BBC News | UK Politics | Draper accuses Observer of entrapment

Derek Draper issued a statement demanding that the paper should publish its tapes in full, saying it would prove he was "not guilty of doing anything unethical".

Mr Draper, who was suspended on Monday from his job with lobby company GPC and sacked as a columnist with the Express, said he had never suggested that the decisions of ministers or their aides could be altered in exchange for cash.

He also denied offering "secrets for sale" and said his comments had been "cobbled together and taken out of context".

A 'big-mouth'

Mr Draper said he had been contacted by a Mr Palast, an Observer reporter whom he thought was a US businessman. He said told Mr Palast that "you cannot simply `buy' decisions and influence in the UK, whatever may happen in the US".

Mr Palast then said he would recommend GPC for a contract and they went out for a celebratory drink together.

Mr Draper said Mr Palast pumped him for details about his contacts in government.

"To my regret, I eventually answered his repeated questions with my characteristic brashness, little knowing the remarks would be conflated and presented in such a negative and distorted way.

"I realise my remarks, as presented by Mr Palast, may appear arrogant and boastful and I regret this. But the quotations are incomplete, taken out of context, and confined to wholly misrepresent what was, after all, a pitch for business."

Mr Draper added: "I am sorry for any embarrassment I have caused it (the Labour Party). I accept that I am guilty of being an occasional big-mouth but nothing else.

Mandelson's message to Observer

Meanwhile, Minister without Portfolio Peter Mandelson has denied that he routinely vetted or checked Mr Draper's newspaper column and has demanded a retraction from The Observer.

Denial: Peter Mandelson

But the minister did confirm that he talked to Mr Draper about two items - once about pension reform and once on local government.

"These conversations did not last longer than 10 minutes each time. I have no responsibility for what finally appeared and I do not know whether he took my factual observations into account," Mr Mandelson wrote.

He added that he had discussed the claim of vetting with Mr Draper, who categorically denied it.

"It is clear to me that you have no grounds for making this allegation and in view of the damaging coverage in other newspapers that your allegation has triggered, I insist that you retract it."