The taxpayer is being stung so this Lord can live in Admiralty House

James Forsyth and Claudia Rosett unravel the astonishing tale of Mark Malloch Brown, the most controversial recruit to the ministry of all talents, the deal he struck with Gordon Brown — and the questions being asked in Parliament about his grand grace-and-favour home 1 n February 2006 Mark Malloch Brown, then the UN Secretary General's chief of staff, was interviewed by Claudia Rosett at the UN, and found himself increasingly furious at the line of questioning about his housing arrangements in New York. Malloch Brown had caused controversy with his decision to live on the smart country estate of George Soros, the financier who forced Britain out of the ERNI in 1992, and a major donor to left-wing causes. Finally, the UN mandarin barked that he was doing 'God's work' before storming out of the interview. Malloch Brown might well consider himself to be on a mission from God. But, now, as then, he lives more like a mediaeval cardinal than an ascetic monk.

Scroll forward to the summer of 2007 and the same man found divine providence intervening on his behalf. Gordon Brown, shortly to become Prime Minister, was desperate to bring Malloch Brown on board. One friend who was advising him while Brown and Malloch Brown were negotiating over the telephone remembers egging him on: 'It was great fun! You know, strike a hard bargain.'

It ended up with Malloch Brown nailing down a quite remarkable deal from the supplicant Prime Minister-in-waiting. This newcomer to British government picked up an extensive portfolio incorporating Africa — one of Brown's foreign policy priorities — Asia and the United Nations, a peerage and the right to attend Cabinet. The message was clear: Malloch Brown was not to be some token peer picking up the crumbs under the Foreign Secretary's table but a man with a seat at the top table.

Why was Gordon so keen to bring him in? In the months leading up to the takeover on 27 June, senior Brownites expressed concern at their boss's comparative inexperience in foreign policy. Despite a decade at the centre of power, Brown's experience on the global stage was limited to his work with the International Monetary Fund, the development agenda and his famously grumpy appearances at meetings of EU finance ministers. Brown's emphasis on the economic aspects of international security and peace-making in the Middle East served only to highlight the narrowness of his focus. Blairites sneered that 'Gordon doesn't do abroad'.

There were obvious attractions, therefore, in hiring a foreign policy heavyweight to act as his guide and guru, but it was depressingly difficult to find anyone to fulfil this role. Margaret Beckett had proved a mediocre foreign secretary; and restoring Jack Straw to the Foreign Office would have been too clear a slap to Tony Blair and George W. Bush and boxed Brown in on Iran. So Brown looked outside Westminster.

The answer Brown's team came up with — with help from some unofficial headhunters — was Malloch Brown; a Brit in his early fifties who was married with four children and had been educated at Marlborough, Cambridge and Michigan, been a journalist on the Economist and a political consultant before entering the world of international bureaucracy, rising to become Kofi Annan's deputy secretary general at the United Nations in April 2006. There could only be a dozen or so people in the world who were as thoroughly well-versed in the global agenda as Malloch Brown. To add to his appeal to the Brownites, he also represented a clear break with the Blairite past on foreign policy. At the UN he had been a stern critic of the Iraq war and publicly slapped down the Bush and Blair partnership over the crisis in the Lebanon and for their 'megaphone diplomacy' on Darfur.

Malloch Brown, the theory ran, would add instant heft to Brown's reform agenda for international institutions and signal that foreign policy would be very different under Brown. Shriti Vadera, now parliamentary under-secretary of state at DFID and one of Brown's closest aides, was apparently particularly keen on the appointment. His multilateral UN credentials also meant that the Labour party was likely to tolerate his political promiscuity — Malloch Brown had flirted with the SDP in the 1980s and done a turn at David Cameron's first Tory conference — and not kick up a fuss over the financial work he had taken on after leaving the UN.

The CV of Brown's most senior outside appointment reads like that of a hair-shirted technocrat: a vice-president of World Bank, head of UNDP, chief of staff and then deputy secretary-general of the United Nations and now Minister for Africa, Asia and the UN. His entry in the Lords register of interests is spartan; he declares only his government salary, which is £81,504.

