This is a smear against me by a Labour supporting newspaper

Michael Portillo

The allegations in Tuesday's Guardian newspaper concern Mr Portillo's failure to declare payments totalling more than �20,000 for speeches and private briefings while a member of John Major's cabinet.

Mr Portillo has rejected as a "smear" claims that he behaved improperly, insisting there had been no need to declare the donations, which went to his former Enfield constituency party.

No minister or public servant should accept gifts, hospitality or services from anyone which would or might appear to place him under an obligation

1995 ministerial code of conduct

The revelation of the payments is likely to raise the issue of Mr Portillo's judgement in accepting the money at a time when public concern over political "sleaze" was reaching its height.

But one of his chief leadership rivals, Ken Clarke - a cabinet colleague when the payments were made - dismissed the claims of wrongdoing as "absolutely senseless".

Payments for briefings

The Guardian sets out how Mr Portillo, now the MP for Kensington & Chelsea, was paid for private briefings and speeches while he was employment secretary and then defence secretary between 1995 and 1997.

According to documents obtained by the paper, the briefings sprang from a constituency dining club called the Enterprise Club, which paid Mr Portillo for attending dinners with business clients.

The cash went to his north London Enfield Southgate constituency party.

The code of ministerial conduct in force in 1995 stated that "no minister or public servant should accept gifts, hospitality or services from anyone which would or might appear to place him under an obligation".

Michael Portillo: Denies improper conduct

But Mr Portillo has firmly rejected that the payments-for-briefings transgressed those rules. "There is no truth that I have taken any money whatsoever," he told the BBC.

"I, like most Conservative MPs, have raised money for my party and my constituency association and I have done nothing improper."

The claim of impropriety was "a smear against me by a Labour-supporting newspaper".

Awkward timing

The timing is undoubtedly awkward for Mr Portillo, the Guardian printing its story on the very day that Tory MPs vote in the first knock-ballot of the contest to succeed William Hague.

All 166 of them can vote in the knock-out ballot, which will eliminate the candidate with least support. The secret ballot is held in a Commons committee room and opens at 1300BST/1200GMT, closing at 1700BST/1600GMT.

Once the result is known the surviving four candidates are expected to attend a private hustings for Tory MPs later on Tuesday evening.

More rounds of voting will be held on Thursday and next Tuesday before the final shortlist of two is put to a ballot of grassroots Tory members. The winner will be announced on 12 September.

Senseless claims

Ken Clarke was the only candidate to comment on the story, although he had not read the newspaper.

Ken Clarke: "The most popular"

"I heard the account on the radio and it was absolutely senseless," he said. "I could not see anything wrong in their description at all."

Mr Clarke and the other would-be Tory leaders were instead focusing on last-minute bids to snatch votes.

With Mr Portillo still widely expected to easily top the MPs' ballot, interest has focused on who will win the second place on the two-name shortlist from which party members will choose the winner.

So far that battle looks to be between Thatcherite Eurosceptic Iain Duncan Smith and pro-European Mr Clarke.

Mr Duncan Smith's campaign manager, Bernard Jenkin, warned that a leadership victory for Mr Clarke would only re-open deep divisions within the Tories over Europe.

"Ken is the one candidate that has been reopening all the splits in the party on Europe when every other candidate is trying to draw a line," he said.

'Ken the most popular'

But European commissioner Lord (Leon) Brittan, a Tory former home secretary, said: "All the polls show that [Ken Clarke] is the most popular Conservative in the country. He is known, he is experienced, he is popular."

"We have got to decide, do we want this to be a private debate in the party or do we actually want to win the general election?"

Meanwhile David Davis, thought to be jostling Michael Ancram to avoid coming last in the first round, insisted he would soldier on to later stages of the contest even if he only survived in fourth place in Tuesday's eliminatory ballot.

"I expect to be fourth today, third on Thursday, second next week and to win in the country," he said.