor. "What can't be disputed is that this raises real questions about the judgement of the Conservative Party in pursuing allegations about Peter Mandelson's dealing with a man who they themselves had discussed money with. "There's an old saying in politics - if you get into the gutter, you have to be prepared to get dirty."