Fri, Jul 14, 2006 - Page 6 News List

UK leader's ally released on bail after questioning

THE GUARDIAN , LONDON

The "cash for peerages" scandal paralyzing the British Labour Party moved perilously close to Prime Minister Tony Blair's door on Wednesday when the London metropolitan police arrested Lord Levy, Blair's personal party fundraiser, Middle East envoy and personal confidant.

The news 10 Downing Street has been privately dreading for months came after the police spent all day interviewing Lord Levy at a north London police station before releasing him on bail without charge.

It is understood that at least three senior Downing Street officials have also been interviewed by the police, but not under caution. Since Blair has himself said the buck stops with him over party fundraising, Downing Street seems to accept that it is inevitable detectives will now interview the prime minister too.

The Scottish nationalist leader Alex Salmond said "the waters are now lapping at the ankles of the prime minister."

The ebullient Labour peer, 62, was questioned by members of the specialist crime directorate about offering peerages in return for loans and whether he had breached laws on the disclosure of gifts to political parties.

Lord Levy later vociferously protested his innocence and angrily attacked the police for arresting him even though he had offered total cooperation. He accused them of using their arrest powers "totally unnecessarily."

Ley's aides said his computers and papers were at the full disposal of the police. He had also been asked for fingerprints.

"He went to the police station voluntarily this morning. Most unexpectedly the police invoked their powers of arrest," one aide said. "He has not been charged and does not expect to be once this inquiry is complete, as he has committed no offence. It is not clear what the allegations are, but he denies any wrongdoing, or any involvement in wrongdoing with others."

Some parliamentarians questioned the timing of the arrest, and the former home secretary David Blunkett last night urged investigators to be "thorough rather than theatrical."

Lord Levy was questioned on his role in raising ?14 million (US$27 million) of undeclared loans from Labour-supporting millionaires last year, including four men who were proposed for peerages by Blair.

The arrest came the day before John Yates, the deputy commissioner of the metropolitan police, was due to be questioned in private by MPs at an all-party public administration select committee on the progress of his investigation. MPs have put their own inquiry on hold at his request.

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