Former HBOS executive Paul Moore says he raised concerns over the bank's risk level
The Tories want an urgent inquiry into claims that one of Gordon Brown's key advisers sacked a bank whistleblower who warned about excessive risk taking.
Sir James Crosby allegedly sacked HBOS executive Paul Moore in 2005 after he warned the bank's board about its potentially dangerous "sales culture".
HBOS said Mr Moore was made redundant by the bank and his allegations have "no substance and no merit".
The Tories are calling for a government inquiry to establish the truth.
Sir James, who was HBOS chief executive and is now deputy head of the Financial Services Authority, has been called to appear before the Commons Treasury Committee, to explain his alleged role in the affair.
Anyone whose eyes were not blinded by money, power and pride (Hubris) who really looked carefully knew there was something wrong
The former HBOS chief, who has 30 years of experience in the City, is one of the government's favourite economic advisers.
He recently conducted a review of mortgage lending and also plays a key role in the development of the national identity card scheme, recommending a greater role for the banks and retailers in an influential report published last year.
But Mr Moore claims he was "summarily dismissed" as the head of group regulatory risk at HBOS by Sir James, who was the bank's chief executive until 2006.
"He said I had lost the confidence of key executives and non executives but refused to explain why," says Mr Moore in a written submission to the Treasury Committee.
But the bank says Mr Moore was made redundant following a restructuring and was replaced by a banker with 20 years experience, who reported directly to the chief executive.
Mr Moore told the BBC he saw evidence of "negligence" and even "recklessness" during his time at the bank.
In a Newsnight interview, he said: "I realised the bank was moving too fast and I raised those challenges very strongly at board level. I also raised issues of cultural indisposition to challenge and inappropriate behaviours, and ultimately I was sacked."
Earlier, in written evidence to the Treasury select committee, Mr Moore said the crisis which drove HBOS to the brink of collapse could have been avoided if there had been adequate systems to hold bank chiefs in check.
He said: "I told the board they ought to slow down but was prevented from having this properly minuted by the chief financial officer.
"I told them that their sales culture was significantly out of balance with their systems and controls."
Mr Moore said that, after suing for unfair dismissal, he received "substantial damages" but was subjected to a "gagging order" preventing him from speaking out.
He had decided to talk publicly about the issue now because, he said, "the public interest demands it".
'Emperor's new clothes'
Mr Moore's account of his warnings and his alleged treatment by Sir James was disclosed in an evidence session of the Treasury committee, at which figures including former HBOS chief executive Andy Hornby and former chairman Lord Stevenson apologised for bringing their banks to the verge of collapse.
Lord Stevenson said Mr Moore's claims had been rejected after a nine-month inquiry by the Financial Services Authority.
Mr Hornby rejected Mr Moore's claim that he was met with "threatening behaviour" from some HBOS executives when he tried to raise concerns.
In his written evidence to the committee, Mr Moore said the HBOS story was like the "Emperor's new clothes" with no one prepared to "step out of line" and say what was going wrong.
What is at issue here is Gordon Brown's judgement and the people he takes advice from
George Osborne, shadow chancellor
On the wider economic situation at the time, he said: "Anyone whose eyes were not blinded by money, power and pride (Hubris) who really looked carefully knew there was something wrong and that economic growth based almost solely on excessive consumer spending based on excessive consumer credit based on massively increasing property prices which were caused by the very same excessively easy credit could only ultimately lead to disaster.
"But sadly, no-one wanted or felt able to speak up for fear of stepping out of line with the rest of the lemmings who were busy organising themselves to run over the edge of the cliff behind the pied piper CEOs and executive teams that were being paid so much to play that tune and take them in that direction."
He said he was replaced at HBOS by a new group risk director "who had never carried out a role as a risk manager of any type before" and had primarily been a sales manager.
Tory MP Michael Fallon, deputy chairman of the treasury committee, said that, if true, Mr Moore's allegations were "extremely serious" and "embarrassing for the prime minister".
But Michael Bolton, another former executive at HBOS who worked under Sir James, described him as a "most able individual" who was right in his pursuit of profit and growth.
He told BBC Radio 4: "Any bank chief executive pre-August 2007 that turned round to its shareholders and said profits and growth are now no longer the most important, it is now a more balanced approach - how many of those chief executives would have still been in their job, with that sort of strategy?"
But shadow chancellor George Osborne said the government needed to investigate Mr Moore's "exceptionally serious" allegations because Gordon Brown had appointed Sir James as deputy chairman of the FSA and relied on him as a key economic adviser.
He said: "What is at issue here is Gordon Brown's judgement and the people he takes advice from."
Downing Street refused to be drawn on the claims on Tuesday. The prime minister's spokesman said: "Sir James Crosby is not a member of the government. He is somebody who has completed a review for the government."
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