But Malloch Brown's living arrangements in this country are exceedingly grand, and provided by the taxpayer. Only three members of the government have grace-and-favour residences in London. Malloch Brown is one of them, the other two are the Prime Minister and the Chancellor. David Miliband and his growing family have yet to use 1 Carlton Gardens, the Foreign Secretary's London residence. Yet Malloch Brown, astonishingly, has secured one of the three government flats in Admiralty House, where John Prescott used to live. In so doing, this newcomer has leapfrogged 20 full members of the Cabinet who notionally enjoy seniority over him. The oddness of the situation is compounded by the fact that the other two flats in the building are empty, and another government grace-and-favour residence in South Eaton Place, SW1, is being sold off. In response to The Spectator's investigation Eric Pickles, a member of the shadow Cabinet, has laid down a series of parliamentary questions in an attempt to find out how much Malloch Brown's living arrangements are costing the Foreign Office.

Malloch Brown's return from abroad is given as the explanation for him receiving a graceand-favour flat. Others hint that he secured it because he has four children under 16. If so, Ruth Kelly — with four pre-teen children — should surely have had first pick.

The Treasury's National Assets Register values the Admiralty House accommodation at £7.76 million and as worth more than the flats above No. 10 and 11 Downing Street. It is, indeed, fit for a Lord, and one with tastes which are the opposite of frugal. A parliamentary answer earlier this autumn revealed that `the floor area of the ministerial residences in Admiralty House is 859 square metres.' In 200607 the Deputy Prime Minister's Office paid the Cabinet Office no less than £173,000 for John Prescott's living in one of the flats there.

One of the Brown government's key selling points — part of its 'change' message — was that, in contrast to the Blair era, there would be no more high life, no more ministerial noses in the trough. Malloch Brown's housing arrangements threaten to sully that message. One Cabinet minister fretted: 'Housing is always so sensitive. Every voter can relate to it because everyone has a home or, increasingly, is struggling to afford one. New Labour was badly damaged by the first Peter Mandelson resignation over the mortgage and the impression of greed, that a normal house wasn't good enough somehow.'

The unlucky person to whom care of Malloch Brown has fallen is the highly regarded Baroness Ashton, the Leader of the Lords. Her job is to look after the outsiders that Brown has brought into his government such as Malloch Brown, Digby Jones and Admiral West. Early on, she told colleagues that she had made friendly attempts to persuade Malloch Brown to move out of Admiralty House in due course. Evidently, her polite advice fell on deaf ears.

Malloch Brown's determination to keep the flat may not be in the best interests of the government's image, but it conforms to a pattern of behaviour. The minister is simply keeping himself in the style to which he has become accustomed. Before moving to London, Malloch Brown had been living as a tenant on George Soros's estate in Katonah, New York. Katonah is in Westchester Country, home to the Clintons, and about an hour from New York City itself.

Soros's estate is so large that only a curving tree-lined drive can be seen through the eagletopped red-brick front gates. Malloch Brown was paying a UN-subsidised rent of around $10,000 a month for his accommodation. He could well afford this as by the end of his time at the United Nations his total, take-home compensation package amounted to $287,087 p.a. Malloch Brown might be doing 'God's work', but he was receiving his rewards on earth, too. He was paid more as number two at the UN than Dick Cheney was as Vice President.

Despite being asked by the press on a number of occasions about the details of his housing arrangements in Katonah, Malloch Brown has provided neither details nor documentation. At a UN press briefing in New York on 20 June 2005, about six months after he had become Annan's chief of staff, Malloch Brown was asked by a reporter to explain the full extent of his financial relationship with George Soros. He heatedly denied any financial relationship, praised Soros for his work around the world and tore a strip off the questioner. He went on to say, 'In UNDP we collaborate extensively. For that reason, it was absolutely critical when we set our hearts on a house on his property that if we were going to rent it, we'd pay the full commercial rent, and we have done so.'

But neither proof nor any further details were forthcoming. Indeed, Malloch Brown has refused even to say when he began his tenancy.

The relationship between the UNDP and Soros remains obscure. The UN last year was unable or unwilling to supply a complete list of details accounting for this relationship; neither did Soros's Open Society Institute open up about it. But Malloch Brown and Soros were sufficiently close professionally to give a joint press conference on 19 March 2002 at a global aid gathering in Monterrey, Mexico.

Nor did Malloch Brown ever disclose his finances to the public — despite presiding over reforms that he assured the world would mean more transparency. In 2005, Malloch Brown told the US House of Representatives Committee on International Relations that 'transparency and accountability are the watchwords for the United Nations in the new century' and described 'more rigorous financial disclosures by senior officials' as an immediate management reform that the UN was already undertaking. In 2006, the UN Secretariat launched a reform requiring senior UN administrative officials to fill out financial disclosure forms and file them with the UN's new Ethics Office. But this 'financial disclosure' policy came with an extraordinary loophole of which Kafka would have been proud: the forms did not actually need to be disclosed to the public. This year, Ban Ki-moon, Kofi Annan's successor, and his deputy both voluntarily released their financial forms to the public. But despite much talk about transparency, neither Annan nor Malloch Brown chose to release theirs.

