'Loans against honours' scandal hits Labour

'Loans against honours' scandal hits Labour

	Published : Thu, 16 Mar 2006 15:10 By : Phil Bateman Print this Story

LONDON: The ruling Labour Party is facing an by its own treasurer investigation into charges that it had accepted loans from millionaire supporters who were later rewarded with titles under the honours system.

Party treasurer Jack Dromey went public saying he had been "kept in the dark" over last year's undeclared loans given to the party by wealthy businessmen. This created a furore leading to accusations that Tony Blair's government sells peerages. He said he will investigate the issue along with the party's general secretary and submit a report to the party's executive committee Tuesday.

Dromey, also deputy general secretary of the Transport and General Workers' Union and husband of minister Harriet Harman, said the party needs to put its house in order to restore public's and party members' confidence.

The issue came to light after three Labour supporters -- Chai Patel, chief executive of the Priory Healthcare group, Barry Townsley, a stockbroker, and Sir David Garrard, a property developer, -- were recommended for honours. They had together loaned 4.5 million pounds to the party.

Of the three, Sir David sought his name to be removed from the list and confirmed that he had loaned money to the party "on commercial terms". The issue actually came to a boil when Patel publicly complained that his nomination to the House of Lords had been stalled.

Their nominations have been blocked by the House of Lords Appointments' Commission.

The party reacted to the charges saying it followed guidelines laid down by the Electoral Commission regarding fundraising, donations and loans. It said the Tories had a loan book of more than 20 million pounds.

Meanwhile, the Commons public administration committee will interview cabinet secretary Sir Gus O'Donnell. Members of a Lords appointments commission will also appear before the committee.

The committee is also probing into claims that political parties are now mostly accepting loans, and not donations, from backers as loans are not required to be declared to the election watchdog.