Steve Morgan, chairman of public affairs agency Morgan Allen Moore, has been the subject of scrutiny since news broke of his £5,000 donation to Hain's Labour deputy leadership campaign via an unknown think-tank.
The Mail on Sunday ran a spread last weekend claiming Morgan's donation resulted in Hain's endorsement of a Morgan Allen Moore client, Tesco, when it opened a branch in a Welsh town.
'Prior to publication the Works and Pensions Department issued a formal statement advising that the suggestion was inaccurate,' said Morgan. 'Despite this the paper chose to publish a story that was misleading. We're pursuing legal action.'