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* Hague moves to quell speculation about Heywood

* Lawmakers had asked minister what he knew about case

By Adrian Croft

LONDON, April 26 (Reuters) – A businessman whose murder

sparked political upheaval in China was not a British spy,

Foreign Secretary William Hague said on Thursday, trying to

quell speculation that has swirled around the man’s mysterious

death.

An influential parliamentary committee had asked Hague for

more information about what Britain knew about Neil Heywood’s

death in a hotel room in the southwestern Chinese city of

Chongqinq last November, and about media speculation he may have

been a British spy or informant.

“It is long-established government policy neither to confirm

nor deny speculation of this sort,” Hague said in a letter to

Richard Ottaway, the chairman of the Foreign Affairs committee.

“However, given the intense interest in this case it is,

exceptionally, appropriate for me to confirm that Mr Heywood was

not an employee of the British government in any capacity,” he

wrote.

Heywood, 41, was only an “occasional contact of the embassy,

attending some meetings in connection with his business”, Hague

said, adding that he was not known to the British

Consulate-General in Chongqing.

Heywood’s relatives and a British security source also have

denied he was a spy.

Chinese police initially attributed Heywood’s death to

cardiac arrest due to drinking too much alcohol. But this month

Chinese authorities said they believed it was a murder and named

the wife of Bo Xilai, a former Communist Party chief of

Chongqing, as a suspect.

Heywood’s death ended Bo’s hopes of emerging as a national

leader and is potentially the most divisive issue the Communist

Party has faced since Zhao Ziyang was sacked as Party chief in

1989 for opposing the brutal army crackdown on student-led

demonstrations for democracy centred on Tiananmen Square in

Beijing that year.

The British foreign ministry has come under fire at home for

being slow to demand that China investigate the case.

Ottaway asked Hague last week why ministers were briefed

about Heywood’s death only in February when Foreign Office

officials were told weeks earlier about rumours among

expatriates that Heywood’s death was suspicious.

Hague said Foreign Office officials had judged at the time

that ministers did not need to be told about an “uncorroborated

report”.

Hague was not told about the case until Feb. 7, the day

after Wang Lijun, Bo’s once-trusted police chief, fled to a U.S.

consulate in an apparent attempt to secure asylum, alleging that

Bo’s wife was involved in Heywood’s death.

After discussion with Heywood’s family, Britain formally

asked China to investigate the case eight days later.

“We acted to seek an investigation as soon as we judged that

concerns about the circumstance of Mr Heywood’s death justified

it, and we are pleased that the Chinese are now investigating,”

Hague said.

(Reporting by Adrian Croft; Editing by Michael Roddy)