One of David Cameron's trade envoys and former ministers is facing calls to stand down over for his links to a pro-Russian business group.
Charles Hendry, a Tory MP and former energy minister, is listed as president of the Russo-British Chamber of Commerce, leading an advisory council that includes one of Vladimir Putin's wealthy allies whose firm recently struck an oil deal with Syria and an ex-chief of the Russian arms company that designed Buk missiles.
The prime minister has said Russia cannot expect to continue enjoying access to European markets and pushed for stronger sanctions against the country, after both the UK and US said they strongly suspect the Malaysia Airlines flight MH17 was struck down in Ukraine by separatists using Russian-made Buk missiles.
At the same time, the business group advised by Cameron's own trade envoy is promoting commerce with Russia. A statement on its website says it firmly believes the country continues to represent "an attractive investment and trading destination".
Without mentioning the Malaysian airliner disaster, the statement said it was "concerned that the recent and ongoing developments in Ukraine and the reaction of the international community will lead to disruption in trade and business relations between Russia and the UK".
Several members of its advisory council have current or past links to the Russian government. One is Igor Ashurbeyli, who until 2011 was a senior director-general at Almaz-Antey, the Russian defence company that designed Buk missile systems. Last week, the US named Almaz-Antey on its sanctions list, describing the company as making "surface-to-air missile systems currently used by the Russian military".
Another is Yuri Shafranik, a former Kremlin energy minister, who has since gone on to be chairman of SoyuzNefteGaz, which signed a major oil exploration deal with president Bashar al-Assad's Syrian regime in December.
On the British side, the patron of the chamber of commerce is Prince Michael of Kent, and members of the advisory council also include businessmen from BP, Ernst & Young, PwC and Baker & McKenzie. Its annual dinner was picketed earlier this year by Ukrainian protesters.
Contacted by the Guardian, Hendry said he was asked some time ago to take over as president of the advisory council "as part of the process of renewing and re-energising" it but that had been put on hold. He said he had never met Ashurbeyli or Shafranik.
"Clearly, there is an important role for the chamber to perform in assisting British companies operating in Russia, and especially in advising them on how to abide by the letter and spirit of any sanctions," he said. "The RBCC is a 'bridge organisation' working in both countries, but naturally its UK members, board and executive will abide by UK sanctions in the same way that its Russian members will abide by the dictates of their government."
He has condemned the shooting down of MH17 as a "terrible crime" and stressed anything he does in relation to Russia is done "with the knowledge and agreement of the FCO and our embassy".
Hendry, who is not paid for his government role, took a £2,200 trip with his wife to Moscow, staying in the Ritz-Carlton Hotel, at the expense of the chamber of commerce to speak at a conference in 2012. He is also paid £60,000 a year to work one and a half days a month as a consultant to Vitol, an oil trader that has loaned billions to Russian state oil company Rosneft.
Downing Street would not comment on Hendry's business links but Conservative sources defended his position, saying the government was not advocating the end of all trade with Russia.
John Mann, a Labour MP, said Hendry should step down as an envoy and have the whip withdrawn.
"This organisation is encouraging trade with Russia," he said. "This is the opposite of the sanctions that we require, that the government says we are pursuing. How can he possibly retain this role when he is an advocate for even more trade with Russia. His position is totally untenable. David Cameron should act to remove him."
The controversy over Hendry comes on top of intense scrutiny over links between the Tory party and wealthy Russian donors. Boris Johnson, London's mayor, has said he could back out of a tennis match auctioned at a Conservative fundraiser for £160,000 to the wife of a former minister in Vladimir Putin's government.
Johnson was due to play a match with David Cameron and Lubov Chernukhin, the wife of Vladimir Chernukhin, deputy finance minister under Putin in 2000. The game was the star lot at the Tory summer party last month. But amid growing concern at Russian funding of the party, the mayor said on Wednesday he wanted the winning bidder to be vetted.
"It is very important full checks are carried out to make sure this is not someone who is an intimate or a crony [of Putin]," he said.
The prime minister insisted on Wednesday he would not take money from any "crony" of Putin, but Electoral Commisson records reveal that Kremlin-linked businesses have donated more than £100,000 to the party in the past five years.
Cash donors to Tory central office include a firm led by a Russian banker who has facilitated investments by the Kremlin's $10bn (£5.86bn) Russian Direct Investment Fund and Russian oil group Lukoil. Natalia Tsukanova has advised several Russian companies with state-ownership and her Moscow-based company, Xenon Capital Partners, gave £10,000 to the Conservative party in 2010.
A London based public relations firm which has represented several allies of Putin also gave the Conservatives £91,000 in 2009 and 2010 and has spent several thousand pounds on tables at Conservative fundraising events since then. New Century Media, headed by the former Northern Ireland unionist MP David Burnside, has made introductions with David Cameron for Vasily Shestakov, Putin's judo partner and an MP in the Russian Duma who had been given the job of improving Russia's reputation in the UK.
On Wednesday Labour MP John Healey wrote to Cameron demanding he rethink whether the party should keep Russian funding. He wrote: "When leader of the opposition in 2008 you went as far as to say, 'Russian armies can't march into other countries while Russian shoppers carry on marching into Selfridges', and yet ...while the Russian army marches in to Ukraine you seem content to base your re-election campaign on Russian funds. Since you set this moral standard while leader of the opposition, I believe it is now vital that you make a public judgment and justification of whether you and your party will keep the money you have received."
A Tory spokesman said: "All donations to the Conservative party are fully permissible and transparently declared to the Electoral Commission and published on their website." A Tory source added: "If John Healey has any evidence of impropriety he should show it. Our donors don't choose our candidates, pick our leader or dictate our policies. Labour's do."
Cameron has also been forced to re-examine arms exports to Russia after the Commons committee on export control identified £130m of sales despite the sanctions. The government argues none of these have gone to military sources, citing the example of parts that went to a Brazilian ship that happened to be docked in Russia.
However, Cameron said the government would conduct extra checks to reassure the public. "I believe that we have been consistent with the terms of the arms embargo that we set out which was principally aimed at Russian armed forces and the use of goods and involvement in Ukraine but we will look very carefully at all outstanding licences and make sure that's the case and of course if it's not the case we would want to act very swiftly," he said.
