THE OBSERVER

Jamie Doward and Gaby Hinsliff
Sunday August 21, 2005

Health groups said his non-executive post with British American Tobacco (BAT) threatened his credibility over key issues such as the planned smoking ban in pubs and restaurants.

And Tory MPs are privately warning that, while his business interests were barely an issue during the 2001 leadership contest, changing attitudes to smoking now make them a liability.

Clarke is not expected to sever his business links unless or until he actually becomes leader, meaning they would be fair game in a leadership contest. The issue is already increasingly discussed on the widely read leadership blogs run by David Davis supporters and within other rivals' camps.

'He could kind of get away with it then [in 2001], and say "I'm just a bloke down the pub who smokes" and people think, "Well, Ken's Ken",' said a source close to David Cameron's camp. 'There is a new climate now, a younger set of MPs who take a different view.'

Clarke's portfolio as non-executive deputy chairman of BAT includes corporate social responsibility, which an internal discussion document suggests is regarded as a way of fending off criticism. The 2000 paper notes: 'The process [of CSR] will not only help BAT achieve a position of recognised responsibility, but also provide "air cover" from criticism while improvements are being made.'

A second document obtained by The Observer shows that Clarke attended a meeting in Geneva in 1999, in which the company discussed with Philip Morris and Japan Tobacco ways to ensure that the WHO's Framework Convention on Tobacco Control - the first global attempt to curb tobacco consumption - would not hurt their profits.

Among the topics discussed were ways the tobacco firms could work together to resist advertising bans and fund research into the links between smoking and disease, countering claims made by anti-smoking groups.

'How can you claim a badge of corporate social responsibility when you are responsible for producing something that kills 750,000 people a year?' said Ian Willmore of the anti-smoking group Ash.

The new Tory leader will have to debate Labour's plans to ban smoking in restaurants and pubs that serve food. When the white paper outlining its plans was published, Clarke denounced them as an 'extraordinary extension of the role on the state into individual liberty and choice of lifestyle'.

However, Clarke's friends insist he would never be beholden to any interests that, were he to run, he would be obliged to give up on becoming leader. 'I think you would be hard pushed to find in Ken the kind of character and record that ... would in any way be compromised by any previous position,' said one source close to Clarke.

The formal leadership campaign does not begin until October, when the party approves the method of voting. However, intense lobbying has begun behind the scenes to thin out the potential candidates, with several contenders courting David Willetts to join forces with them.

Surveys suggest Davis still maintains a commanding lead, but appears to have hit a ceiling of support at around 70 MPs. Clarke and Cameron are neck and neck, prompting pressure for them to combine in a 'dream ticket'.

The two men met earlier this summer to discuss a pact, but sources said each arrived determined to get the other one to capitulate: 'Ken wasn't ready to rule himself out and David was pretty clear that he wanted to go for it himself.'

The two have spoken since by telephone, but Cameron's supporters are quashing suggestions of a deal. They argue that, because some Cameron supporters have Davis as their second choice, it would be impossible to make them all transfer to Clarke, souring any 'sweetheart' deal.