Mitchell insists he has done no wrong

In Parliament on Friday, Mr Mitchell said the commission will be set up by the Governor General.

"I must say that I am quite pleased to announce this because after all that has been said, and all the allegations, innuendos and character assassination that has been done by certain persons in this country, I will live today to see that this Prime Minister will be vindicated and that in fact the people would be able to see those who do not care about Grenada and those who are interested in Grenada."

The Prime Minister said he had nothing to hide and the inquiry will give those who believe they have evidence against him an opportunity to present it.

Dr Mitchell also said he had served defamation lawsuits on a number of individuals including some members of parliament.

We believe it has caused people to have some doubt about the integrity of the Prime Minister and we don't think that is something good.   Canon Leopold Friday, Grenada Conference of Churches

The allegation was first made in the Miami-based publication Offshore Alert and has become a talking point in Grenada.

The opposition and a number of civic groups have called for an inquiry into the allegations.

One of the groups that called for an inquiry into the allegations was the Grenada Conference of Churches. The group's chairman Canon Leopold Friday told BBC Caribbean Radio an inquiry will bring much needed closure to the issue.

"The particular issue lends itself to opening the individual to suspicion and the incident we believe, has left a cloud hanging over the office of the Prime Minister."

Canon Friday stressed that the Conference of Churches did not believe Mr Mitchell is guilty, but the allegations have caused uncertainty among Grenadians.

"We believe it has caused people to have some doubt about the integrity of the Prime Minister and we don't think that is something good," he said. "We believe it will be good for an inquiry to make that judgement on the issue."

Canon Friday said he felt that the Inquiry's role must not be limited to examining the allegations against Prime Minister Mitchell, but should also come up with recommendations to ensure transparency and accountability from ministers.