A businessman appointed by the prime minister to head a quango managing public funds has resigned after it emerged he had been declared bankrupt.
Tony Caplin has resigned as chairman of the Public Works Loan Board (PWLB).
The organisation is responsible for multi-million pound loans to local councils for infrastructure projects.
A Conservative spokesman said Mr Caplin "should have declared he was bankrupt", and Labour described his appointment as "astonishing".
The Mail on Sunday reported that Mr Caplin had been made bankrupt in 2012.
'No party role'Whitehall rules require anyone serving on a public body who is declared bankrupt to inform the relevant minister immediately.
A Conservative Party spokesman said: "Tony Caplin has no role in the Conservative Party nor is he contributing to the manifesto.
"He was appointed to a number of public bodies by the previous government.
"He was re-appointed to the PWLB by the prime minister. He should have declared he was bankrupt.
"This has been pointed out to him, and as a result he has resigned."
'Serious questions'Senior Labour MP Margaret Hodge, who chairs the Commons Public Accounts Committee, told The Mail on Sunday: "This raises serious questions which should be investigated."
The former Conservative Party chief operating officer has served on a number of public bodies, including the North West London Hospitals NHS Trust, where he was chairman until January last year.
He had been a PWLB commissioner for 10 years and was appointed chairman by Mr Cameron in July 2013.
According to the PWLB website, Mr Caplin's appointment had been due to end in 2015.
The shadow chief secretary to the Treasury, Chris Leslie, said: "It is astonishing that the prime minister and the chancellor could appoint someone who went bankrupt owing so much to the Treasury, to run the Treasury's lending operations."
Mr Leslie added that he thought this was a mistake "by a prime minister with a track record of poor judgement in relation to his cronies".
He called for the government to set out exactly what it knew about Mr Caplin's history before it made his appointment.
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