Documents released by the government include advice sent to the prime minister which said the pair's relationship continued after the financier's conviction for procuring an underage girl in 2008.

The PM's chief secretary Darren Jones said the due diligence process "fell short" and the government had already taken steps to address "weaknesses in the system".

The files also suggest Mandelson explored the possibility of a severance payment of more than £500,000 after he was sacked, although the BBC understands he takes issue with this claim.

The BBC understands Lord Mandelson claims he was quick to agree the sum he was eventually paid by the Foreign Office and made it very clear he had no intention of taking his case to an employment tribunal – and that had any issues about him lying been raised he would not have been entitled to any payout.

Lord Mandelson was sacked as the UK's ambassador to the US last September, following new revelations about the extent of his friendship with Epstein.

More documents are due to be published in the future but the Metropolitan Police has asked for some to be held back to avoid prejudicing the ongoing criminal investigation into Lord Mandelson.

When Lord Mandelson was appointed, supporters argued the Labour veteran's contacts across business and politics, as well as his ability to charm, would help him to develop a strong relationship with the incoming Trump administration.

However, a due diligence document sent to the PM on 11 December 2024 - nine days before he was confirmed as ambassador - raised a number of issues which could pose a "reputational risk".

The prime minister has maintained he did not know the extent and depth of the pair's relationship when Mandelson was appointed.

In a record of a call on 12 September 2025, the day after Lord Mandelson was sacked, Powell is noted as having raised concerns "about the individual and reputation" to Sir Keir's then-chief of staff, Morgan McSweeney.

Powell also claimed Philip Barton, the most senior civil servant at the Foreign Office at the time, had "reservations around the appointment", according to the document.

Meanwhile, a Treasury document claimed that negotiations over Lord Mandelson's severance payment began with a suggestion from the peer that he could be entitled to a sum equal to the remainder of the salary for his four-year appointment, totalling £547,201.

Following his sacking, an email shows Lord Mandelson also told a Foreign Office official he wanted to leave the US "with the maximum dignity and minimum media intrusion", arguing he remained a civil servant and "expect to be treated as such".

Giving a statement in Parliament on the documents, the PM's chief secretary said the government "wouldn't have wanted to pay £1" to Lord Mandelson but a settlement was agreed to avoid even higher costs from a drawn-out legal claim.

She said the release exposed that he "has not been honest with the country" about the extent of what he knew about the relationship between Lord Mandelson and Epstein.

The government was forced to release the documents after MPs voted for them to be published through a parliamentary procedure known as a humble address triggered by the Conservatives.

It has promised to publish all papers related to Lord Mandelson's appointment as US ambassador, as well as communications between the peer and the prime minister's chief of staff, special advisers or ministers in the six months before his appointment and during his time as ambassador.

Only documents which jeopardise national security or international relations will be withheld, along with any files police say could prejudice their investigation.

The initial batch does not include a series of follow-up questions that Number 10 sent to Lord Mandelson about his relationship with Epstein.

The BBC has been told these questions related to his continued contact with Epstein after his first conviction, reports that he had stayed at Epstein's home while the financier was in prison and his association with a charity founded by Epstein associate Ghislaine Maxwell.

The prime minister has previously said Lord Mandelson "portrayed Epstein as someone he barely knew" and that when it became clear that was not true he sacked him.

Lord Mandelson remains of the view that he did not lie to the prime minister, does not recall being asked questions about Epstein face-to-face during vetting interviews and answered written questions about his contact with the sex offender after his conviction truthfully and fully.

Lord Mandelson has repeatedly let it be known that he believes he has not acted criminally, did not act for personal gain and is cooperating with the police

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