However, the case raises serious questions for the Duke over how he funds a lavish lifestyle that includes the upkeep on Royal Lodge, his 30-room home at Windsor, and his own private security.
The Telegraph can disclose that Buckingham Palace has no way of scrutinising the Duke’s finances, including the money used for the upkeep of Royal Lodge, which is owned by the Crown Estate.
Sources said the palace had “no power, authority or legal right” to do so and that all palace officials could do was seek assurances that the Duke’s money was “legitimately earned”.
It can also be revealed that the King was made aware of the MI5 investigation into his brother and his links to the alleged Chinese agent before the bombshell judgment which exposed their friendship.
The latest scandal to beset the Duke is likely to have contributed to the King’s decision earlier in the year to cut his brother off from all funding.
Buckingham Palace declined to say when the King was told about the MI5 investigation into the alleged spy but royal sources pointed out that the Duke was “no longer privately supported by the King”.
It is likely that the domestic intelligence agency informed the Royal household through Lord Parker, who was Lord Chamberlain up until a month ago and before that MI5’s director general.
The alleged spy, known only as H6, is a former junior civil servant in China who is accused of working for the United Front Work Department (UFWD), an arm of the Chinese state used to gather intelligence, recruit agents and buy influence abroad.
‘This was much more than just gathering information’
Whitehall sources have told The Telegraph that the UFWD used financial inducements to gain access and buy influence in the West, engaging in “deceptive” acts.
A source said: “The UFWD does influence. This is much more than just gathering sensitive information.”
The Telegraph has been told that money received by Prince Andrew was being investigated.
The Prince launched an initiative across China called Pitch@Palace, which ran Dragons’ Den-style business competitions operated for profits. The Telegraph can disclose that H6 was connected to Pitch@Palace’s Chinese operations. Any profits made from the business venture are subject to scrutiny by the security services.
Prince Andrew launched Pitch@Palace in the UK on a not-for-profit basis in 2014. Two years later, he launched overseas versions, including in China, which were run to make to money.
It is unclear when he met H6. But sources have pointed to a series of speeches and comments given by Prince Andrew in which he encouraged British businesses to invest in China.
H6 was so close to Prince Andrew that he had been told he could act on the Duke’s behalf when dealing with potential investors in China, according to court documents.
He was even invited to the Duke’s birthday party in 2020, and was described by the judges overseeing the case as a “close confidant of the Duke”.
Buckingham Palace has let its despair be known over the latest scandal.
Royal sources said they were made aware of the court case against H6 and that his close association with the Duke was eventually going to emerge. The King was told “at the appropriate juncture through appropriate government channels”.
The cost of maintenance on Royal Lodge and Prince Andrew’s security bill is thought to add up to millions of pounds a year. The Duke has had longstanding money problems, including taking money from Jeffrey Epstein, the convicted child sex offender who killed himself while awaiting trial on fresh charges in 2019.
On Friday night, a statement was released from the Duke’s office insisting he had cut off all contact with H6 after receiving advice from the Government.
It said: “The Duke of York followed advice from HMG [the Government] and ceased all contact with the individual after concerns were raised.
“The Duke met the individual through official channels, with nothing of a sensitive nature ever discussed. He is unable to comment further on matters relating to national security.”
The Home Office decided to ban H6, who is 50, from the UK in July 2023 after MI5 deemed him to be an agent who had engaged in “covert and deceptive activity” on behalf of the Chinese Communist Party (CCP) and that he likely posed a threat to national security.
Two judges for the Special Immigration Appeals Commission (SIAC) on Thursday ruled that the Home Office was justified in keeping him out of the country.
H6 is contesting that decision and denies he is a spy or agent for the CCP.
However, his identity has remained secret. SIAC initially granted H6 anonymity but this was lifted by the judges to take effect from Thursday.
H6 appealed the lifting of the anonymity order and was granted “interim relief”, meaning the High Court could decide at a future date whether he should be named. A hearing could be as early as next week.
Duke’s position ‘extremely embarrassing’
On Friday night, senior Tories including Suella Braverman, the former Home Secretary, demanded that H6 should lose his anonymity.
Mrs Braverman was Home Secretary when H6 was barred from entry in 2023.
Mrs Braverman said: “We know that China is using all means necessary, particularly espionage and exploiting vulnerabilities in the UK to get access to state secrets and other sensitive information that can harm our national security.
“So disclosing the identity of this person will have a deterrent effect on others taking part in similar activities but it will also ensure full transparency is afforded to this issue of utmost national security importance.”
The Duke’s precarious position was further undermined when Tom Tugendhat, the former security minister, said his involvement with H6 was “extremely embarrassing”, and demonstrated how the Chinese state was trying to seek influence and interfere in Britain’s affairs.
“The United Front Work Department, which is a branch of the Communist Party, is seeking influence across the UK in everything across social, academic, financial, industrial, and various other ways,” Mr Tugendhat said.
A spokesman for the Chinese embassy said: “Some people in the UK are so keen on making up all kinds of spy stories against China. This again is a typical case of the thief crying ‘catch thief’. Their purpose is to smear China and sabotage normal people-to-people exchanges between China and the UK. We strongly condemn this.”
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