The senior Conservative, along with Labour’s Jack Straw, is facing accusations that he was prepared to use his position and contacts to benefit a private company in return for payments of thousands of pounds.
Both MPs were secretly filmed by reporters claiming to represent a Hong Kong-based communications agency called PMR which was seeking to hire senior British politicians to join its advisory board.
Sir Malcolm, who chairs the parliamentary committee which oversees Britain’s intelligence agencies, was said to have claimed that he could arrange “useful access” to every British ambassador in the world because of his status.
He told the BBC Radio 4 Today programme: “These are very serious allegations. They are unfounded and I’m going to fight them with all my strength.”
Sir Malcolm said “many ex-ministers, former chancellors, home secretaries, prime ministers, as well as other people, have served on advisory boards” and insisted it was “entirely proper”.
“This is something which Parliament has said is acceptable,” he added.
Sir Malcolm said there were “about 200” MPs who had business interests and insisted many members of the public did not want “full-time politicians”.
“If you are trying to attract people of a business or a professional background to serve in the House of Commons, and if they are not ministers, it is quite unrealistic to believe they will go through their parliamentary career being able to simply accept a salary of £60,000.
“That sounds a lot to a lot of people earning less than that but the vast majority of people from a business or professional background earn far, far more than that. If they are told they have to choose one or the other they just won’t come to the House of Commons at all and Parliament will lose their skills.”
Sir Malcolm and Mr Straw were named in an undercover investigation by the Daily Telegraph and Channel 4’s Dispatches. Both men have strongly denied any wrongdoing and have referred themselves to the Parliamentary Commissioner for Standards.
The undercover reporters met Sir Malcolm at the fictional firm’s Mayfair office in January, where he is said to have told them he could meet “any ambassador that I wish to see” in London.
“They’ll all see me personally,” he said. “That provides access in a way that is, is useful.”
In a second meeting, Sir Malcolm was said to have suggested that he would be willing to write to ministers on behalf of the company without declaring the name of the firm.
During the meetings, Sir Malcolm is said to have described himself as being “self-employed”, saying “nobody pays me a salary”. He is said to have discussed his usual fee for his services as being “somewhere in the region of £5,000 to £8,000” for a half a day’s work.
Sir Malcolm told Today the comment about not being paid a salary was a “silly thing to say” and insisted he was referring to his business interests.
He added: “Of course I receive a salary as a Member of Parliament.”
Sir Malcolm said the public could “see every penny I earn” on Parliament’s Register of Members’ Interests.
He claimed he offered to appear on the Channel 4 programme to answer the allegations but “they refused to allow me”.
Pressed if he would stand down as chairman of the Intelligence and Security Committee of Parliament (ISC), he told Today: “Not unless my committee colleagues wanted me to. Certainly not.
“The one has got nothing to do with the other. None of the matters, even that the Telegraph are alleging, or complaining about, are remotely to do with intelligence and security.”
Asked if he would be embarrassed when the television programme aired, he replied: “No, I’m going to be hugely irritated and angry because I have got nothing to be embarrassed about.
“Every single thing I said to these people I would have been willing to say on television or to you if you had put the same questions to me at the time.”
Mr Straw, who is standing down at the election, said he had agreed to suspend himself from the parliamentary Labour Party and refer himself to the Parliamentary Commissioner for Standards despite insisting he has done nothing wrong “because of the way this appears”.
He told Today: “I’m mortified by the fact that I fell into this trap set by a very skilful journalist from Channel 4 and it was a very skilful trap but I fell into it.
“And, inevitably, if you have what you think is a private conversation where you trust the person, or people, you are talking to, you use language not that’s necessarily wrong but could be taken out of context.”
Mr Straw insisted he had been “absolutely scrupulous” in observing all the rules, including on outside interests.
“This discussion with this bogus Chinese Hong Kong company was not about what I was going to do as a Member of Parliament. It was all about what I might do once I had left the House of Commons on May 7.”
Asked why he had not waited until after the election, he replied: “Well, I should have done, is the answer. It would have saved a fantastic amount of time and trouble and what I had hoped was the last five or six weeks of time in the House of Commons being a rather valedictory way through being caught up with all of this.
“Of course I very much regret the fact that I saw these people.”
Mr Straw said he had had “five or six approaches” over the last 18 months about what he would like to do when he has finished.
“Yes, I’m interested in earning money but above all what I’m interested in is doing things which would engage my brain and use whatever skills and knowledge that I’ve got.”
He said all but one had “gone nowhere”.
At one meeting, Mr Straw is said to have described how he operated “under the radar” to use his influence to change European Union rules on behalf of a commodity firm which paid him £60,000 a year.
He was also said to have claimed to have used “charm and menace” to convince the Ukrainian prime minister to change laws on behalf of the same firm.
Mr Straw met the undercover reporters at his office in the Commons - a potential breach of Commons rules - where he is said to have explained how he helped ED&F Man, a commodities company with a sugar refinery in Ukraine, change an EU regulation by meeting officials in Brussels.
He is also said to have claimed he overturned a law in Ukraine which would have hindered the firm’s operations, by taking its representatives to meet the then-Ukrainian prime minister, Mykola Azarov.
“It’s a combination of sort of charm and menace,” he is quoted as saying. “I mean he (the prime minister) understood.”
He is said to have explained that he normally charges a fee of £5,000 a day for his work. He made clear he would not take on the role while he remained an MP, but is said to have suggested that he could be more helpful to the company if he became a peer, as different rules apply.
Mr Straw told Today: “I said in relation to EU negotiations that it was better to handle negotiations like this “under the radar” than to go and shout in the street about them; in other words, that you can get further with EU officials by being polite and quite and forensic than shouting.”
The Labour MP said comments he has made in the past about colleagues’ “stupidity” when caught up in stings had been “too strident”.