By Michael Holden

LONDON (Reuters) - Britain's Prince Andrew was facing intense media scrutiny on Saturday after revelations that a close Chinese business associate of the scandal-hit younger brother of King Charles was thought by the British government to be a Chinese spy.

In a court ruling on Thursday, it was disclosed that the businessman, known only as H6, had been banned from Britain on national security grounds because the authorities suspected he was working clandestinely for Beijing to forge close contacts with prominent British figures.

Late on Friday, Andrew, the Duke of York, issued a statement to the BBC and other media in which he said he had "ceased all contact" with the individual, described in the court documents as a "close confidant", once concerns were raised.

"The duke met the individual through official channels, with nothing of a sensitive nature ever discussed," the statement said.

However, questions about the case have continued to dominate British front pages and news broadcasts.

The Daily Telegraph newspaper reported that the British intelligence agency MI5 was investigating Chinese money given to Andrew, while the Times said the prince had invited the businessman to the royal properties Buckingham Palace, St James's Palace and Windsor Castle.

The Mirror reported that King Charles had been briefed by MI5 and was "truly exasperated" by the situation. A royal source told Reuters that Buckingham Palace had been kept informed of the situation in the appropriate ways and at the appropriate junctures. 

ESPIONAGE ACCUSATIONS

While British Prime Minister Keir Starmer has sought to thaw ties with China since taking office in July, London and Beijing have repeatedly traded spying accusations, with British security services warning of Chinese attempts to infiltrate political, business and academic spheres.

The Chinese embassy in London described the H6 case as another attempt to smear China and sabotage normal working relationships.

The case also shines a light on the finances of the 64-year-old prince.

Andrew, once a dashing naval officer who served in the military during the Falklands War with Argentina in the early 1980s, has now become a royal pariah over his friendship with the late U.S. sex offender Jeffrey Epstein.

He was forced to step down from a roving UK trade ambassador role in 2011, before quitting all royal duties in 2019 and then being stripped of his military links and royal patronages in 2022 amid allegations of sexual misconduct which he has always denied.

British media have reported that Charles had cut off his allowance and wanted to oust the duke from his Royal Lodge home on the Windsor estate.

The court documents about H6, who had been authorised to act for Andrew to seek investors in China, referred to a 2021 document listing talking points for a call between him and the prince in which he wrote the duke was "in a desperate situation and will grab onto anything".

(Reporting by Michael Holden; Editing by Keith Weir)