Blair dismisses influence claims

The Romanian PM received a letter from Mr Blair

Tony Blair has dismissed a new row over his support for a Labour donor as "Enron chapter 55".

Opposition parties have rounded on Mr Blair, accusing him of personally intervening to help a businessman complete a deal in return for a donation to the Labour Party.

But the prime minister denied any impropriety, insisting: "If people have got a complaint let them make it."

When you look at what has exactly happened, including the former leading Conservative Party people, there is no comparison

Tony Blair

According to a report in the Sunday Telegraph, Mr Blair wrote a letter in support of a multi-million pound business deal by Indian-born steel tycoon Lakshmi Mittal who had donated £125,000 to Labour.

Mr Blair's letter was sent to Romanian Prime Minister Adrian Nastase two days before he signed a draft agreement for the £300m sale of the country's nationalised steel company Sidex.

Transparent rules

Downing Street confirmed the letter had been sent but insisted the privatisation deal had been effectively sealed before it was written.

The potential buyer was a firm owned by Mr Mittal, the UK's eighth richest man with personal wealth of £2.2bn.

In the letter, it is claimed Mr Blair hinted the privatisation of the firm might help smooth the way for Romania's entry into the EU.

Tony Blair has been caught up in the Enron row

Mr Blair defended his actions, saying: "If anybody has got any evidence that the rules haven't been observed let them bring it forward.

"Governments will back companies to win contracts the whole time.

"Otherwise you would end up with the absurd situation where government doesn't have anything to do with British business."

The Sunday Telegraph reported Mr Blair's letter, sent on 23 July last year, said: "I am delighted by the news that you are to sign the contract for the privatisation of your biggest steel plant, Sidex, with the LNM Group.

"I am particularly pleased that it is a British company which is your partner."

Two days after the letter was sent, on 25 July, Mr Nastase announced a draft agreement had been sealed.

Deal 'effectively sealed'

Mr Mittal had donated £125,000 to Labour on 26 June last year, a few weeks after the general election.

The gift followed a donation of "over £5,000" in 1997.

Though Mr Mittal's LNM group is based in London, the subsidiary buying Sidex, LNM holdings is not UK-registered.

Mr Blair's official spokesman refused to say whether Mr Mittal or his company paid tax in Britain or reveal how many people it employed here.

A spokeswoman for LNM insisted that there was no link between Mr Mittal's donation and the Sidex deal.

Competition with Corus

Talks were essentially complete and the letter was effectively conveying congratulations.

The row comes ahead of this week's Ogmore by-election and observers suggest that has intensified the argument.

Plaid Cymru wants an explanation of why Mr Blair was backing a foreign-registered company in competition with Corus - formerly British Steel - which a year ago cut 6,000 jobs, many of them in south Wales.

Plaid Cymru industry spokesman Adam Price said: "This company is actually a competitor to the British steel industry which is undermining British jobs and British products overseas."

Mr Price told BBC Radio 4's Today programme that the letter was "absolutely critical" to clinching the deal.

Shadow foreign secretary Michael Ancram said a full inquiry was needed into Mr Blair's alleged role in the Mittal deal and he said it followed other similar allegations.

Mr Ancram pointed to claims that "giving large sums of money to the Labour Party ends up with the government either changing its policy or withdrawing a moratorium or, as in this case, trying to help the person involved to do business".

Welsh Office minister Don Touhig dismissed Tory and Plaid Cymru concerns as a "series of insinuations and inuendos."

He told Today there was nothing unusual in the prime minister promoting the interests of a British company.