David Blunkett tonight tried to bury a controversy threatening his ministerial career by announcing the sale of shares in a DNA-testing firm that he bought shortly before his return to Cabinet.
The Work and Pensions Secretary, hoping to avoid his second resignation in less than a year, said he had asked his three eldest sons - for whom the shares in DNA Bioscience are held in trust - to authorise trustees to sell the shares and they had agreed.
In a statement released shortly after a visit to Tony Blair at Downing Street, Mr Blunkett that he had taken that step "not only to avoid continuing misinterpretation of the position but to protect family and friends from further intrusion".
A spokesman for the Prime Minister - who was earlier challenged by the Tories to reveal what he knew about the share purchase - said that Mr Blair "believes that no further action is needed and the matter is closed".
Mr Blunkett bought a 3 per cent stake in DNA Bioscience during the election campaign and served as a non-executive director for just two weeks, resigning after his appointment to the Cabinet on May 6 and putting the shares in trust for his sons.
If the shares had been retained, the Blunkett family might have made a windfall profit of as much as £300,000 if the company lists on the stock market as planned.
Mr Blunkett said tonight that the firm had no contracts with his department or the Child Support Agency - which might fall directly within his Work and Pensions remit - and that he had not made any representations on its behalf or given it any advice. He added: "There has therefore been no conflict of interest."
"I have not made any representations to any Government department or agency on behalf of DNA Bioscience since returning to Government, nor have I provided any advice to the company. There has therefore been no conflict of interest," Mr Blunkett said.
"However, I am not prepared even to have the appearance that there could be any potential future conflict whilst the trust retains any shares in DNA Bioscience. I have therefore asked my sons to authorise the trustees to dispose of the shares. They have agreed to this.
"I have taken this step not only to avoid continuing misinterpretation of the position, but also to protect family and friends from further intrusion and hope that will be respected."
It is not clear what will happen to any profit made from the sale.
Chris Grayling, Shadow Leader of the Commons, has accused Mr Blunkett of a "clear breach" of the code of conduct governing ministers and recent former ministers.
He has written to Mr Blair asking whether he had been fully aware of Mr Blunkett's ties with the company before details emerged in the press and whether he thought it appropriate for Mr Blunkett's family to retain the shareholding.
Mr Blunkett has also been criticised for continuing to meet members of the family that own DNA Bioscience since his resignation as a director and return to Cabinet.
Downing Street aides were clearly keen to avoid any repeat of the prolonged and damaging sex and abuse-of-office scandal which forced Mr Blunkett to resign as Home Secretary in December, after the messy public break-up of his affair with Kimberly Fortier, a married American magazine publisher with whom he had a son.
The Government has asked Sir Gus O'Donnell, the Cabinet Secretary, to rule on whether Mr Blunkett had indeed breached ministerial rules or ignored a conflict of interest in his dealings with the firm. Sir Gus may rule as early as this evening.
The Blunkett statement failed to satisfy the Conservatives, who continued to call for an inquiry into the affair. Mr Grayling said: "Unfortunately Mr Blunkett’s statement today has not drawn a line under the matter. Just because he has disposed of the shares, it does not mean he should not face a proper investigation.
"We need a rapid inquiry into what has happened to clear the matter up once and for all. Until this takes place, the questions about Mr Blunkett’s dealings will remain and his position will become increasingly untenable."
Philip Webster, Political Editor of The Times, said that the Blunkett statement was carefully worded and the issue could emerge again, despite the comments by Mr Blair this evening.
"It is known that DNA Biosciences has been seeking to work with the Government. That is why there has had to be this careful drafting, because any of conflict of interest would put Mr Blunkett in breach of the ministerial code of conduct again."
Webster added: "Somehow I can't quite believe this is the end of this one. With the Prime Minister's support, Mr Blunkett has managed to get this far, but you get the impression it wouldn't take that much more to get this started again."
Mr Blunkett had effectively acknowledged breaching the ministerial code yesterday, when he confirmed that he had not sought advice from an independent committee before buying the shareholding and agreeing to become a company officer.
In his letter to the Prime Minister, Mr Grayling reminded Mr Blair of his own stated commitment that his ministers would observe both the letter and the spirit of the code of conduct, under which Cabinet ministers should not enter into any directorships during their first two years out of office without consulting the Advisory Committee on Ministerial Appointments.
He added: "However, I regard the other issues relating to Mr Blunkett’s relationship with DNA Bioscience as even more serious.
"Put simply, the situation is this: Mr Blunkett became a director of the company for two weeks, during the general election campaign, even though journalists tell me that he had indicated to them before that that he had high hopes of returning to the Government after election day.
"During that time he acquired, on behalf of his family, a significant shareholding in the company. Surely normal practice would have been to wait a fortnight before deciding whether or not it was possible for him to join the board?
"Although he resigned from the board of the company after his return to office, he has not denied reports that he continued to meet members of the family who control the company after he became Secretary of State for Work and Pensions.
"It has also since emerged that the company is seeking business from a number of Government departments, and other public bodies – including Mr Blunkett’s own Department. In the case of its contract with the Law Centres, it has been reported that it used Mr Blunkett’s name in pursuing the business.
"The significance of this is that the company is believed also to be seeking a stock market listing. Its success in doing so, and the price of sale, will depend on its success in winning public sector contracts. If it does succeed, Mr Blunkett’s family stands to gain substantially from this.
"Is this really all consistent with both the letter and the spirit of the Ministerial Code?"
A Cabinet Office spokeswoman said that the Cabinet Office would respond to the points raised in Mr Grayling's letter "in due course".
