Sir Gulam Noon lent
£250,000 to Labour, his name had
been blocked by the Lords Appointments Commission because
of "Cash for peerages"
London, July 11,2006
BBC London Report
NRI, the Curry King of UK signed an agreement
on 20 April 2005 to lend Labour £250,000. He paid the
funds on 28 April. Scotland Yard is conducting a wide-ranging
investigation into loans and donations made to all three parties
and also into whether honours have been given as rewards for
financial help.
According to the BBC reporter business editor
Robert Peston says the disclosure is another example of the
cloak of secrecy put by Labour around loans it had been receiving
from wealthy individuals.
Labour chief fundraiser Lord Levy told a businessman
he need not tell a Lords vetting committee about his loan
to the party. Lord Levy's advice prompted Sir Gulam to retrieve
nomination papers already sent to Downing Street for forwarding
to the Lords Appointments Commission. That was because the
papers mentioned the £250,000 as if it were a gift.
Sir Gulam Noon said:
He had originally offered to make a donation
of between £50,000 and £75,000 but Lord Levy wanted
£1m. They then negotiated a loan, rather than a donation.
There is a dispute about whether the loan was Lord Levy's
suggestion or Sir Gulam's. Sir Gulam eventually agreed to
make a loan on allegedly commercial terms.
Labour and the Tories have both been given legal advice that
loans made on commercial terms did not have to be made public,
unlike substantial donations.
A letter sent to Sir Gulam at this time by Labour said that
his £250,000 loan was not "reportable" under
relevant legislation.
Labour was in dire financial straits in early 2005. The general
election was imminent and the party wanted cash to help fund
its campaign.
Just over five months later, on 3 October, Sir Gulam received
a call from Ruth Turner, Tony Blair's director of government
relations and a Labour official, telling him the prime minister
was nominating him for a peerage.
The following day, 4 October, Sir Gulam received the nomination
forms for joining the House of Lords.
These asked him to list his donations to political parties.
Sir Gulam Noon says his conscience is clear
Sir Gulam gave the papers to his accountant, who put down
the £250,000 loan on the form along with just over £220,000
of direct donations he had made since 2000.
The completed forms were then sent to Richard Roscoe, a civil
servant at 10 Downing Street, for forwarding to the Lords
Appointments Commission, which is chaired by Lord Stevenson.
However on 5 October, Sir Gulam and Lord Levy
had a telephone conversation.
In the course of the conversation, Lord Levy told Sir Gulam
that he need not have included the £250,000 loan on
the papers sent to the Lords Appointments Commission.
He said this was because the £250,000 was a loan, not
a donation, and was therefore did not have to be disclosed
under the law.
Nomination withdrawn
Sources close to the Lords Appointments Commission have told
the BBC that other nominees for peerages have disclosed their
loans to the Commission.
Sir Gulam then telephoned Mr Roscoe and asked if he still
had the papers or whether they had already been passed to
the vetting committee.
Mr Roscoe said he still had them. So Sir Gulam retrieved
them and submitted a revised document that made no mention
of the £250,000.
In March this year, the Lords Appointments Commission found
out about the loan made by Sir Gulam. Its chairman, Lord Stevenson,
then wrote to the prime minister asking that Sir Gulam's nomination
for a peerage be withdrawn.
Although the commission's members accept that the failure
to tell them about the loan may have been a simple mistake
by Sir Gulam, they felt it was inappropriate for him to receive
a peerage so soon after he gave financial help to Labour.
However, they did not rule that he was not fit and proper
to be a peer and might accept his nomination for a peerage
if it were resubmitted at some point in the future.
A friend of Lord Levy - who has raised millions of pounds
for Labour and is a close confident of Tony Blair - says Sir
Gulam and Lord Levy are not particularly close.
Until Sir Gulam made the loan, he had made his donations
independently of Lord Levy's fund-raising efforts.
BBC political editor Nick Robinson says there was no proof
that the law or the rules had been broken.
But questions would be asked about Lord Levy's advice when
Sir Gulam was willing to declare details of his loan and the
Lords vetting committee would have liked to hear about it.
'Clear conscience'
In an interview with BBC Radio Five Live, Sir Gulam refused
to confirm that Lord Levy was the Labour official who suggested
the money should be a loan.
"I knew it was a loan, simply a loan, it was not a donation,"
said Sir Gulam, explaining Labour had made clear he did not
have to declare the money under the law.
Sir Gulam denied haggling over the amount of the loan and
said he felt "hurt" that the loan had been blown
"out of proportion".
"I have done nothing wrong," he said. "My
conscience is clear. I gave the loan and when I filled in
a nomination form I did declare it."
Norman Lamb, Liberal Democrat leader Sir Menzies Campbell's
chief of staff, said: "The proximity with which Lord
Levy operates to Downing Street means that these reports raise
serious questions for the prime minister and the Labour party
as a whole."
A Labour Party spokesman said: "These matters are subject
to an ongoing police investigation and therefore we have nothing
to say."
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