The minister in the Department for International Development covertly brokered the lucrative deal between oil firm Vitol and rebels.
Last night it emerged Mr Duncan was once on the company’s payroll, pocketing £1,750 a day.
His close links with Vitol and its chief Ian Taylor came under the microscope over the deal to cut off the fuel supply to Colonel Gaddafi’s troops and land huge profits for Vitol.
We also learned Tory donor Mr Taylor had paid Mr Duncan’s private office tens of thousands of pounds.
More serious questions were raised about the 54-year-old MP’s continued connection to the murky world of trans-global oil trading.
Before entering politics, Mr Duncan made vast sums of money by cutting deals to buy and sell large quantities of “black gold”, shipping it around the globe in a fleet of chartered tankers.
For two decades he has moved in circles that have been embroiled in claims of shady deals with dictators, war criminals and corrupt governments. The MP’s swashbuckling oil past has cast a huge question mark over his latest project and sparked calls for a government inquiry.
Former defence secretary Bob Ainsworth yesterday demanded Number 10 release all the details surrounding the behind-closed-doors operation, amid accusations of a “huge conflict of interest”.
Mr Ainsworth, a Labour MP, and member of the foreign affairs select committee, said it was “essential” to get to the bottom of the Libya oil cell, an organisation set up by Mr Duncan which ultimately benefited Vitol.
He said: “It’s important that we find adequate and appropriate ways to fully investigate this. It is unacceptable that these things should happen behind closed doors.”
And last night Douglas Alexander, Shadow Foreign Secretary, said: “Government ministers should be spending their time acting impartially in the UK national interest, assisting the Libyan people, rather than making grandiose claims about their own expertise and roles.” From 1982 to 1988 Oxford-educated Mr Duncan worked for Marc Rich, a highly controversial US commodity trader.
Mr Rich was indicted on charges of illegal trading with Iran and tax evasion, forcing the American to live in Switzerland because it had no extradition treaty with the US.
He was eventually pardoned during Bill Clinton’s last week in office.
Mr Duncan, while working for Mr Rich, had been involved in an elaborate operation to bust UN oil sanctions against apartheid South Africa, according to a newspaper in 2001.
The MP dismissed the allegations as “malicious and false” claiming that documents on the deal had been copied to him by mistake.
He set up Harcourt Consultants after Mr Rich fled the US.
He earned roughly £400,000 a year – and boasted that he’d made £1million during the Gulf War by selling oil to Pakistan, between 1988 and 1992.
At the same time, Mr Duncan was dipping his toes into politics, and was elected to the Commons in 1992.
After several minor positions in the John Major government, he played a key role in William Hague’s successful bid for the Tory leadership in 1997.
Mr Duncan became Shadow Secretary of State for Trade and Industry during David Cameron’s leadership.
But he kept very close links with his old friends in the oil industry.
Even in 1993, just a year into political life, Mr Duncan was to become embroiled in an alleged illegal multi-million-pound oil deal that would later lead to a criminal investigation.
In 2001, it emerged that the Pakistan government was probing a huge oil shipment in 1993, when Vitol sold 280,000 tonnes of “contaminated” oil to the country’s state-owned power company.
Mr Duncan was a paid consultant to Vitol at the time and dealt principally with its operations in Pakistan.
In 1994, the Pakistan government began an inquiry into the scandal, which was subsequently dropped.
There is no suggestion Mr Duncan or Vitol had acted improperly or illegally.
His friendship with Vitol, especially company boss Mr Taylor, would continue for the next 17 years.
Mr Taylor has given more than £200,000 to the Conservative Party, much of which went directly to Mr Duncan’s office. Mr Duncan has always maintained he was unaware his office cash had come from Mr Taylor.
The MP was certainly not fazed by Vitol’s regular bumps with controversy.
Between April 2008 and April 2009, while a shadow minister, Duncan was paid £35,000 a year to work 20 days – £1,750 a day – for Arawak Energy, an oil exploration company with interests in Russia, Kazakhstan and Azerbaijan.
The firm, which has offices in St James’s in London, is part-owned by Vitol.
Mr Duncan joined Arawak as a non-executive director, just weeks before the UK-Canadian oil firm raised money via a flotation on the London Stock Exchange.
At the same time, Mr Duncan had also been earning £45,000-a-year with the Los Angeles-based technology company Catalytic Solutions.
Mr Duncan – who once said he’d be “super-rich” if he had stayed working in the oil industry – resigned from both positions in 2009 and his consultancy business also ceased trading.
The move came after David Cameron demanded a clampdown on the outside interests of shadow ministers. But Mr Duncan’s continued lucrative link to Vitol caused more concern, especially when some questionable oil deals were dragged up in the media.
Documents showed it signed a deal with Serbian company Orion to sell oil to the former Yugoslavia.
In 2007, Vitol confessed to “grand larceny” in a US court and was fined $17million for paying $13million in illegal “surcharges” to Saddam Hussein’s government to help facilitate oil deals.
Silver-tongued Mr Duncan has been schmoozing super-rich oil magnates, especially those in the Middle East, for two decades.
The openly gay politician even proposed to partner James Dunseath on Valentine’s Day while visiting Oman.
His links with the oil-rich nation stem from his work and almost without fail he spends New Year there as a guest of the Sultanate. In the past 10 years, he has spent more than 100 days living it up in luxury in Oman. The tab was picked up by the Sultan’s government, which has presented him with five watches, three sets of cufflinks, and a traditional Omani coffee pot and incense burner.
Duncan has always denied suggestions there is anything improper in his relationship with the Omani regime, but again it raises questions over how he can remain impartial when brokering oil deals on behalf of the British Government.
Last night Labour MP John Speller said: “It is curious that he has kept such strong links with these companies that have regularly fallen foul of the law. It raises serious questions of judgement.”
The US is set to release $300million of frozen Libyan assets to the Vitol Group to pay for fuel for the rebels.
It is reported Vitol bought two tankers of crude oil from the National Transitional Council, the rebels’ umbrella group, while providing about 20 tankers of refined product.
No 10 has insisted there was no conflict of interest in his role with the Libya oil cell and it said his links to the oil industry were well known and registered.
Alan Duncan's top secret plot to get oil to Libyan rebels
HIDDEN away in two disused rooms in the Foreign Office, Alan Duncan plotted to get oil to the rebels.
He led a team of six over four months in the Libya oil cell.
David Cameron commissioned the unit, created in early April after the first round of bombing failed to topple Colonel Gaddafi.
Duncan went to the National Security Council with intelligence that sanctions were hurting the rebels while leaving the Libyan dictator untouched.
Duncan set up meetings between anti-government forces and his old company Vitol which then supplied oil to the rebels without upfront payment.
The cell also set up a major oil symposium, and worked with UK Trade & Investment to get firms operating after the conflict.
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