No.10 has defended the employment arrangements of Liz Truss's chief of staff, Mark Fullbrook, saying the Cabinet Office's propriety and ethics team signed off on him being paid as a contractor through his lobbying firm.
Senior civil servants are said to have raised doubts about the “highly questionable” decision to employ Fullbrook as a contractor rather than as a government employee.
Former chiefs of staff to the prime minister have been appointed as temporary civil servants and their salary has been made public.
But Fullbrook is being paid through Fullbrook Strategies, a lobbying firm he set up in April but which he said has suspended commercial activity.
A Cabinet Office spokesperson confirmed that the department’s propriety and ethics team had signed off on the arrangement, and said Fulbrook will be “subject to the usual special adviser or civil service codes”.
"It is not unusual for a special adviser or civil servant to join government on secondment,” they said.
"The government will pay the salary of an employee on secondment, including costs such as employers' national insurance contributions to the seconding company," they added.
"All government employees are subject to the necessary checks and vetting and all special advisers declare their interests in line with Cabinet Office guidance."
But senior officials are reportedly uncomfortable with the arrangement, with one Whitehall source telling The Times that “no one can understand” why cabinet secretary Simon Case had signed off on it.
“It feels really, really murky,” the source said, as the newspaper reported today that Fullbrook is on a short-term contract running up to December and is said to be hoping to run the Tories’ next general election campaign.
The Sunday Times first reported on the chief of staff’s employment arrangements, which could allow him to pay less tax.
A spokesperson for Fullbrook told the newspaper: "This is not an unusual arrangement. It was not put in place for tax purposes and Mr Fullbrook derives no tax benefit from it.”
However, they did not explain why he is being paid as a contractor.
The revelation comes after it was reported that Fullbrook had been questioned as a witness as part of an FBI inquiry into alleged bribery in Puerto Rico.
The US law-enforcement agency is investigating allegations that Julio Herrera Velutini, a financier and Conservative Party donor, promised to help the former governor of Puerto Rico get re-elected in exchange for her firing an official investigating a bank he owned there. He has denied the charges.
When the news was reported a week ago, spokesperson for Fullbrook said: “As has been made repeatedly clear, Mr Fullbrook is committed to and complies with all laws and regulations in any jurisdiction in which he works and is confident that he has done so in this matter.
“Indeed, Mark Fullbrook is a witness in this matter and has fully, completely and voluntarily engaged with the US authorities in this matter, as he would always do in any circumstance in which his assistance is sought by authorities.
“The work was engaged only by Mr Herrera and only to conduct opinion research for him and no one else."
But following the latest reports that he is being paid through a lobbying firm, Labour’s deputy leader Angela Rayner said: "The fact that this bombshell comes days after alarming reports that Mr Fullbrook is also embroiled in a foreign bribery probe involving the FBI will only add to public concern.
"While Liz Truss shows all the signs of allowing another wave of Tory sleaze to fester, a Labour government would create an independent ethics and integrity commission to clean up public life and restore the basic standards we expect."