Calamity John: A trip to a ranch may mean that Blair's deputy bites the dust

When John Prescott arrived late for dinner with friends on Monday night, he looked like a Dodge City gambler on a losing streak. Pale and unshaven, the Deputy Prime Minister was slumped next to his old friend and ally Peter Snape. MPs wondered whether he was telling his friends he was preparing to resign. After his wild times with Tracey Temple, could the old bruiser's career finally be heading west?

The revelation that he secretly stayed on the ranch of the US billionaire who bought the Millennium Dome ensured Mr Prescott had one of the roughest weeks in politics. His professional integrity is under formal investigation, his personal morality has been questioned and his denials of wrongdoing lampooned. Mr Prescott's explanation that he was "curious" to see Philip Anschutz's ranch after watching Westerns as a young man prompted gales of laughter across the country.

Further embarrassment was heaped on the Deputy PM last night as it was alleged he accepted a hand-crafted Western costume from the American billionaire. His aides failed to deny a report in The Mail on Sunday that Mr Prescott was given a pair of tooled leather boots, a Stetson hat and a silver-buckled leather belt bearing the initials JP.

The newspaper estimated that the gifts - "a lavish Wild West outfit" - could have cost as much as $20,000 (£10,800). Under Whitehall rules, gifts should be declared and ministers must pay for those they keep. A full list of gifts is published annually and a spokeswoman for Mr Prescott refused to confirm or deny whether it would include items given by Mr Anschutz.

Yet had it not been for an overheard conversation in a Californian restaurant, Mr Prescott's ranching would have remained between him and the prairie. Diplomats, gathered for a convivial evening, complained how the Deputy Prime Minister had eagerly accepted the American tycoon's hospitality. The officials were in little doubt that Mr Prescott had displayed a grave error of judgement and said so loudly. Unfortunately, from the Deputy PM's point of view, they were overheard.

The Independent on Sunday revealed last week that Mr Anschutz's firm saw a casino licence for the Dome as "critical". Mr Prescott's assertion throughout has been that his stay on the ranch did not amount to a conflict of interest because he had no say in deciding the casino application. But papers obtained by the IoS under the Freedom of Information Act show that his department was intimately involved, and that he was kept personally informed of developments. The government documents also demonstrate the full extent of links between Anschutz executives and government officials. The latter seemed at pains to keep the American entertainment giant informed of developments in gambling policy.

The personal links between John Prescott's officials and Mr Anschutz go back to 2003. A document from July of that year says that a meeting between Richard Caborn, the Sports minister, and Detlef Kornett, managing director of the Anschutz Entertainment Group (AEG), was "a follow-up to their meeting with the Deputy Prime Minister in June".

The following month, Tessa Jowell, the Secretary of State for Culture, was copied into a memo recommending that ministers meet "senior people" from Mr Anschutz to discuss the casino in the Dome. The memo, entitled "Casinos - Anschutz Entertainment Group (AEG), says : "A casino does not form part of the deal for the Dome. But AEG are keen to have one, and to get it going quickly."

It adds that Mr Prescott's officials were "suggesting a further meeting" with officials from AEG. Mr Prescott's meetings with the American billionaire were also in officials' minds. One Whitehall memo says bluntly: "You should be aware that John Prescott recently met Phil Anschutz, owner of the Anschutz Entertainment Group."

The Deputy Prime Minister insisted last week that any contact between his department and Anschutz in relation to the Dome was confined to "some civil servants down the line". But this is contradicted by internal memos showing that civil servants kept him closely informed.

An email dated 19 August 2003 marked "High Priority" and entitled "Dome and Greenwich Peninsula - Casino" says: "I attach ... a note I have just put to the Deputy Prime Minister." The three-page paper was so urgent that civil servants insisted it must be seen by Mr Prescott "tonight".

Another memo describing a meeting in September 2003 records how a casino was "a central feature" of Anschutz's business plan for the Dome. The memo adds that officials had "agreed to keep ODPM [the Office of the Deputy Prime Minister]" updated on progress with casino policy.

Another Whitehall briefing shows that Anschutz's needs in building a Docklands casino are foremost in officials' minds. In capital letters, the memo reads: "IN ANY CASE, THIS WOULD NOT DELIVER WHAT ANSCHUTZ WANT."

On Tuesday, the day after Mr Prescott's gloomy dinner, the story appeared to be on the wane and support from No 10 solid. The respite was brief, however, for the next day brought news that Sir Philip Mawer, the Parliamentary Standards Commissioner, was to investigate his failure to register the trip to the 32,000-acre ranch. Worse still, it seemed as if they were about to be fresh revelations about Mr Prescott's private life - a virtual open season since his admission of an affair with Ms Temple, his diary secretary. A former government car driver was said to be negotiating with a tabloid newspaper to tell all about other affairs of the Deputy PM.

For Mr Prescott, this was an intolerable provocation and he decided he could no longer stay silent. To their great surprise, producers on the Radio 4 Today Programme learned that the Deputy PM was willing to give an interview the next morning.

In 20 minutes of unforgettable radio, the Deputy PM lurched from bombast to farce as he sought to deny to presenter John Humphrys any wrongdoing in both his public and private life. The interview's most comedic moment came when he sought to justify his visit to the ranch by reference to his love of Westerns. "I'm curious about it; I saw the cowboy films over my young years, didn't you? I was interested to have a look at it."

