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Last Updated: Wednesday, 12 July 2006, 21:24 GMT 22:24 UK
No surprise as Lord Levy arrested
By Jon Silverman
Legal affairs analyst

Although the arrest of New Labour's chief fundraiser Lord Levy has made headlines, it comes as no surprise to those who have been following the progress of Scotland Yard's loans-for-peerages inquiry.

Lord Levy
Questioning of Lord Levy was expected by many

Only days after the investigation was launched by the Yard's Specialist Crime Directorate, detectives requested documents and emails from Downing Street, the Cabinet Office and the House of Lords Appointments Commission.

Deputy Assistant Commissioner John Yates, leading the inquiry, also showed his intent by asking Parliament's Public Administration Committee to hold fire on part of its own investigation so that the police probe could take precedence.

Lord Levy was one of those whom the committee intended to question.

It has been assumed that Mr Yates' team would seek to interview Lord Levy and it has not been ruled out that the prime minister himself might be asked to help the inquiry.

Double act

The investigation began when allegations were made that there had been a breach of the 1925 Honours (Prevention of Abuses) Act.

But in April 2006, it was disclosed that the inquiry had been broadened to see if any offences had been committed under the 2000 act which regulates the funding of political parties, elections and referendums.

Lord Levy was questioned under both acts before being released on bail.

His lawyer, Neil O'May, has queried why Lord Levy was arrested.

Gulam Noon
The arrest came after Gulam Noon revealed Lord Levy's advice

The police did it, said Mr O'May, in order to obtain documents which would have been handed over voluntarily.

The implication is that Scotland Yard was making some kind of point.

However, in April, the police arrested and later bailed without charge Des Smith, a former government adviser connected to the Specialist Schools and Academies Trust. Lord Levy is president of the trust.

It seems probable that the timing of Lord Levy's arrest is connected to the revelation that Sir Gulam Noon was told to keep secret a 250,000 loan to New Labour because, he was told, it was not required to disclose it under the existing rules.

A loan made on commercial terms is exempt from declaration, while a donation is not.

The police will have to decide whether this sum, and others, such as an amount of more than 1 million from Chai Patel, were loans or donations and whether any inducement had been made to disguise one as the other.

It is believed that only one prosecution has taken place under the 1925 act - and that, as far back as 1933.

It is a matter of speculation as to whether the current inquiry will lead to any charges.

But one thing is clear. It is anything but a cosmetic exercise.


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