THE culture secretary Tessa Jowell has become embroiled in the scandal surrounding her husband after it emerged that she had allowed their house to be used in a financial deal.

An investigation by The Sunday Times has established that Jowell signed a mortgage document that enabled her husband to bring an alleged bribe of £350,000 into Britain.

Italian prosecutors claim the money was paid by Silvio Berlusconi, the Italian prime minister, for help from Jowell’s husband in two corruption hearings against the politician.

Until now Jowell had avoided being drawn into the affair which has dogged her husband, David Mills, a corporate lawyer. Without her co-operation Mills would not have been able to raise a loan on their jointly owned house which enabled him to bring the Italian money onshore.

The couple’s London house and Mills’s office were raided this month by police at the request of Italian prosecutors and documents and two computers were seized.

Mills, 61, had previously tried to protect his wife, a close cabinet ally of Tony Blair who once said she would “jump in front of a bus” to save the prime minister from being drawn into the allegations. Last week he said: “Our finances are totally separate. She has no involvement in this of any kind at any level — personal, financial or at any other level — except that she’s married to me.”

Yet Jowell’s signature on a joint mortgage document with Mills meant he could undertake a complicated financial transaction as part of the Italian deal.

Mills has admitted that the £350,000 was paid by an Italian into Torrey Global Offshore, a specialist investment vehicle. The money had been transferred through at least seven accounts worldwide, including ones in Switzerland, the Caribbean and Gibraltar, before reaching Torrey Global.

The couple then raised a loan on their Kentish Town house in north London for a similar amount and put this money into a second hedge fund. The loan on the house was paid off within a month, using the cash from the first hedge fund which Italian police allege was a bribe.

After studying the web of companies and accounts used to convey the money, a financial expert said: “What is the purpose of rooting through a series of offshore accounts in this way? It looks like a lot of smoke and mirrors.”

Last week a leaked letter sent by Mills to his accountants revealed that the Italians wanted the money to be handed over “discreetly”. He wrote: “At around the end of 1999, I was told I would receive money, which I could treat as a long-term loan or gift. $600,000 (£350,000) was put in a hedge fund and I was told it would be there if I needed it.

“At the end of 2000 I wanted to invest in another fund, and my bank made a loan of the amount, secured on my house etc, of around €650,000 (worth £408,000 then). I paid it off by liquidating the $600,000.”

In fact, the bank loan was not made on his house, as he claimed, but on their jointly owned house, and lasted less than a month. Land Registry records show the mortgage was taken out by Mills and Jowell, with both signing for the loan from Hambros Bank. Without Jowell’s co-operation, Mills would not have been able to raise the loan, which facilitated the “gift” being brought onshore.

Opposition MPs are expected to raise questions in parliament about the affair this week. Among the issues they will wish to address are:

• Given that Jowell’s husband had already been interrogated by the Italian authorities, what steps did she take to ensure she would not be compromised by the transaction?
  
  
• Now that the money has become the subject of a criminal investigation, what disclosures has she made to her department?
  
  
• Did she take adequate steps to find out where the money to repay the mortgage was coming from?
  
  For more than 10 years the Italian authorities have been pursuing Berlusconi over a range of allegations including tax evasion, bribery of judges and making illegal payments to footballers.

  Mills has been drawn into the affair because he was architect of the offshore business network for Berlusconi’s empire, although he has always denied knowledge of any illegal activities. He has twice been called to give evidence against Berlusconi.

  The latest inquiry began after Mills’s own accountants reported the suspicious “gift” in February 2004. In an interview with Italian prosecutors five months later, Mills said Carlo Bernasconi, Berlusconi’s cousin and business associate, paid him the money.

  The payment was made on behalf of Berlusconi as a “debt of gratitude” because Mills had “managed to protect (Berlusconi) during the investigations and trials”.

  Mills said during the interview that although he had never “borne false testimony” for Berlusconi, he had “tried to maintain, where possible, a certain degree of privacy about the transactions I made with him”.

  Mills has since retracted his statement, saying it was made under duress after 10 hours of questioning. He now says the money originated from Diego Attanasio, a Neapolitan shipping magnate, who was also a client. However, Attanasio says he was in prison at the time and could not have ordered the transfer.

  Mike Warburton, an accountant at Grant Thornton, said such circuitous methods of transmitting money are unusual: “If you receive money, you pay it into your local bank account and you pay your taxes on it.”

  Italian prosecutors are to decide next month whether Mills should face trial on corruption charges.

  Yesterday Mills described the way he used the money to repay the mortgage as a “normal domestic transaction”. He denied his wife had been financially involved: “If I say to her that I am borrowing money for the short term, which it was, she trusts me enough to know I am doing what I say I am doing.”

  Yesterday Jowell issued a statement saying: “I signed a charge over our jointly owned home to support a loan made to my husband alone by his bank. I am satisfied that no conflict of interest arose out of this transaction in relation to my ministerial duties. As is standard practice in relation to legal proceedings it would be inappropriate for me to comment further.”

  Insight: Jonathan Calvert, Gareth Walsh, John Follain

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