Labour faces bankruptcy
The run of bad luck continues for British Prime Minister Tony Blair with the launch of an investigation into the alleged sale of peerages.india Updated: Mar 23, 2006 01:46 IST
The run of bad luck continues for British Prime Minister Tony Blair with the launch of an investigation into the alleged sale of peerages against undeclared loans and the demand by five multi-millionaires including Dr Chai Patel for return of their loan.
One donor demanded that interest at the commercial rate be paid by Labour. City analysts reckoned the party could be running up £1 million in interest.
More embarrassment was in store for Blair. One of the lenders said he was told by fund-raiser Lord Levy that it was Blair rather than the party seeking the loan and that he would be doing the prime minister a favour.
Things are so bad that Labour's national executive committee agreed to close ranks to limit the damage only after taking away the power to raise funds from the prime minister.
The party is now plunged into deep financial crisis as it will have to cough out over £6.5 million to pay back those who have gone public demanding the return of loans. Of this, £3.5 million is due this year and the rest by 2008. Dr Patel said he expected his money back by August, but later clarified he would abide by what Labour asked him to do.
In any case, the party faces bankruptcy as banks are not willing to advance more money and all its assets are already mortgaged. The Financial Times reported that Labour was now close to selling its Old Street headquarters which could raise £6.5 million.