Liz Truss’s chief of staff Mark Fullbrook will be employed directly by Downing Street after it emerged he was being paid through his lobbying company.
The top aide will be put on a special advisor contract to avoid “any ongoing speculation”, said a No 10 spokesperson in a U-turn announced early on Tuesday.
The Cabinet Office had previously claimed that it was “not unusual” for an adviser to join government “on secondment” and for his salary was paid to a “seconding company”.
But the arrangement drew accusations of renewed “Tory sleaze” from Labour and the opposition parties.
No 10 did not deny that Ms Truss’s top aide had received payments through Fullbrook Strategies, a private lobbying firm he set up in April, as the Sunday Times reported.
A spokesperson for Mr Fullbrook previously denied speculation that the arrangement allows him to pay less tax. “This is not an unusual arrangement. It was not put in place for tax purposes and Mr Fullbrook derives no tax benefit from it.”
A No 10 spokesperson on Tuesday said: “While there are established arrangements for employees to join government on secondment, to avoid any ongoing speculation Mark Fullbrook will be employed directly by the government on a special adviser contract.
“All government employees, including those joining on secondment, are subject to the necessary checks and vetting, and all special advisers declare their interests in line with Cabinet Office guidance.”
Mr Fullbrook’s company, which he says has now suspended commercial activities, reportedly contacted the government on behalf of clients including the Libyan House of Representatives, an energy provider and a PPE firm.
Mr Fullbrook has already been in the headlines since starting his role as the most senior political appointee in government two weeks ago.
It emerged last week he was questioned as a witness as part of a FBI inquiry into alleged bribery in Puerto Rico.
Labour’s deputy leader Angela Rayner said the revelation that Mr Fullbrook is “on loan” from a lobbying firm “raises serious questions about the new prime minister’s judgment”.
The FBI probe relates to allegations that Tory donor Julio Herrera Velutini promised to help the former governor of Puerto Rico get re-elected if she dismissed an official investigating a bank he owned there. He has denied the charges against him.
Mr Velutini is alleged to have paid CT Group, a political consultancy firm in which Mr Fullbrook was a senior figure, 300,000 US dollars (almost £263,000) for work intended to help Wanda Vazquez Garced’s ultimately unsuccessful re-election campaign in 2020.
Mr Fullbrook strongly denies any wrongdoing. A representative said: “Our client was not involved in the illegal conduct being alleged and is not being investigated in relation to it.”
“He is merely a witness to it, and has and is fully cooperating with the relevant US law enforcement authorities. Any allegation that he is unfit to hold the position of chief of staff is wholly untrue.”
A Downing Street spokesperson previously said Ms Truss stood 100 per cent behind Mr Fullbrook and “he has her full support”.
The Sunday Times reported that Mr Fullbrook’s company, which he says has now suspended commercial activities, contacted the government on behalf of clients including the Libyan House of Representatives, an energy provider and a PPE firm.
