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Tuesday, 29 January, 2002, 11:16 GMT
Labour's Enron difficulties
Enron HQ
Government rejects impropriety over Enron links
Nick Assinder

It was probably inevitable that the fall-out from the Enron scandal would hit Britain.

And now the government is being quizzed over its relationship with the company amid suggestions it managed to influence policy.

Both the Conservatives and Liberal Democrats are calling for a Commons inquiry into the affair, even though the Tories have admitted taking 25,000 from the US energy giant.

Tory vice-chairman Tim Collins says the party now regrets acccepting the donation.

But he has claimed that the alleged links and cash connections between Labour and Enron would eclipse the "sleaze" scandals which crippled John Major's government.

Downing Street has absolutely rejected suggestions there was any improper influence.

And the Labour Party has denied there were any donations to the party, only that the company had sponsored one event and bought tickets for a dinner.

Temporary ban

The claims surround the fact that, in 1998, the government announced a moratorium on new gas fired power stations in an attempt to "level the playing field" with coal.

The ban was always intended to be temporary and short term and was lifted in November 2000, Downing Street insists.

A spokesman also said that representatives from Enron - along with those from other energy companies including Mobil, Sweb and Esso - met with ministers between 1998 and 2000.

And he claimed the meetings had started before the moratorium.

The implication, flatly rejected by Downing Street, is that the company succeeded in persuading the government to lift the ban.

Cash for access

Ministers are understandably sensitive about such allegations.

The wounds from the Bernie Ecclestone affair which engulfed the Labour government shortly after the 1997 election still smart.

Formula One boss Bernie Ecclestone
Ecclestone cash row
The Formula One racing boss had donated 1m to the Labour Party, funds which looked suspicious when the government later exempted the sport from a ban on tobacco advertising.

No impropriety was ever proved, but the prime minister was forced onto the defensive and eventually handed back the cash.

This affair was later followed by the "cash for access" row after a former Labour spin doctor was said to have offered his lobbying firm's clients, valuable access to ministers.

Like all these affairs, mud stuck. So it is no surprise that Downing Street has moved to swiftly dismiss the allegations and "open the books" over meetings between ministers and the company.

And Downing Street has promised to make available any information relating to the affair.

State funding

At the moment there is nothing to suggest there was anything unusual about the relationship between Enron and either the Labour Party or the government.

All political parties are eager, within reason, to take contributions from business.

And it is part of normal political life for ministers to be lobbied by vested interests.

These two things are bound to cause tensions. On the one hand there are political parties crying out for cash, on the other there are wealthy companies seeking - quite legitimately - to influence government policy.

If this row does nothing else, it is certain to strengthen the hand of those demanding the state funding of political parties to remove any danger of undue influence.

See also:

28 Jan 02 | UK Politics
24 Jan 02 | Business
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