Baroness Warsi, the Conservative chairman, was facing questions last night over whether she breached the ministerial code by promoting her private business at a party function.
She personally paid for potential customers, one of whom was in negotiations over a deal with her firm, to attend a Conservative Party lunch with the Prime Minister last month.
The Sunday Telegraph has also learnt that her business partner, Abid Hussain, a former activist with a radical Islamic group who has a conviction for violence, secured an invitation to meet David Cameron at Downing Street, raising questions over the Prime Minister’s security.
The disclosures put Lady Warsi under fresh scrutiny.
Mr Cameron has already asked Sir Alex Allan, the independent adviser on ministerial conduct, to investigate after The Sunday Telegraph disclosed that she had not declared a majority stake in Rupert’s Recipes, a restaurant supply firm whose other shareholder is Mr Hussain.
However the disclosure that she apparently used a political function to promote her business appears to breach clause one of the Ministerial Code, which states: “Ministers must ensure that no conflict arises, or appears to arise, between their public duties and their private interests.”
Last night Labour said it would table further questions on Lady Warsi’s conduct. Michael Dugher, the shadow Cabinet Office minister, said: “These latest allegations take the scandal to David Cameron’s doorstep and to the heart of Downing Street.
“The Conservative Party chairman seems to have been giving her private business associate – a man who has admitted being involved in an extremist Islamist group – access to the corridors of power.”
The latest revelations concern the launch of the Conservative Friends of Pakistan, in the Savoy Hotel, central London, last month. The guests of honour were Mr Cameron and Yousuf Raza Gilani, the Pakistani prime minister.
Lady Warsi paid a total of £5,000 for two tables at the event. Guests on one table included her parents, sisters, and others involved in the family’s Dewsbury-based bed manufacturing business.
She “hosted” another table, made up of clients and staff from “Rupert’s Recipes”, although she sat on the VIP table.
The guests’ names were supplied to the Conservative Party by Lady Warsi’s husband, Iftikhar Azam, from his Rupert’s Recipes email address. Rupert’s Recipes describes itself as a “one stop shop for bespoke ingredients” for breaded chicken, fish batter, meat marinades and kebab seasoning.
As well as Mr Azam, the table included Mr Hussain, Mohammed Johngir Saddiq, and Fareed Nasir. Mr Nasir is the founder of Chunky Chicken, a chain of 19 fast food restaurants, mainly in the Midlands and North West. He said he was invited to the event by Mr Azam as they were “working closely” about a possible deal.
“We are trying to do some work with Rupert’s Recipes, we are not using their spices at the moment but we have had some samples,” he said. He added that he is not a member of the Conservative Party and has not donated money. Mr Saddiq runs Big John’s, a chain of 15 takeaway shops in and around Birmingham, worth £19.5 million. His business claims to have been the country’s first “drive thru” fish and chip shop and offers “the nation’s biggest pizza”. He declined to comment on the function.
Other guests included a halal meat supplier, and men believed to be Pakistani restaurateurs.
Lady Warsi personally vouched for the table’s guests, meaning they were exempt from checks carried out by the party’s internal compliance team, which verifies that guests can legitimately make donations to the party.
Labour wants the latest disclosure added to the investigation that is already under way into why Lady Warsi did not disclose that in February this year she owned a 60 per cent stake in Rupert’s Recipes. Peers have to disclose if they are majority shareholders in a company.
The Conservative chairman said that she became a majority shareholder when shares were transferred to her, but “immediately” transferred a proportion to her husband, and therefore did not have to register the holding with the Lords. However, party officials have consistently refused to provide exact details of the share transfer.
There are also questions over Mr Hussain, who met Mr Cameron at a Downing Street reception in November 2010 at which Lady Warsi was also present.
He has been closely involved with the Islamist group Hizb ut Tahrir, which Mr Cameron pledged to ban while in opposition. Mr Hussain, 42, was first involved with the extremists in the early 1990s, and backed them at meetings after the July 7 bombings in 2005. He also has a conviction for an assault, committed when he was 17. His lawyers confirmed that he was convicted of actual bodily harm in 1988 or 1989 and sentenced to three months in a young offenders institution.
They said that the conviction is now “spent” and its disclosure has “no legitimate …public interest”.
However, it would have been relevant to his presence in Downing Street as it raises serious security questions about whether he was fully vetted.
It is unclear whether Lady Warsi, who has said that she knows nothing of Mr Hussain’s involvement with Islamic extremists, played any role in getting him on the guest list.
The latest disclosures come after Lady Warsi admitted she failed to declare rental income on a flat she owns, and is being investigated in the Lords over expenses claims for overnight stays in London. She stayed as a guest of a party donor who says he did not charge her rent. She claims she gave the money to an aide, also living at the address, who had invited her to stay.
Questioned on the Number 10 reception, a Downing Street spokesman said: “All guests invited to Downing Street receptions must go through security checks and are properly searched on entry to ensure they pose no security threat and all electronic equipment, including mobile phones, is taken off them for the duration of their stay.”
He failed to answer questions about whether security would be reviewed in the light of Mr Hussain’s invitation to the event.
A Conservative Party spokesman said of the Savoy reception: “This was a party event organised by the Conservative Friends of Pakistan to reach out to potential supporters within the British Pakistani community.
“All those who bought tables were fully compliance-checked to ensure they were permissible donors, and everyone who attended was subject to the normal security arrangements.
“No gift or hospitality was received by Baroness Warsi and no issue arises in relation to the ministerial code.”
He added: “This was a party-political event for members of the British Pakistani community. To suggest that there was any impropriety in their being invited is simply mischief-making.”