The wary probing of the lawyers

How the David Mills drama is dividing Britain's top legal institution

Late last month Tessa Jowell announced the appointment of the chair of the Olympic Lottery Distributor, who will oversee the payment of grants in the run-up to the 2012 Olympics. According to the Department for Culture, Media and Sport website, Janet Paraskeva officially took up the post on 1 March. For two days' work a month she will be paid £10,000 out of the public purse. It may be of interest, therefore, that Paraskeva is the chief executive of the Law Society, the body responsible for investigating any wrongdoing on the part of Tessa Jowell's husband, David Mills, in his work as a solicitor.

The Law Society claims there is no conflict of interest here, pointing out that Paraskeva is, strictly speaking, only in charge of the "trade union" functions of the organisation, not its regulatory arm. It also claims that Paraskeva will not start work in her new job until after she has retired from the Law Society later this year. In a bizarre statement issued to the New Statesman, Kevin Martin, the president of the Law Society, said: "Janet Paraskeva was appointed on 1 March but the Department for Culture, Media and Sport has indicated that significant work is not expected until later in the year as the monies from the new Lottery game build up."

Janet Paraskeva is a respected and able member of the legal establishment who has been tipped for a peerage. The Law Society is adamant that she is not a personal friend of Jowell, and I have no doubt that she will distribute Lottery grants with the utmost integrity. The DCMS press release states that the appointment adheres to the code of practice of the Office of the Commissioner for Public Appointments and I'm sure this is true. She was probably the right person for the job. Despite this, it would almost certainly be better for public confidence in the legal profession, the Lottery, the Olympics and the government if Paraskeva handed over one of these posts. Such is the reach of Mills's financial dealings that the repercussions now appear to affect even this specialised, but still important, government position.

So far the Law Society has refused to launch an official investigation into Mills's affairs saying, however, that it is "closely monitoring developments". Given the circumstances, it is difficult to see how the Law Society can demonstrate its absolute independence in this matter.

The Society is said to be in a state of deep confusion about how to deal with the affair. Asked why no one from the regulator has been put up to appear in the television studios to discuss it, I was told by one official that senior figures in the organisation would "wet their knickers" if they were expected to justify themselves to the media. The official line is that the Law Society will wait for the results of any Italian trial before it decides whether to act.

Peter Williamson, the former president of the Law Society who now chairs its regulatory arm, is the man who would be responsible. A spokesman for the Society said Williamson has not begun any work on the affair. There are those within the organisation who believe this is the most serious test of integrity the regulator has faced. They argue that any probe should be taken out of the hands of the legal profession, and the government altogether, and given to an independent inquiry. One Law Society source told the NS: "The issues are not just to do with Mills as a solicitor. There is a moral principle that you are driving at here. This is part of what we were told we were seeing the back of in 1997."

Mills's accountant and former friend Bob Drennan has been courageous in bringing his concerns about his client to the attention of the Serious Fraud Office. It is difficult to believe that the Law Society could not launch its own investigation as a result of Drennan's claims alone. Unlike the SFO, it does not need to have evidence of alleged wrongdoing - it just needs to judge whether he should be allowed to practise as a lawyer.

One of the most interesting of the thousands of pages of documents to have leaked from the Italian inquiry is a letter sent by the veteran anti-corruption judge Fabio de Pasquale to the Home Office's Judicial Co-operation Unit on 23 January this year, asking for clearance to raid Mills's office and home. It alleges that Mills used accounts set up for clients for his own and other people's money. This is what made it so difficult to trace the origins of the alleged gift of $600,000 from Silvio Berlusconi, Pasquale explained. "Mills therefore had constantly covered up the origin and the ownership of this sum of money, making use of three of his clients who were unaware of the operation," the letter says. "This circumstance appears to be extremely serious in that it most certainly represents a breach of the duties of loyalty of a lawyer towards his clients." Mills denies any wrongdoing.

These are the measured words of a lawyer who has spent 15 years investigating corruption in Italy. At the very least, he has suggested that there are questions to be answered about David Mills's affairs. The Law Society should take note. It need look no further than its own chief executive - who risks embarrassment through no fault of her own - if it needs an example of how deeply this case has already poisoned the body politic.