An alleged spy who befriended Prince Andrew has been named as the businessman Yang Tengbo, amid a row at the heart of government over how to deal with influential Chinese nationals.
The allegations surrounding Yang have cast a spotlight on the government’s plans for a foreign interests register and whether to designate China as an enhanced risk in the middle of Labour’s new charm offensive towards Beijing.
The security minister Dan Jarvis said a planned shake-up of security laws that would require those working for a foreign government to declare this or face criminal prosecution would now not be ready until summer 2025. His Tory predecessor Tom Tugendhat said MI5 had advised that the scheme would be pointless unless it designated China as the highest risk.
Yang, who split his time between the UK and China for almost two decades, ran the Duke of York’s Pitch@Palace in China – a Dragons’ Den-style project. He was also given authority to act on the prince’s behalf in Chinese business dealings, according to court documents.
He was also pictured with two former Conservative prime ministers, Theresa May and David Cameron. Yang is also known to have met a number of other politicians, including the former deputy prime minister John Prescott.
In a statement, Yang insisted he was not a spy and had done “nothing wrong or unlawful” and had asked the high court to lift the anonymity order so he could challenge “ill-founded” claims against him.
Jarvis told the Commons on Monday the government would lay the regulations for foreign influence registration scheme (Firs) in the new year with it going live in summer 2025. He said no decision had been taken on whether to designate China as an enhanced risk.
Yang Tengbo insisted he was not a spy and had done ‘nothing wrong or unlawful’.
Under Firs there would be a basic level of declarations, called the political influence tier, and an enhanced tier, for countries deemed a threat to national security such as Russia.
Tugendhat told the Guardian that Yang would have been covered under the scope of Firs if it had been in place. Speaking in the Commons on Monday, the Tory MP said his officials had told him the scheme was ready and questioned why the government was delaying. “The advice from MI5 was very, very clear. If China isn’t in the enhanced tier it’s not worth having,” Tugendhat said.
A business source said there was a split between the Home Office, which wants China to be designated a threat to national security under the scheme, and the Treasury, which is relaying concerns about the burden on businesses. “That fight is under way again in Whitehall,” the source said.
A Conservative source said Rishi Sunak’s government had decided to include China in the enhanced tier after a similar debate took place internally.
“The City had some concerns that they would have to be putting on reams of paperwork for whatever deal they did,” they said. It was reported in the spring that leading banks and other financial services firms included HSBC, Standard Chartered and Prudential were lobbying ministers to tone down the plans.
However, the Conservative source said all departments including the Treasury eventually came round to the decision to include China in the enhanced scheme.
Ministers are simultaneously carrying out a cross-Whitehall audit of the UK-China relationship, which insiders now expect to conclude in March.
Yang, 50, the former chair of Hampton Group, a consultancy firm, had been in the UK for almost two decades. He was first stopped by counter-terrorism services in 2021 and ordered to surrender his devices.
In February 2023, Yang was “off-boarded” from a flight from Beijing to London and in March he was excluded from the UK. His appeal against the decision was rejected last week by the special immigration appeals tribunal (Siac).
The businessman had visited the UK regularly, attending events at a series of royal residences including Andrew’s birthday party at the prince’s Windsor home.
The hearing heard Yang was barred because he was believed to be associated with China’s United Front Work Department, which seeks to gather intelligence on influential overseas nationals. The ruling said in his witness statement Yang had “downplayed his links” with the group.
In a statement on Friday, Andrew’s office said he had stopped all contact with the man, whom he had met through “official channels” with “nothing of a sensitive nature ever discussed”. The duke is to stay away from the royal family’s traditional Christmas gathering at Sandringham this year amid the controversy.
Yang said in a statement he was devastated to have been excluded from the UK and denied he had ever acted against British interests. He said there was a “high level of speculation and misreporting in the media, and elsewhere” and he was applying to appeal against the decision to exclude him.
“The political climate has changed, and unfortunately, I have fallen victim to this. When relations are good, and Chinese investment is sought, I am welcome in the UK. When relations sour, an anti-China stance is taken, and I am excluded,” he said.
In the judgment that upheld his exclusion from the UK, the judge found Yang “won a significant degree, one could say an unusual degree, of trust from a senior member of the royal family who was prepared to enter into business activities with him”.
When the businessman’s phone was searched, officials uncovered a letter from March 2020 from Dominic Hampshire, a senior adviser to Andrew, which referred to him being invited to the prince’s birthday party that month and said: “Outside of his closest internal confidants, you sit at the very top of a tree that many, many people would like to be on.”
A document was also found on Yang’s phone that had “main talking points” for a call with Andrew, which said he was “in a ‘desperate situation and will grab on to anything’.”
Guy Vassall-Adams KC, acting for Yang, told the high court threats to name his client in parliament by MPs had been part of the reason he had decided to apply to lift the anonymity order.
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