New Delhi, March 12 -- British Prime Minister Keir Starmer was warned that Peter Mandelson 's friendship with convicted sex offender Jeffrey Epstein exposed the government to "reputational risk," but he still appointed him as ambassador to the United States, documents released Wednesday show.

Starmer fired Mandelson after nine months in the job when new details of the relationship with Epstein emerged, and now faces a political storm over the appointment. The newly published files show the prime minister ignored red flags raised by his staff when he appointed the savvy but controversial Mandelson to the U.K.'s most important diplomatic post.

Mandelson was briefly arrested last month by police investigating allegations he passed sensitiv...