Justice minister Jonathan Djanogly is introducing changes that are expected to benefit the insurance industry to the tune of hundreds of millions. Photograph: Rex Features

Powered by Guardian.co.ukThis article titled “Jonathan Djanogly forced to act over conflict of interest claims” was written by Randeep Ramesh, for The Guardian on Sunday 9th October 2011 22.30 Europe/London

The justice minister Jonathan Djanogly has been forced to publicly declare in the parliamentary register that his controversial stakes in the insurance industry have been placed in a “blind trust”, after a Guardian investigation revealed that he could personally profit from legislation he is piloting in the Commons.

The minister’s declaration of interests, released last week, shows that Djanogly registered his insurance industry investments in the trust seven days after the Guardian exposed how he potentially stood to gain from a bill he was pushing through the house.

Djanogly has at least £250,000 in shares in companies with insurance subsidiaries and is a member of his family’s Lloyds underwriting partnership that deals in accident, health and motor claims. He has been entitled to a £41,000 a year from that partnership.

The insurance industry stands to be benefit by “hundreds of millions of pounds” from the changes Djanogly is pushing.

On Tuesday the minister will face tough questions in parliament over the bill that proposes to slash the legal aid budget by £350m and shift part of the costs of bringing “no win, no fee” cases from losing defendants to winning claimants.

This would reduce the liabilities of companies and their insurers if they unsuccessfully defend a claim as it will force claimants to pay out of any awarded damages their lawyers’ success fees and insurance policies that cover court costs.

The minister has come under pressure from Downing Street after the Guardian said he had failed to declare that his teenage children were minority shareholders in his brother-in-law’s businesses – two firms which advertise accident compensation claims and are part of an industry that Djanogly regulates in government. After he was contacted the minister sold his children’s stake.

The latest admission comes at a crucial time for the 46-year-old former City solicitor. The cabinet secretary, Gus O’Donnell, is considering a complaint from Labour’s justice spokesman, Andy Slaughter, that Djanogly faces a slew of conflict-of-interest claims over plans to cut legal aid budgets and curb payments.

The minister had attempted to insulate himself from charges that he was making investment decisions in the family underwriting business, which stakes millions in the insurance market, by “delegating sole management… to the managing agent” in 2010.

But this does not absolve the minister from statutory duties as a partner in the business, says Slaughter. One responsibilty of membership of the business is to safeguard the assets of the partnership. This effectively means that the minister could be sued if he was to advance a law that threatened the underwriting business.

Slaughter called for the minister to release details of the blind trust and the advice he has received from civil servants on his conflicts of interest.

“Quietly fiddling with declarations and selling shares does not change the fact that he has consulted on highly controversial changes to our legal system, proposed legislation, and railroaded it through parliament while conflicts may have been in place. There appears to have been a complete failure of leadership and judgment from the top.”

Speculation is rife in Whitehall that Djanogly will be dropped in an imminent reshuffle.

Although contacted on Friday with a series of questions by the Guardian, a spokesman from the minister would only say “the entry in the register of MPs’ interests was accurate”.

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