Baroness Warsi is to face an investigation by the independent adviser on the ministerial code after failing to disclose her shared business interest with a relative who travelled with her to Pakistan on an official visit.
The Conservative Party co-chairman wrote to David Cameron saying "sorry" for the embarrassment caused by the undeclared relationship with Abid Hussain, who assisted the British High Commission with outreach events in Pakistan in July 2010.
She said Mr Hussain was her husband's second cousin and this fact was "widely known", including to her private office and the British High Commission.
But she said she did not realise the need to declare they had "a common business interest as minority shareholders in a small food company".
"I sincerely regret that I did not consider the significance of this relationship with Mr Hussain when the arrangements for the visit were being made. In retrospect, I accept that I should have made officials aware of the business relationship between Mr Hussain and myself, and for this I am sorry.
"I regret that this failure may have caused embarrassment to the Government."
The Prime Minister said he accepted her apology but was asking Alex Allan, his adviser on ministerial interests, to "consider the issues that have been raised with respect to the Ministerial Code and to provide advice to me as rapidly as possible".
Cameron's decisions to refer the case to Allan comes just days after he decided the allegations that culture secretary Jeremy Hunt broke the rules over his handling of the BSkyB bid did not warrant a similar inquiry.
Here is the letter in full from Baroness Warsi to David Cameron:
Dear Prime Minister,
I am writing to you concerning allegations that arrangements for a visit I made to Pakistan shortly after I became a Minister may have resulted in the appearance of a conflict of interest and a breach of the Ministerial Code.
This visit in question occurred within weeks of my appointment to the Cabinet, and after a visit to Pakistan by William Hague, after which he spoke of the appetite within Pakistan for me to visit at an early stage. You will be aware that both the Foreign Secretary and the British High Commission felt that a visit could capitalise on the interest and goodwill that my appointment had generated and would be advantageous for our countries' relationship. The visit was indeed successful and had a positive impact on the perception of the United Kingdom within Pakistan.
The British High Commission in Pakistan and my private office agreed to arrange two outreach events with communities in Mirpur and Bewal, towns from which many members of the British Pakistani community originate and the latter being the town nearest to the village from which my father migrated fifty years ago.
Unlike most High Commission activity, the events were outside the main city regions and targeted at large numbers of ordinary resident communities. It was agreed that this format would have the most positive media and community impact in fulfilling the visit's objectives. A number of members of the British Pakistani diaspora therefore assisted the British High Commission in the organisation and delivery of these events. All decisions about the two events lay ultimately with the High Commission and the members of the Pakistani diaspora merely provided advice and support.
One of those who assisted the High Commission in this way was Mr Abid Hussain. Mr Hussain is a community activist who has worked with politicians of all parties both in Pakistan and in the UK, including David Miliband and Nick Clegg, and it was felt he would be able to help as he has extensive links to the local community in Mirpur.
Abid Hussain is my husband's second-cousin. This relationship is widely known and my private office and the British High Commission were aware of this.
However, I did not recognise, at the point that this visit was arranged, a need to disclose to my officials and the High Commission that Abid Hussain and I have a common business interest as minority shareholders in a small food company. It is important to note that my own interest in the company has always been fully declared and disclosed to Cabinet Office.
I sincerely regret that I did not consider the significance of this relationship with Mr Hussain when the arrangements for the visit were being made. In retrospect, I accept that I should have made officials aware of the business relationship between Mr Hussain and myself, and for this I am sorry. I regret that this failure may have caused embarrassment to the Government.
In mitigation, I would point out the following:
:: All decisions about the two events lay ultimately with the High Commission and the members of the Pakistani diaspora merely provided advice and support.
:: This was not a trade-related visit, and Mr Hussain did not gain any financial or business advantage from his involvement in voluntarily assisting the High Commission with the event.
:: Mr Hussain was not part of the official delegation;
:: No aspect of his visit or travel was funded by the British Government;
:: No arrangements were made by my office or the British High Commission for him to meet leading politicians;
:: There was no personal financial benefit to either myself or any company with which I was connected as a consequence of the visit to Pakistan or Mr Hussain's involvement with it.
:: The company concerned has never had any suppliers, customers or any other financial interest in Pakistan; it does not trade in Pakistan.
In the interests of transparency, I want to put in record that in February 2011, Abid Hussain was present at an event for the launch the Office for Overseas Pakistanis and British Nationals. This works with police forces across the UK and British consular services on issues such as forced marriage and kidnapping. The event was organised by the British High Commission and both I and the High Commissioner spoke at it. Mr Hussain was in Pakistan as part of a separate cross-party parliamentary delegation which included Richard Harrington MP, Andrew Griffiths MP, Lord Nazir Ahmed and others, and my office had no involvement in his attendance at the event.
As a final point, the visit of July 2010 was organised within a few weeks of my appointment. It was at a time when my office accommodation and staffing were still being settled and I was finding my feet within Government. However, I have at all times disclosed my own personal financial interests in full on the register of Ministerial interests.
On a personal note, David, I am sincerely sorry for these difficulties.
If there are any further questions, I am of course happy to co-operate and assist in any way you feel appropriate.
Here is David Cameron's reply to Baroness Warsi in full:
Thank you for your letter about allegations made in respect of your business interests in the press yesterday and today.
As you explained, you should have raised pro-actively with the FCO and the Cabinet Office the fact that Mr Hussain had a common business interest to you as minority shareholders in a small food company. The Ministerial Code requires Ministers to ensure no real or perceived conflict between their official responsibilities and their personal interests.
However, as you say, you did declare to the Cabinet Office your own interest in the company, and I note too the other points you make - in particular that this was not a trade-related visit, and Mr Hussain did not gain any financial or business advantage from his involvement in voluntarily assisting the High Commission with the event. This seems to me to be important to take into account in responding to this issue. I accept too your apology for your error and for any embarrassment to the Government.
There are clearly some lessons for future handling and I have asked Alex Allan, my adviser on Ministers' interests, to consider the issues that have been raised with respect to the Ministerial Code and to provide advice to me as rapidly as possible.