DTI investigates firm linked to Blair's holiday host

Anti-smoking campaigners condemned Tony Blair yesterday for holidaying at a chateau owned by a businessman with a financial interest in a British company under investigation for alleged tobacco smuggling.

The Prime Minister is spending his family summer holiday as a guest of Alain Dominique Perrin, who heads the luxury goods firm Richemont. It owns £3bn of shares in British American Tobacco (BAT). BAT is the subject of a formal Department of Trade and Industry inquiry into allegations that it "profited from bootlegging" and "deliberately stimulated" the smuggling market.

The inquiry, which has been under way for 18 months and is expected to report in the next few months, is being taken seriously by BAT, Britain's biggest tobacco company.

Last night Kevin Barron, the Labour MP who chairs a Commons committee on smoking, said it was inconceivable that the Prime Minister was unaware of the investigation.

Mr Barron, the MP for Rother Valley and the head of the all-party group on smoking and health, said Mr Blair's decision to accept Mr Perrin's hospitality sent the wrong message. "His host has a clear interest in the outcome of the investigation. What signal is this sending out?"

Clive Bates, the director of the pressure group Action on Smoking and Health, said: "When the Government is investigating BAT over smuggling it's surely the most brazen conflict of interest in taking a free holiday at the expense of someone with a financial interest in BAT."

This is not the first time Mr Blair has courted controversy over the tobacco industry. He was ordered to return a £1m donation to Labour from Bernie Ecclestone, the Formula One boss, after news emerged that the Government had argued for the sport to be exempted from a tobacco advertising ban.

Mr Blair is staying at the 15th-century chateau in the Lot region of south-west France for five days. Richemont owns brands such as Cartier and Chloe and also has 450 million shares in BAT, almost a quarter of its total equity.

Downing Street said last night that talk about business matters with Mr Perrin, including the inquiry into BAT, would not be on the Prime Minister's agenda. "The Prime Minister is on a private holiday. It's a social thing. He is trying to have a break," said a spokeswoman. "I don't suppose he will be discussing these kinds of issues."

BATsaid it was co-operating fully with officials from the Department of Trade and Industry. Files have been seized from the company's London headquarters by government investigators, and BAT executives are believed to have been interviewed.

The inquiry was ordered by Stephen Byers when he was Trade and Industry Secretary after a recommendation by the House of Commons Select Committee on Health.