The Ashcroft Affair: Hague issues challenge on `dirty tricks'

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WILLIAM HAGUE challenged Labour to "put up or shut up" last night after Michael Ashcroft, the beleaguered Conservative Party treasurer, announced he was to sue The Times.

Mr Hague stood firmly by Mr Ashcroft and made clear he would stay in his job during his legal battle. At the weekly meeting of Tory MPs at Westminster, Mr Hague sought to calm growing anxiety in his party over the damaging spate of stories about its biggest financial backer, which have emerged in the past two weeks.

Mr Hague told the meeting: "I am not going to allow people to be driven from positions in the party by smear and innuendo." He also hit back at Labour MPs who have used the protection of Commons privilege, which prevents them being sued, to attack Mr Ashcroft's business dealings in the Central American republic of Belize.

"We will now see whether Labour MPs have the courage to say outside the House what they have had the cowardice to say inside," said Mr Hague.

Mr Hague held a meeting over breakfast with Mr Ashcroft on Tuesday but Tory officials insisted he had put no pressure on his treasurer to take legal action. "The decision was a matter for Mr Ashcroft," said Mr Hague's spokesman.

Tory MPs welcomed the legal action last night. Some expressed the hope that it would stem the tide of press reports about the treasurer, who has personally donated pounds 3m to the party in recent years.

However, some senior Tories remain nervous about Mr Hague's strong backing for Mr Ashcroft. They fear that the publicity will scupper the party's attempts to dispel the image of "Tory sleaze" that dogged John Major's government.

"The lesson from those years is that if you are going to resign, you should go quickly to avoid damaging the party," one Tory MP said last night. "If he eventually has to go, it will look terrible."

Another MP said: "It doesn't matter whether you are innocent or guilty. When these kind of allegations are made, it is best to go. Anyone with business dealings in Belize is bound to have skeletons in their cupboard."

The legal move followed a story in The Times yesterday about a file held on Mr Ashcroft by the US Drug Enforcement Administration, which has decided to take no action against him.

Mr Ashcroft issued a writ against Times Newspapers, the paper's editor, Peter Stothard, and two of its journalists, Tom Baldwin and Toby Follett. His solicitors, Biddle & Co, have instructed George Carman QC, the leading defamation barrister, to seek libel damages.

In an open letter to the newspaper last night, Mr Ashcroft accused it of running "perhaps the most one-sided, partial and coloured account of anyone's affairs ever produced by a newspaper in a free country".

The Tory treasurer said the paper had rejected his lawyers' request for it to publish the Drug Enforcement Administration's file on him in full. "This morning, you published more about me, making it perfectly clear to your readers what you consider my track record to be on both drug trafficking and money laundering."

Mr Ashcroft accused The Times of running a "co-ordinated campaign" and "conspiracy" to smear him in the run-up to today's important Parliamentary by-election in Eddisbury, Cheshire. "I have no intention of allowing you to get me," he told Mr Stothard.

The former cabinet minister Michael Portillo echoed the private fears of some Tory MPs on Tuesday, when he compared the Ashcroft affair to the controversy over Neil Hamilton, the former MP for Tatton, who was accused of accepting "cash for questions".

Writing in The Scotsman, Mr Portillo said: "The Hamilton business did the Tories immeasurable damage. These Ashcroft stories are the same. They once more link the Tories to sleaze. That will take years to shake off, even assuming no new stories appear along the way."