Repeatedly asked to comment on allegations of other affairs, Mr Prescott wriggled uncomfortably, deploying a variety of responses, none of which amounted to a straight denial.

Arriving at Cabinet later that morning, Mr Prescott was in a foul temper, according to fellow ministers. His mood soured further when he learnt that Alan Johnson, the Secretary of State for Education, had been given leave of absence to attend the opening in Hull of the centre dedicated to the memory of the slavery abolitionist William Wilberforce. Perhaps suspecting he was being kept from the event by No 10, Mr Prescott is said to have stormed out, insisting that if Mr Johnson could be spared, so could he.

Both Mr Blair and Gordon Brown may want Mr Prescott to stay in his job to avoid any suggestion of a destabilising leadership election, but plenty of other Cabinet colleagues are hoping he quits. "The only way forward is down for John Prescott," said one Blairite minister. "What does the Government need least at the moment? Questions about trust and competence. John is casting more doubt on both of these areas."

Even close allies of the Prime Minister were casting doubt on Mr Prescott's ability to survive. One MP said that "his judgement was in doubt. We are sitting here waiting for the next pack of revelations to come out."

A Cabinet source agreed that "each new revelation is another nail in his coffin", but it was forces at the very top of Government that were ensuring he could stay. "Apart from the big players, everyone thinks he should go. There is a coalition of people who don't want a leadership contest to happen. It's a matter of months rather than years before he goes," he said.

The affair has not helped Mr Prescott's reputation in Whitehall. Senior mandarins are furious that his decision to stay at the American billionaire's ranch effectively led officials, and the special adviser who accompanied him, to break the terms of their own code of conduct. A senior government source said: "It was very, very difficult for the officials. They could hardly say to the Deputy PM we are not going to stay at the ranch because of the code."

The Cabinet Secretary, Sir Gus O'Donnell, has so far avoided questions on whether Mr Prescott broke the Ministerial Code. Only Mr Blair can order him to begin an inquiry. It is just as well for Mr Prescott that the Prime Minister has not done so, since there seems little doubt that he breached section 5.24 - that no minister should accept hospitality which "might appear to put him under an obligation".

It also seems the Deputy Prime Minister may have broken a second section of the code, 5.28, that says hospitality worth more than £550 from a "source or on a scale which might reasonably be thought likely to influence ministerial action" should be declared in the Register of Interests.

This section of the code may help explain the furious mopping-up exercise launched by officials, in which a sum of cash was donated to charity in lieu of the estimated cost of Mr Anschutz's hospitality.

Ultimately, it may not be Sir Gus who investigates the propriety of Mr Prescott's ranching but John Yates, the Metropolitan Police Deputy Assistant Commissioner. As we report today, the Liberal Democrat MP Norman Baker has written to Mr Yates asking him to investigate Mr Prescott under the Prevention of Corruption Acts 1906 and 1916. The Act says that public servants, including ministers, must not receive gifts or hospitality from a person who has obtained or is attempting to obtain an official contract.

Whatever happens, it seems that this deputy is going to have to hand in his badge.

THE TYCOON

Philip Anschutz, the 67-year-old US billionaire, presents an apparent conundrum - a champion of right-wing Christian values, he is nonetheless bidding for a super-casino licence for a venue near the Dome. His ranching interests and the Greenwich tent aside, Anschutz has recently becoming something of a film impresario. Mr Prescott's initial justification for visiting his ranch was to discuss a forthcoming biopic on the slavery abolitionist William Wilberforce.

THE PR MAN

Matthew Freud, 41-year-old head of Freud Communications engaged by Anschutz to lobby ministers. He hosted a dinner for the tycoon attended by Tessa Jowell, the Culture secretary. Freud, who is married to Elisabeth Murdoch, the Australian media magnate's daughter, is often referred to as one of the most well connected people in Britain. He recently bought the journalists' trade paper, Press Gazette, with the former Daily Mirror editor Piers Morgan.

THE MANDARIN

Sir Gus O'Donnell, 46, the Cabinet Secretary, has so far studiously avoided investigating what appears to be a clear breach of the ministerial code by John Prescott. Sir Gus's letters to Hugo Swire, the Tories' culture spokesman, have been masterpieces of mandarin evasion. It was the Cabinet Secretary who delivered the fatal blow to David Blunkett's career when he ruled that he had broken the code by not seeking the advice of a watchdog before taking a City job.

THE PRIME MINISTER

Tony Blair, 53, needs John Prescott to survive this latest storm because he cannot be sure that his departure would not precipitate his own exit. He is reported to have sought out his deputy this week to tell him "we were elected together, we will go together." Some of his allies, however, believe that the Deputy PM is now beyond saving and that Blair should de-couple his future from that of Prescott.

THE WIFE

Pauline Prescott, 67, was swigging champagne on Friday as she helped to open a centre to the memory of Wilberforce in Hull on Friday - but her husband stuck to fizzy water. Friends say that she is "beside herself with rage" at being thrust back into the media maelstrom just a month after the revelations of her husband's affair with his secretary Tracey Temple. She has, nonetheless, won a measure of public respect and affection for her dignified silence.