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Two British-Indians in cash-for-peerage row

Hasan Suroor

Allegations that nominations were in return for loans or donations to the Labour Party.

WHAT IS it about Indian businessmen and their financial links with the Labour Party that they invariably end up in a controversy?

The latest in a line of rich British-Indians to catch the "bug" are Ghulam Noon, founder of one of Britain's biggest Indian food chains, and Chai Patel, owner of an upmarket healthcare company. Both find themselves embroiled in a cash-for-peerage row, seen as the most damaging sleaze "scandal" to hit Prime Minister Tony Blair's Government since it came to power in 1997 promising to be "whiter than white."

In the past week, Sir Ghulam and Dr. Patel have had their nominations for peerage blocked after it emerged that they had given loans to the Labour Party in the months before it recommended their names. They have acknowledged giving money but indignantly denied that they expected a favour in return.

"It was a small loan of £200,000 to £250,000. The peerage stuff was not even in the conversation," said Sir Ghulam.

Dr. Patel, who gave a loan of £1.5 million, said he would have "walked out of the room" if it had been suggested to him that he would be rewarded for his generosity.

"Absolutely not. If they said, `you will get this by signing this,' I would have walked out of the room," he said claiming that he was surprised when barely weeks after he gave the loan he was told by the party that his name was being considered for a peerage.

The two are among four businessmen whose nominations have been stopped by the Lords Appointments Commission amid allegations of peerages being handed out in return for loans or donations.

Both are self-confessed Labour supporters and have previously donated large sums to the party. Indeed, Sir Ghulam owes his knighthood to the Blair Government, and a peerage would have been a second gift to him from a party to which he is reported to have donated more than £200,000 since the early 1990s.

"I was advised by a senior party man, in a telephone conversation, that there was no reason why I should declare this loan because it was refundable," Sir Ghulam said. Both Sir Ghulam and Dr. Patel have now asked that their nominations for peerage be withdrawn.

There have been other similar rows in the past with Indian millionaires facing allegations of trying to use their money power to buy influence at the highest levels of the Labour Party and its government.

The most famous was the Hindujas' "passport affair" in 2001, when Peter Mandelson, a close friend of Mr. Blair and a senior Cabinet Minister at the time, was accused of trying to "fast-track" S.P. Hinduja's citizenship application soon after his family had donated £1 million to the Millenium Dome, Mr. Mandelson's pet — and ultimately doomed — project.

Then there was the so-called "Mittal-gate" in 2002 relating to a letter which Mr. Blair wrote to the then Romanian Prime Minister in a bid to help the steel magnate Lakshmi Mittal acquire a steel company in Romania. Mr. Blair's intervention was sought to be linked to a £125,000 donation, which Mr. Mittal had made to Labour's election fund, though, of course, a direct connection was never established.

Now we have the Noon-Patel embarrassment and, if history is any guide, it may not be the last.

It is estimated that the Labour Party raised £14 million using means that helped it circumvent the norms for political donations. And despite the party's protestations that it has not broken any rules the fact is that the revelations have further damaged Mr. Blair's image with 56 per cent of the people, according to a new poll, saying that they believe he has been giving peerages in return for cash — reminding them of the Tories' last days in office, which were marred by accusations of sleaze.

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