New twist in Steelgate row

Lakshmi Mittal had a letter of support from Tony Blair

The last Conservative government fought the takeover of an Irish steel company by Labour donor Lakshmi Mittal because it would hurt British jobs, it has emerged.

The news the Tories took a very different view of the British status of Mr Mittal's companies comes amid the continuing row over Tony Blair's support for his firm's Romanian takeover last year.

The subsidy put to Irish Steel worked against British national interests, against the interests of British Steel and threaten British jobs

Tim Eggar
Former industry minister

Opposition parties have already pressed the prime minister to explain why he backed the Romanian deal when Mr Mittal's company, LNM, did not appear to be British.

Mr Mittal gave £125,000 to Labour during last year's election campaign but Downing Street insists Mr Blair wrote to his Romanian counterpart supporting the deal on the advice of the British ambassador in Bucharest.

The ambassador, Richard Ralph, said the deal was Romania's "privatisation of the decade" says Number 10.

The Liberal Democrats want Mr Ralph to be brought before a committee of MPs to answer questions about the controversy.

Subsidy row

Now a former Tory industry minister has revealed his department objected strongly to the takeover by Mr Mittal's Ispat subsidiary of Irish Steel because it would hurt British interests.

Tim Eggar told BBC Radio 4's World At One programme how the British government had lobbied against an Irish subsidy in Ispat's 1995 £1 purchase of the struggling Irish Steel.

"I believe that the subsidy put to Irish Steel worked against British national interests, against the interests of British Steel and threatened British jobs," said Mr Eggar.

Tim Eggar says his department did not see Ispat as British

"I was proved to be right."

Mr Eggar said at one stage it was claimed the UK government should not necessarily support British Steel's opposition to the Irish takeover because Ispat was a British company and had British interests.

"We looked at that claim, I seem to remember, and rejected it."

When Irish Ispat finally closed in June last year - with British Customs and Excise among its creditors - it owed 400,000 Euros in unpaid VAT, the World At One was told.

The Department of Trade and Industry says it was not contacted at any stage by Downing Street or the Foreign Office over the Britishness of Mr Mittal's companies before Mr Blair wrote his letter supporting the Romanian deal.

Blair's letter 'surprise'

The chief adviser to the Romanian minister responsible for the privatisation told the World At One they did not regard LNM as British and did not care what nationality the buyer was.

The Romanian government had not been in contact with the British government over the deal, he said, and Mr Blair's letter of endorsement was a "pleasant surprise".

Ambassadors from other countries had also written to congratulate the Romanian government on the privatisation, he added.

Shadow cabinet office minister Tim Collins launched a new attack on Mr Blair, saying: "He can no longer credibly resist the case for a full independent inquiry into the government's handling of this matter."

Mr Collins wants all papers published about a meeting the Romanian prime minister held with a Downing Street foreign policy adviser and the UK ambassador in Bucharest, Mr Ralph.

'Unanswered questions'

Downing Street told the World At One the meeting took place in April last year, a month before Mr Mittal's donation, but refused to say what was discussed.

Since the row began, Number 10 has said Mr Blair was supporting a British success story.

That is despite it emerging that LNM is not British-registered and only employs a tiny fraction of its workforce in the UK, although it has a headquarters in London.

Lib Dem Treasury spokesman Matthew Taylor says Mr Ralph is the only non-government source able to shed light on the affair.

He argued Downing Street had failed to give straight answers to simple questions, which should now be put to the ambassador by a Commons committee.