Jowell accused in fresh loans row

The controversy surrounding Culture Secretary Tessa Jowell was reignited last night after The Observer uncovered documents showing she had signed for two further mortgages connected to her husband's investments.

She signed for both mortgages on the same day in March 2002, for a total of £450,000. The documents have led opposition politicians to demand that the Cabinet Secretary, Sir Gus O'Donnell, reopen his inquiry into whether she breached the ministerial code.

The news came amid reports that Jowell has kept out of cabinet discussions on Iran for almost three years because of her husband's controversial business dealings there, first revealed in The Observer. Her silence is understood to have followed consultations with top civil servants, according to today's Sunday Mirror

Last week, Jowell separated from her husband, David Mills, citing strains caused by Italian prosecutors' attempts to charge him with obstructing the course of justice. He has denied any wrongdoing.

Earlier this month, O'Donnell accepted Jowell's assurances that she had had no knowledge that money alleged to have been a 'bribe' from Italian Prime Minister Silvio Berlusconi had been used by her husband to help pay off a mortgage on their London home. She told O'Donnell she had not known until August 2004 that the loan, taken out in September 2000, had been settled.

Yet analysis of the applications reveals she signed two mortgage deals on 8 March 2002 with Mortgage Express. These allowed her husband to raise £450,000 to cover investments linked to the US stock market. Both application forms asked if there were any outstanding mortgages on their properties. Critically, the form for the second mortgage, taken out for £200,000 on the couple's country home in Warwickshire, asked them if they had any mortgages on other properties. It is understood that no mention of the earlier mortgage was made because it had already been paid off.

A spokeswoman for Jowell declined to commenton the latest disclosure and referred to an earlier statement by her boss that she 'first became aware in August 2004' that her husband had received money that he 'had reasonable grounds to believe was a gift'.

Tory MP Nigel Evans, a member of the House of Commons Culture, Media and Sport select committee, said: 'The credibility of her defence has stretched beyond breaking point. We now know she signed two legal documents on the same day where she was asked about outstanding mortgages. There appears to be growing evidence that she misled the Cabinet Secretary.' Evans is writing to O'Donnell to ask him to reopen the inquiry.

There were also fresh revelations from the Italian prosecutors. Documents from the case, according to today's The Sunday Telegraph, showed that an Italian film company with which he had ties received British government grants.

Concerns about ministers' involvement in complex financial dealings will be heightened by a disclosure that the wife of the Defence Secretary John Reid has links to an offshore company set up in a Caribbean tax haven. She used a family trust in the British Virgin Islands to provide a bridging loan in 2000 to help her purchase a London townhouse.