Downing Street has confirmed it will employ Liz Truss’s chief of staff Mark Fullbrook directly after it emerged he was being paid through his lobbying company.
Mr Fullbrook will be put on a special advisor contract to avoid “any ongoing speculation”, a No 10 spokesperson said early on Tuesday.
The Cabinet Office had previously said it was “not unusual” for a special adviser to join Government “on secondment” and that his salary was paid to a “seconding company”.
But the arrangement drew accusations of renewed “Tory sleaze” from opposition parties.
No 10 did not deny that Liz Truss’s top aide 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.
The spokesperson said: “This is not an unusual arrangement. It was not put in place for tax purposes and Mr Fullbrook derives no tax benefit from it.”
No 10’s 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.”
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.
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 Federal Bureau of Investigation (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 financier and 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.
A Downing Street spokesperson previously said Ms Truss stood 100% behind Mr Fullbrook and “he has her full support”.