Hurd faces questions on Serbian deal

Italian prosecutors investigating allegations of bribery and embezzlement relating to the privatisation of Serbia's telephone network want to question Lord Hurd, the former Tory Foreign Secretary.

Hurd was deputy chairman of NatWest Markets, which advised Telekom Serbia during the controversial 1997 sell-off. The bank was hired by the Serbs after a breakfast meeting between the peer and Slobodan Milosevic, then Serbia's President.

Magistrates in Turin are probing claims that money paid by Telecom Italia for a stake in the Serbian company was diverted into bank accounts and shell companies controlled by Milosevic and his associates.

There is no suggestion of wrongdoing by Hurd, Telecom Italia or NatWest, now part of the Royal Bank of Scotland group.

'We have asked to interview Lord Hurd. We are waiting for a date to be fixed,' Paolo Storari, one of the prosecutors leading the investigation, told The Observer last week. He added that the former Cabinet Minister had a legal right to refuse to be interviewed, but had not yet indicated whether he intended to use it.

Hurd was on holiday this weekend and unavailable for comment. Spokespeople for NatWest and Hawkpoint Partners, the finance house where Hurd now works, declined to comment.

Storari visited London last month to seek the assistance of the Serious Fraud Office, and has requested access to bank accounts and other financial documents from NatWest Markets. 'We want to see how NatWest was paid for the consultancy it provided to Telekom Serbia,' the prosecutor said.

'We haven't received any documents yet.'

He declined to say whether the investigators had found proof of corrupt payments relating to Telecom Italia's purchase for 900 million Deutschmarks of a 29 per cent stake in Telekom Serbia.

NatWest was criticised at the time, with some observers suggesting the privatisation provided a financial windfall to strengthen Milosevic's grip on power.

Hurd, who left the Foreign Office in 1995, was perceived to be sympathetic to the Serbs during the Balkans conflict. He opposed US plans to lift an embargo against Bosnia's Muslim population in the early and mid-Nineties.