Rishi Sunak has said he was given "no reason that Nadhim Zahawi could not be appointed to government" when he became prime minister.
Mr Zahawi is facing calls to resign as Tory Party chair after it emerged he paid a penalty to resolve a multi-million-pound tax dispute with HMRC when he was chancellor under Boris Johnson.
The prime minister insisted "integrity and accountability are really important to me", after he ordered an investigation into the row.
Report by Buseld.
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