AN inquiry is underway after a drugs baron serving a 16-year prison sentence was able to launch a blackmail bid while still a serving prisoner.

Lee Morgan, 47, was one of eight men jailed for 112 years seven years ago over a £6.5million plot to flood the region with South American cocaine.

But Morgan, while on a pre-release scheme, was apparently able to threaten Murray John Dawson.

Morgan, formerly of Lyndale Road, Hapton, has admitted demanding £100,000 from Mr Dawson with menaces between May 16 and June 2, during a brief hearing at Burnley Crown Court.

He was remanded in custody and will be sentenced by a judge on November 29.

Patrick Harrison, defending, said evidence would be sought from the defendant’s family, including details of his marriage breakdown, which may have provided the motivation for the offence.

Mr Harrison confirmed that Morgan was still a serving prisoner and had been on ‘work duties’, rather than out on licence, when the offence is said to have taken place.

Morgan was the right-hand man of Dutch drugs smuggler Johan Ranft, with the pair working together to bring consignments of cocaine to the streets of East Lancashire via the Samba Pi yacht from Brazil, before his arrest in 2007.

His partners-in-crime included James Downie, then 47, of Whalley Road, Clayton-le-Moors and and Paul Jorgensen, also 47, and Stephen Hegarty, also 47, both of Springhill Road, Accrington.

The gang was eventually caught after the yacht broke down off the coast of Ireland with £100,000 of drugs stashed in two holdalls inside a shower compartment.

A Prison Service spokesman said: “Release on temporary licence is used to prepare prisoners for their eventual release from prison.

“We are currently reviewing the way it operates across England and Wales to see whether any changes are necessary.

“We need a process for people to be reintegrated into the community, but it needs to be right and something the public has confidence in.”