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Indian-origin doc in peer row

Chai Patel is said to have lent Labour party #1.5m for the recommendation, says Nabanita Sircar.

india Updated: Mar 13, 2006 16:50 IST

Labour leaders face a backlash from their own MPs after admitting they received loans from millionaire supporters who were then recommended for peerages.

But the party persisted that it broke no rules by accepting loans, that enable it to avoid declaring the financial help, and strenuously denied the backers were being rewarded for the loans.

But critics within the party protested that the practice was bringing Labour into disrepute and called for reform both of the funding of political parties and the composition of the House of Lords.

The controversy arose after it emerged that three businessmen at the centre of a row between Downing Street and the watchdog on Lords appointments had all made loans to the Labour party.

This includes Chai Patel, who is chief executive of the Priory Clinics. He is said to have lent the party £1.5m at commercial rates last August, as well making donations worth £100,000.

He was quoted in the Independent saying, "I did this because I was asked to, and because I was able to. If I had ever imagined that providing financial support in this way would have brought so much criticism, I would not have done so. I never expected anything in return for either the donation or the loan."

The paper reported that his and two others named in the row gave loans were worth more than £3.5m.

Chai Patel's elevation to a peerage is one of three being blocked by the House of Lords Appointments Commission. The others are that of Sir David Garrard, a property developer who is believed to have loaned Labour more than £1m, and stockbroker Barry Townsley, who lent the party £1m.

A Labour spokesman said, "There is nothing wrong with donating or lending money to a political party as long as the rules are strictly adhered to.

"The issue here, regarding the loans that these people have made, is whether the strict rules set by the Electoral Commission regarding the declaration of loans that have been made at a commercial rate, have been fully observed. They have. It has been suggested that these loans were made at a preferential rate. That is absolutely not the case."

But Peter Kilfoyle, the former armed forces minister, disagreed, "I have always been very concerned about the increasing reliance on wealthy donors. Traditionally, the party was funded by the trade unions that was far more transparent and accountable."

Chai Patel is very angry and decided to be an exception and question the whole system of donation.

First Published: Mar 13, 2006 16:50 IST