Fund scam Blair's new headache

The party took ?loans? instead of donations, which have to be declared unlike loans. It is said Labour bigwigs traded peerages for #10 million in funds.

Scandals continue to haunt British Prime Minister Tony Blair. He is now caught up in a cash-for-honours row and is facing a backlash from his own MPs following the revelation that Labour tried to conceal millions of pounds of financial aid from multi-millionaire supporters, some of whom were later nominated for peerage.

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The party took “loans” instead of donations, which have to be declared unlike loans. It is said Labour bigwigs traded peerages for £10 million in funds.

Caught up in the row are three millionaires, including the Indian-origin Dr Chai Patel, who is said to have lent the party £1.5 million last August. He has denounced the methods for peerages as a “bazaar”.

He was among 27 others who were recommended for peerage. But Appointments Commission, which monitors nominations to the House of Lords, blocked his recommendation.

Labour maintains that it broke no rules and strenuously denies the backers were being rewarded for the loans.