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The current investigation into Lady Warsi is being carried out by Sir Alex Allan, the Prime Minister’s adviser on the ministerial code, into the disclosure that company documents showed she was the majority shareholder in Rupert’s Recipes, a spice company whose other shareholder was Mr Hussain.
She had not registered the holding with the House of Lords, whose rules say peers should declare any majority shareholdings.
“These further revelations about the conduct of Baroness Warsi are extremely worrying,” Mr Dugher said.
“Yet again, there seems to be a blurring of the lines between what constitutes proper official business and what is, in fact, party political activity with private associates.
"Labour will be asking urgent questions next week in Parliament, including of the Foreign Office.
"What the baroness was doing with someone who has admitted his involvement with the extremist Islamist group Hizb ut-Tahrir also calls into question her judgment.”
Hizb ut-Tahrir has been accused of promoting racism and anti-Semitism, praising suicide bombers and urging Muslims to kill Jews.
Before coming to power, Mr Cameron pledged to ban it but the plan was shelved after a Coalition review.
The nature of Mr Hussain’s involvement in the radical party has already prompted questions over the extent of security vetting.
He has twice accompanied Lady Warsi on trips to Pakistan, and has also been pictured in the House of Lords at a reception for her.
In the early 1990s, sources say, Mr Hussain joined Hizb ut-Tahrir and was nicknamed “Strapper” by other students because of his bulky frame.
He lived for a time in one of its London houses, studying the radical form of Islam taught by its then leader Omar Bakri Mohammed, who is now banned from Britain.
In 1995, Mr Hussain attended a party rally filmed in a BBC a documentary and was seen laughing and joking with others.
Mr Hussain issued a statement through a lawyer last night which said he “has never been a member of Hizb ut-Tahrir”.
“In his mid-20s, which is to say more than 20 years ago, Mr Hussain attended Hizb ut-Tahrir meetings,” the statement said. “However, he often debated against their views and never became a member.”
A former Hizb ut-Tahrir member, Ghaffar Hussain, who now works for the Quilliam Foundation, the anti-radicalisation organisation, said: “He [Mr Hussain ]acted as a key recruiter and propagandist for the groups in the late 90s.

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