Donors wanted secrecy, insist Labour insiders
Senior Labour sources today insisted that major donors in the cash-for-peerages affair wanted to remain anonymous.
Party insiders say they have written proof that some of the businessmen who lent Labour £14 million before the general election last year did not want their names made public.
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• Now Labour accused of hiding £12million in loans from auditors
The claim follows allegations that Tony Blair had "misled" Labour's ruling body over the way the loans were arranged.
According to an account of a crucial meeting of the National Executive Committee, Mr Blair said the donors wanted to keep their names secret to avoid being "trashed in the media".
But Mr Blair's words put him at odds with at least two businessmen at the centre of the inquiry.
Dr Chai Patel and Sir Gulam Noon both claim they were happy to make public donations but were told to give secret loans instead.
Dr Patel said he offered £1.5 million as a donation but was told by Lord Levy, Mr Blair's chief fundraiser, that Labour would prefer the money as a "loan". He was later nominated for a peerage.
Sir Gulam, who lent Labour £250,000, also offered a donation but was advised to make a loan. "My position is that I was very happy to contribute as a donation but that I was asked to give a loan," the tycoon said at the weekend. Sir Gulam was also nominated for an honour.
The question of secrecy is at the heart of the police inquiry which has already seen three people arrested and several senior Labour politicians and Downing Street personnel questioned.
Any suggestion that loans were deliberately sought could breach the Political Parties Elections and Referendums Act 2000.
Mr Blair is reported to have told an NEC meeting in March that the donors "preferred the confidentiality of a loan".
An account of the meeting by NEC member Ann Black records: "Tony Blair said that he understood members' concerns and took full responsibility for everything done in the name of the party.
"Anyone giving to Labour was trashed in the media and so potential donors preferred the confidentiality of a loan." Ms Black's account continues: "He (Mr Blair) did not explain why some donors claimed that the party proposed the arrangement, nor acknowledge that the lenders suffered far more through the facts emerging in this way."
The Prime Minister will come under pressure to explain his comments if, as expected, he is questioned by the police in the next few weeks.
In a further blow for Mr Blair, it has been alleged the Labour Party concealed the loans from its auditors by failing to mention them in 2004 accounts.
