Tory MP dragged into police probe

A senior Tory MP has been dragged into a police investigation into a business deal between his company and a Conservative-run council.

John Hayes, promoted to the shadow cabinet in last week's reshuffle, was a director of computer firm DataBase when it won a contract to sell equipment to schools in Lincolnshire.

The MP is a friend of Jim Speechley, Tory leader of Lincolnshire County Council. Police are probing complaints that the contract was awarded following "improper procedures".

The first contact was made in 1997, and the following year DataBase was awarded an initial £700,000 contract. In 1999, the year Mr Hayes stepped down as a director, the value of the contract was extended to £5.5 million.

In a letter from Mr Hayes to Mr Speechley, sent in November 1998 and leaked to The Guardian, the MP advises the council to be "creative" in order to extract extra money from Whitehall.

The letter says: "If Lincolnshire could come up with additional money, there is a strong chance the Department for Education and Employment might well double it. Naturally you would need to do this within existing spending limits. This implies the need to be creative in identifying sources."

A note on a council file says: "DataBase MD is MP and friend of Jim Speechley."

Two former council officials called in the internal auditors, who upheld their concerns about the awarding of the contract. An independent assessment later ranked DataBase as the least suitable of 12 potential suppliers.

The council's former acting team manager, Judith Davids, complained to the auditors of "bias" and wrote: "I also have concerns that all suppliers have not been treated equally."

Mr Hayes, the shadow agriculture minister, insisted that he was not involved in the tendering process or the award of the contract, and claimed the focus of the investigation was on the council's procedures.

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