Mittal's gift to Labour: #2 mn only

The donation will help Labour pay off huge loans it controversially took from wealthy businessmen before the last general election.

Steel tycoon Lakshmi Mittal has offered two million pounds as bail out gift to the ruling Labour Party and this threatens to become a contentious issue in political circles in the country.

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The deal negotiated by Prime Minister Tony Blair and Lord Levy, Labour's chief fundraiser, who is on bail after being arrested in the summer, is likely to prove contentious because Mittal was embroiled in a "cash-for-favours" row in 2001, when Blair backed one of his business deals after the billionaire gave the party 1,25,000 pounds.

The donation will help Labour pay off huge loans it controversially took from wealthy businessmen before the last general election, The Sunday Times said.

"Mittal has been a committed supporter of the party for many years, and any financial gift from one of the world's most successful businessmen is very welcome," a Labour spokesperson said. No comments were forthcoming from the Mittals.

The money is likely to attract criticism from Labour backbenchers concerned about Blair's apparent financial reliance on a few millionaire backers and on Levy.

According to the report, Blair had hoped the two million pounds gift would remain confidential until May, when the Electoral Commission discloses all donations received by political parties in the first three months of 2007.

Senior party figures are now worried that the disclosure of Mittal's pledge might lead him to withdraw it.