A former Conservative minister with close links to the Government is sitting as a peer in the House of Lords while simultaneously lobbying on behalf of a Caribbean tax haven.

Lord Blencathra, a former MP and Tory chief whip, is being paid by the Cayman Islands government to represent the interests of its financial services industry – despite also being able to vote on legislation affecting the territory.

Inquiries by The Bureau of Investigative Journalism and The Independent have established that Lord Blencathra has lobbied on behalf of the Caymans while claiming thousands of pounds in House of Lords attendance allowances.

At present there are no clear rules stopping members of the House of Lords effectively acting as paid lobbyists for companies or other governments despite widespread criticisms from transparency campaigners.

In the past few months, Lord Blencathra has:

* Lobbied the Chancellor George Osborne to reduce the burden of air passenger transport taxes on the Caymans.

* Facilitated an all-expenses-paid trip to the Caymans for three senior MPs with an interest in the islands over the Easter recess, including the chairman of the influential Conservative backbench 1922 Committee.

* Followed an Early Day Motion in the Commons calling for the Caymans to be closed down as a tax haven by trying to introduce the MP responsible, the former Treasury Select Committee member John Cryer, to members of a Cayman Islands delegation in London. (The meeting never took place.)

Lord Blencathra, who was ennobled in 2011 after standing down as an MP in the 2010 general election, has claimed up to £5,500 a month in attendance allowances in the House of Lords.

Even after the Government's proposed lobbying reforms take effect, Lord Blencathra would not have to declare his role as a lobbyist for the islands in the new register of lobbyists. Last night Labour called for there to be a ban on peers working as lobbyists. He has not raised the Cayman Islands in any public interventions in the Lords and said he had been scrupulous in avoiding potential conflicts of interest.

"I have been meticulous in ensuring that I have no conflict of interest between that role and my duties in the Lords," he said in a statement. "You cannot point to one single incident, speech, vote or question where I have sought to advance the Cayman Islands in the Lords." Asked if his activities were compatible with the House of Lords code of conduct, Lord Blencathra said: "You have confused lobbying Parliament, which I do not do, with lobbying the Government which I do."

On the register of Lords' interests Lord Blencathra, formerly David Maclean, declares that he is director of Cayman Islands Government Office in the United Kingdom. But as he himself admitted during a recent visit to the island, the role is effectively one of a lobbyist and he was hired not for his knowledge of the British Overseas Territory but for his political understanding and connections. He told the islands' media: "I've been appointed as I have 27 years' experience as an MP, 10 to 12 years experience in a British government and I'm still a parliamentarian in a different colour of the corridor in Westminster." He added: "I don't pretend to be an expert on Cayman but I've not been employed to do that job. My role is to make sure I can feed that advice in to government ministers, to the Civil Service ... on behalf of the Cayman Islands government."

The premier of the Cayman Islands William Mckeeva Bush said of his appointment: "I am delighted a politician with David's experience will ensure our interests are protected at a time when tax-neutral jurisdictions are the subject of such malicious and ill-informed attacks."

George Osborne has come under pressure to crack down on tax havens like the Caymans – where many UK companies are based for tax purposes. The Caymans, with a population of around 50,000, is home to 70 per cent of hedge fund registrations worldwide.

Since his appointment Lord Blencathra has contacted Mr Cryer, after he submitted an Early Day Motion calling for the Caymans to be closed as a tax haven. Mr Cryer said: "I just got this email from Lord Blencathra asking if I would meet with a delegation from the Caymans who were in London. I had no idea at the time that he was being paid to lobby for them. It is outrageous for him, as a parliamentarian, to be doing that. Members of the House of Lords should not be representing foreign governments. If those governments want to lobby people they should be doing it themselves."

The peer approached the International Bar Association to discuss its task force on human rights and illicit financial flows before the task force had launched. He said he did so "to offer assistance". And he sent a letter to the Labour MP Angela Eagle after she raised a question about his appointment.

Shadow Cabinet minister Jon Trickett said: "It can't be right for a member of the legislature, responsible for setting tax policy, to be employed by a well-known tax haven." Labour MP Thomas Docherty added: "David Maclean should not be paid by the Crown as a sitting member of the House of Lords and by the Cayman Islands – he shouldn't be wearing both hats at the same time."

Lord Blencathra insisted in a statement: "That is what all representatives do – we make points to the British Government, the EU, the media, MPs, the public on behalf of the member governments. There are over 150 ambassadors and representatives in London doing that all the time. I have seen no suggestion in any other quarter that making representations on behalf of a loyal British Territory is inappropriate."

Profile: Lord Blencathra

David Maclean (as he then was) was the former Tory Chief Whip who led an unsuccessful rearguard action to prevent the Freedom of Information Act from being applied to MPs.

If he had pulled it off, the expenses scandal would never have come to light – which is why his expenses were subjected to special scrutiny. They included £20,000 claimed for doing up the farmhouse which he said he was forced to designate as his second home, which he then sold for £750,000; and £3,300 for a quad bike that he used to get around his large rural constituency, Penrith and The Border.

Despite the publicity, his political career might have survived but for the multiple sclerosis that forced him to quit the Commons at the 2010 election.

Earlier, he had a reputation as a waspish minister who, remarkably, turned down the chance to join the Cabinet. His former Tory colleague, Matthew Parris, once suggested that in medieval times, Maclean would have made a good Minister for Exterminating Witches.

A tenant farmer's son, born in Cromarty in 1953, he took up Tory politics at Aberdeen University, and narrowly won a by-election in Penrith in 1983.