Kenneth Clarke, currently bidding for the Tory leadership, gave what appears to have been false evidence to parliament on behalf of the tobacco company BAT.
The former chancellor told a Commons select committee that the company had not knowingly supplied the international market with smuggled cigarettes. But a document written by British American Tobacco's lawyers before the hearing concludes that there was truth in some of the allegations. A few days later, Mr Clarke, who is deputy chairman of the company, expressly denied the charges to MPs.
Last night the chairman of the committee at the time, the former Labour MP David Hinchcliffe, said: "My committee could have been misled. I will be pressing my successor as chairman, Kevin Barron, to undertake further examination of these witnesses."
Mr Clarke gave evidence in 2000 when BAT was facing smuggling allegations. The City firm Lovells wrote a briefing for the company's bosses, which the Guardian has obtained. A senior partner at Lovells wrote the "privileged and confidential" briefing on February 11 2000 in preparation for the committee hearing. The lawyer, whom Lovells declines to name, concluded that BAT had acted within the law. But he warned in "cautionary notes" concerning his findings that the evidence did show that the tobacco company had deliberately used smuggling channels to "establish itself" and "grow its market share" in Latin America.
On February 16, however, when Mr Clarke was summoned before the Commons select committee, he said the allegations about smuggling were "nonsense" and "unfounded". Last night he stood by his testimony to the committee.
"There is no evidence that BAT engaged in smuggling." Although "a lot" of BAT cigarettes found their way on to the black market, he added, they had been legitimately supplied by BAT to wholesalers.
BAT said: "We have always acknowledged that we knew some cigarettes, legally sold by us, ended up being smuggled by other people."
Mr Clarke's previous Conservative party leadership attempt, in 2001, was fuelled by a donation from the former BAT chairman Sir Patrick Sheehy.
The disclosures come at an awkward moment for the former chancellor. The Conservative party conference opens today and he is due to address the party faithful tomorrow, The Guardian reports.