Peter Costello’s long-held aspiration to succeed John Howard as prime minister of Australia was dealt a serious blow on Friday when one of his key associates quit the central bank because of an alleged tax scandal.

The resignation of Robert Gerard, prominent South Australian businessman and a board member of the Reserve Bank, followed revelations this week that he was being investigated for tax evasion while being considered for the board of the country’s central bank in March 2003. At the time, Mr Gerard had signed a declaration that he had no outstanding personal tax issues..