British Prime Minister Tony Blair's Labour Party Investigated on Finances

The news comes after allegations that three businessmen, who lent a reported 3.5 million pounds (6.1 million dollars, 5.1 million euros) to Labour last year, were later nominated for a peerage that would have put them in the House of Lords, Britain's un-elected upper chamber of parliament.

Labour's treasurer initiated the inquiry after revealing on Wednesday evening that he had not been informed about the loans given to the party by wealthy supporters in the run-up to last May's general election.

Labour, for its part, said it had "fully complied" with rules on fund-raising issued by the Electoral Commission.

Unlike gifts from supporters, loans do not have to be disclosed in the commission's regularly-updated register of donations to political parties.
This means that questions about the source of a particular sum of cash can normally be put off until the publication of the party's accounts.

Labour has been on the defensive since Sunday as it denied any wrongdoing in the furore over peerages offered to business leaders who have given it a financial helping hand.

Chai Patel, chief executive of the Priory Group of private health clinics, told the Sunday Times newspaper that he had made a 1.5-million-pound loan to the party last year, just weeks before being nominated for a peerage.

The controversy deepened on Wednesday when property millionaire David Garrard confirmed that he too had loaned an unspecified amount to Labour before the election. Five months later, he was offered a peerage.

Garrard has now written to Blair asking for his name to be removed from a list of nominees.


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