Blair silent on Mittal's US links

Lakshmi Mittal had a letter of support from Tony Blair

Downing Street is refusing to answer questions about Labour donor Lakshmi Mittal's funding for a campaign in the US to limit steel imports - a move which could threaten British jobs.

It is absolutely incredible that a British prime minister at this time for the British steel industry should be providing support for a foreign competitor

Adam Price, Plaid Cymru trade and industry spokesman

The prime minister's official spokesman said Downing Street staff were suffering from "Mittal fatigue" trying to convince reporters there was no conspiracy surrounding the Indian tycoon's links to government.

The original allegations, that Mr Blair had intervened to help Mr Mittal because he had donated £125,000 to Labour funds three weeks earlier, had been thoroughly disproven, the spokesman said.

Any discussion about a company such as LNM operating in a global market place was just "a chin-stroking discussion for economists", he added.

Opposition parties are demanding to know why Tony Blair apparently stepped in to help a foreign company that is in direct competition with British industry.

Job threat

Shadow secretary for Trade and Industry John Whittingdale said: "Unless these questions are answered it leaves question marks over the integrity of this government."

He called for an independent inquiry into Labour's links with Mr Mittal.

But Northern Ireland Secretary John Reid on Monday dismissed the controversy as "froth" and said the government would not be diverted by the row.

Mr Blair wrote to his Romanian counterpart, Adrian Nastase, last year supporting an attempt by Mr Mittal's company LNM - which employs less than 0.1% of its staff in the UK - to buy Romania's state steel industry Sidex.

He said he had written the letter at the request of the British embassy in Bucharest.

It has since emerged that in addition to funding the Labour party, Mr Mittal has supported a campaign in the US to impose tariffs on foreign steel imports.

The US government is due to make an announcement on steel tariffs - which could be as high as 40% - next month.

Plaid Cymru claims tariffs would cost hundreds of jobs at Corus, formerly British steel.

The party's industry spokesman Adam Price said: "The government has presided over a massive decline in the British steel industry, at the same time it has provided succour to a foreign competitor of Corus and other steel companies...

"It is absolutely incredible that a British prime minister, at this time for the British steel industry, should be providing support for a foreign competitor."

'No pressure'

Earlier, the European bank which lent Mr Mittal £70m to buy Sidex told BBC News it received "no obvious pressure" from the British government in support of the deal.

Critics' claims that Clare Short's Department of International Development had also tried to use its influence to promote LNM were denied by European Bank for Reconstruction and Development (EBRD).

Kilfoyle is not happy with the situation

"From our point of view we were backing the winner of a privatisation process in Romania which had a sound creditworthy proposition that we could support," EBRD's head of banking, Noreen Doyle, told BBC Radio 4's Today programme.

The EBRD lends money for projects across Europe and has been particularly active in helping former Communist countries in their transition to market economies. It has 62 shareholders, including Britain and the US.

New watchdog call

Former Labour minister Peter Kilfoyle told Today he was not happy the government seemed to have supported a company working against the interests of British workers.

The continuing sleaze allegations have prompted senior Labour backbencher Tony Wright to call for a new watchdog to be set up to investigate claims against ministers.

Critics often wanted such allegations to hang in the air rather than be properly examined said Dr Wright, chairman of the Commons public administration select committee.

That did "enormous damage" to the political system.

A new public standards commissioner should be set up, he said, stressing such issues could currently only be investigated on the prime minister's order.

The current parliamentary standards commissioner only looks at alleged breaches of the MPs' code.