The connection with Soros became ever closer once Malloch Brown left the UN. Malloch Brown was appointed to senior positions at both Soros Fund Management and the Open Society Institute, which promotes democracy and the rule of law and which Soros founded and of which he remains the chairman. The Wall Street Journal cheekily dubbed Malloch Brown part of an 'axis of Soros'.

Another episode at the UN that calls Malloch Brown's judgment into question concerns a glowing book on the UNDP published in late 2006 by Cambridge University Press. It turns out the book had been commissioned by Malloch Brown shortly before he left the agency. More than half a million dollars had been spent to hire a historian, give him a travel budget and then buy copies of the book from CUP To no one's great surprise, the book is very positive about Malloch Brown's tenure.

Back in Westminster, Malloch Brown's appointment in June was widely and correctly seen as a message that things were going to change on foreign policy. He was, after all, known to oppose the Iraq war, and had slapped Bush and Blair down over the war in Lebanon. Malloch Brown's appalling relations with the Bush administration — the President personally pleaded with the incoming UN SecretaryGeneral to get rid of him — were music to the ears of those who were desperate for reassurance that Brown was not going to pursue the same strategy as Blair on the global stage.

In Washington, however, Malloch Brown's appointment caused considerable consternation and continues to cast doubt on Brown's judgment. Confidants of the Prime Minister now report that Brown claims that if he 'had known it would cause such a fuss, I wouldn't have appointed him'. Nile Gardiner, a Republican foreign-policy thinker and expert on US–UK relations who is close to the White House, says that Malloch Brown is viewed in Washington as 'viscerally anti-American'.

In his first (and so far only) big interview in the job, Malloch Brown set out to dismiss the idea that his appointment might cause problems with anyone but a few neocon crazies. He told the Daily Telegraph: 'What I really hate is the effort to paint me as anti-American, but I am happy to be described as anti-neocon. If they see me as a villain, I will wear that as a badge of honour.' He went on to boast that: `From Colin Powell to Condi Rice all the way through to Richard Holbrooke or Madeleine Albright, across that massive swath of American foreign policy, I would bet you a drink that you would find that I am their favourite multinationalist Brit.' This, though, is not an opinion shared in Washington. An adviser to a 2008 presidential candidate warns that `the extremely negative reaction that he causes will last long after President Bush's departure from office'.

The Telegraph interview also illustrated how loose a cannon Malloch Brown could become. His suggestion that Anglo–American relations would not be as close under Brown and that he was the Foreign Secretary's 'wise eminence' led to Mr Miliband slapping him down fiercely in an interview with the BBC's Andrew Man, and the Prime Minister snorting in private that 'Mr Malloch Brown does not speak for the government on relations with America' (anger having temporarily stripped Malloch Brown of his peerage, it seems). Since this disastrous start, little has been heard from Lord Malloch-Brown. His blaming of the neocons for all criticism of him is also wearing thin. As one minister says, 'He explains away all criticism as evidence of neocon briefing. It is a completely bloody circular argument' Is this just a fable of folly and grandeur? No. There are substantive policy issues where Malloch Brown could well end up causing Brown problems. The government has already been embarrassed by the revelation that when at the UN, Malloch Brown was enthusiastic about the concept of a European Union seat on the Security Council. And the 'wise eminence', with his extensive knowledge of the UN, is bound to want to insert himself into the debate over what language should be used in any further resolutions about Iran if the crisis escalates.

Brown defends Malloch Brown's appointment to those committed to the special relationship by saying that all he really wanted was his expertise on Darfur. But this answer doesn't stack up. Since taking on the job, Malloch Brown's diplomacy in the region has been unexceptional.

What does all this tell us about the PM? First, that he gave too much away in his first attempt at top-level international negotiating. The problem for Brown is that the Malloch Brown situation is a quagmire If the Prime Minister gets rid of the grandest recruit to his ministry of all the talents, his own judgment will be called into question. If he keeps him, Malloch Brown could end up causing the government major embarrassment. This intractable foreign policy problem is solely the Prime Minister's creation. How Brown solves it will tell us a lot about him and his ability to rectify his own mistakes.

Claudia Rosen is journalist-in-residence with the US-based Foundation for Defense of Democracies and James Forsyth is online editor of The Spectator.