Baroness Warsi was is facing calls for a police investigation into her parliamentary expenses after she claimed up to £2,000 for staying rent-free in the home of a Tory party donor.
The Conservative Party co-chairman claimed up to £165.50 a night while staying at a London house belonging to Dr Wafik Moustafa.
She said she was entitled to the expenses because she had paid a “financial contribution” to her political aide, Naweed Khan, when both were non-paying guests at the house.
But Dr Moustafa insisted that he received no money and said he was “disgusted” that she had claimed taxpayers’ money when he had simply been “helping out” the two party members by offering his free hospitality.
MPs compared the disclosures with the case of Lord Hanningfield, the Conservative peer who was jailed last year for claiming overnight expenses to stay in London when he was not in the capital.
Bob Russell, the Liberal Democrat MP for Colchester, said there was a case for investigating whether there had been “claiming for costs not incurred”.
“There are similarities [to the Lord Hanningfield case],” he said. “I think there’s a prima facie case for this to be looked at by the police.”
Lord Hanningfield pointed out yesterday that most peers claimed the maximum possible daily amount for accommodation expenses before the scandal broke in 2009.
“I don’t want to say anything against Baroness Warsi, but as I said at my trial, 85 per cent of peers were claiming the full allowances,” the former Conservative frontbencher told The Daily Telegraph.
“As several people have said, I just unfortunately picked the short straw and several others have said to me since I got back, 'There but by the grace of God, go I.’ ”
John Mann, the Labour MP for Bassetlaw, said he would refer the case to the standards commissioner in the House of Lords today.
“This appears absolutely comparable on the face of it to people like Lord Hanningfield,” he said.
Sir Alistair Graham, a former chairman of the Committee on Standards in Public Life, told Sky News: “At the moment it all looks very muddy and blurred and worthy of a full investigation.
“I personally am always of the view, when ministers face very serious allegations that seem to have some strength to them, then it’s better that they stand down from their ministerial post while that investigation takes place, but of course that is a matter for the Prime Minister.”
Lord Oakeshott, a leading Liberal Democrat peer, also called on Lady Warsi to refer herself to the standards watchdog of the House of Lords. “Like Caesar’s wife, she must be above suspicion and I’m afraid the story so far looks seriously suspicious,” he said.
Senior Conservatives said the controversy was “embarrassing” but insisted that Lady Warsi, who is understood to be on official business in Malaysia, had done nothing wrong and would co-operate with any inquiries.
The disputed expenses date back to early 2008, just months after Lady Warsi entered the House of Lords.
During this period, Dr Moustafa, a Conservative donor and activist, says he let both Lady Warsi and Naweed Khan, a Tory official who is now her special adviser, have rooms in his house in Acton and gave them keys to come and go as they pleased.
Dr Moustafa said he allowed the two to stay there as a favour and never asked for any money. “It was not Mr Khan who had invited her to stay; it was me, so why would she pay him?,” he told The Daily Telegraph. “If she was paying him money then I would like to know in what form was she paying him, and when, and how much?”
“When I heard that she had been claiming parliamentary expenses for staying here, I was disgusted, really.”
Lady Warsi claims she was a guest of Mr Khan, who she gave an “appropriate financial payment equivalent to what I was paying at the time in hotel costs”.
Mr Khan said yesterday he was paid every time Lady Warsi stayed at the house, but did not disclose how much.
Between October 2007 and March 2008, Lady Warsi claimed expenses for 74 nights of London accommodation from the taxpayer at a cost of about £12,000.
A Conservative spokesman said the peer stayed around 12 nights at the house over a period of about six weeks and believed she was a guest of Mr Khan, rather than Dr Moustafa.
He would not say how much Lady Warsi paid to Mr Khan nor whether the payments were made in cash.
“If MPs want to say that the case should go to the police they can do that and they will look very silly,” he said. “It was for a very short period of time several years ago.
“She made a financial contribution around the same amount she would have paid for a hotel. Whatever agreements Dr Moustafa and Naweed had, that’s a matter for them.”
Lady Warsi has admitted that she failed to declare up to £18,000 a year of income from rental property in Wembley to the Lords, although she did register this as a ministerial interest. A spokesman for Lady Warsi declined to comment further.
Michael Fallon, the Conservative Party deputy chairman, admitted the controversy appeared “embarrassing” but said Lady Warsi believed she had acted within the “spirit and letter” of the rules.
Scotland Yard said it had yet to receive an official complaint about Lady Warsi.