The Foreign Office is examining a settlement paid to Lord Peter Mandelson after his dismissal as the UK’s ambassador to the United States, BBC sources say. The review follows the release of US files detailing his contacts with Jeffrey Epstein and the opening of a separate Metropolitan Police inquiry in the UK.
Officials say Lord Mandelson received a payout after being removed from the post in September. Government sources confirmed a financial settlement was reached but declined to give a figure; The Times has reported the payment was equivalent to three months’ salary. The ambassadorial role typically pays between £155,000 and £159,999 a year, placing a three-month payment at roughly £40,000.
The settlement is now under scrutiny because newly released US documents include emails and other exchanges linking Lord Mandelson to Epstein. Police carried out searches at two properties connected to the peer after material in the US files suggested email correspondence about economic policy. No arrest has been made.
Downing Street has said the peer was removed after “new information” emerged about the extent of his relationship with Epstein. Some of the disclosed emails show messages of support sent to Epstein while he faced sex-offence charges in 2008. Mandelson’s association with Epstein — including contacts that continued after Epstein’s conviction — was reportedly known when he was appointed ambassador in December 2024.
The US release contains material from the period when Lord Mandelson served in Gordon Brown’s cabinet. One email suggests he may have alerted Epstein in advance to a €500bn EU plan to support the euro in 2010. Another file includes a 2009 memo from Nick Butler, a Brown policy adviser, that discussed the UK’s struggling economy and proposed selling government assets to raise funds.
Separately, the Metropolitan Police have opened an investigation into allegations of misconduct in public office. Deputy Assistant Commissioner Hayley Sewart described the inquiry as “complex,” saying it requires substantial evidence gathering and analysis and warning it will take time; she added police would not be providing an ongoing commentary on their work.
A Foreign Office spokesperson said in a statement that “Peter Mandelson’s civil service employment was terminated in accordance with legal advice and the terms and conditions of his employment. Normal civil service HR processes were followed. Further information will be provided to Parliament as part of the government response to the motion passed last week which is being co-ordinated by the Cabinet Office.”
Lord Mandelson has not publicly answered requests for comment to the BBC; the broadcaster understands he maintains he acted lawfully and was not motivated by financial gain. The Treasury of facts underpinning the US disclosures and the ongoing police inquiries mean the settlement and the circumstances of his dismissal are likely to remain under official and public scrutiny for some time.