Blair defends business support

Mr Mittal is the UK's eighth richest man

Tony Blair is not embarrassed by his support for a Labour donor's steel company, says Downing Street.

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

We need to establish is this really an extraordinary chain of coincidences or is there something else going on

Tim Collins
Conservative spokesman

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

The potential buyer was a firm owned by Lakshmi Mittal, who had donated £125,000 to Labour.

He is the UK's eighth richest man with personal wealth of £2.2bn.

In a robust defence on Monday, the prime minister's official spokesman said Mr Blair did not know about the donation when he signed the letter.

And the Romanian ambassador in London, Dan Ghibernnea, insisted Mr Blair was "in the clear" because the deal had been finalised "long before" the letter arrived.

The letter was drafted by the Foreign Office and sent on the recommendation of the UK's ambassador in Romanian capital Bucharest, said Number 10.

Investigation call

The Tories want the Committee on Standards in Public Life to investigate the affair.

Conservative shadow Cabinet Office minister Tim Collins told the BBC: "This is part of a chain of a whole string of people, whether Bernie Ecclestone, Enron or the Hinduja brothers, giving favours to the government and receiving favours in return.

Tony Blair has been caught up in the Enron row

"There's a series of what the government wants us to believe are merely coincidences.

"We need to establish is this really an extraordinary chain of coincidences or is there something else going on."

Meanwhile committee member Lord Goodhart said it was time for a cap on donations to political parties.

"I don't think political parties ought to be funded entirely by the state but there is certainly a case for a significantly larger contribution," he said.

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

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

Public record

Most of LNM's staff are employed overseas and the subsidiary buying Sidex is registered abroad but the parent company is UK-registered, with a London headquarters.

Mr Blair's spokesman said the company employs around 100 people in the UK.

Details of Mr Mittal's Labour donation are on public record. Although he is not British citizen, the businessman can vote in the UK, so the gift does not break the rules on foreign political donations.

Downing Street says Mr Blair was not aware of the donation when he signed the letter.

Nor had he held any meetings with Mr Mittal.

Mr Blair's spokesman said the deal was the strongest signal the Romanian economy was opening up to outside investors.

That was a critical factor when the ambassador recommended the prime minister sign, he continued.

The spokesman also criticised the assumption that Labour donors should be exempt from government support.

Mr Blair wrote many similar letters, with examples featuring business efforts in Russia, the Czech Republic and Bulgaria, he added.

Competition with Corus

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.

But Downing Street says Corus did not bid for this contract so there was no conflict.