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Last Updated: Wednesday, 31 January 2007, 09:51 GMT
Honours police arrest Lord Levy
Lord Levy
Lord Levy is the Labour Party's chief fundraiser
Labour's chief fundraiser Lord Levy has been re-arrested by police looking into cash-for-honours allegations.

He was questioned on suspicion of conspiracy to pervert the course of justice and later bailed.

Lord Levy, a close ally of Tony Blair, was first arrested last year in connection with claims honours had been given in exchange for party donations.

A spokesman for Lord Levy said he "completely denies any allegations of wrongdoing whatsoever".

Downing Street declined to comment on Lord Levy's latest arrest.

The Metropolitan Police have so far spoken to about 90 people in connection with their inquiries, including Tony Blair and former Conservative leader Michael Howard.

Dawn raid

Four people have been arrested - Lord Levy, Downing Street adviser Ruth Turner, Labour donor Sir Christopher Evans and head teacher Des Smith, who was involved in the government's City Academy programme.

No one has been charged and all involved deny any wrongdoing.

Increasingly this sorry affair has the whiff of Watergate about it
Ed Davey, Lib Dems

The Scotland Yard team, led by Deputy Assistant Commissioner John Yates, had been due to deliver its file of evidence to prosecutors by the end of this month.

But they warned that would no longer be possible after Ms Turner was arrested in a dawn raid on her London home earlier this month.

She was arrested on a suspicion of perverting the course of justice, unlike Lord Levy, who is suspected of conspiracy to pervert the course of justice.

Other members of Mr Blair's inner circle to have spoken to officers investigating cash for honours claims include his director of political operations John McTernan, who has been interviewed twice, and his chief of staff, Jonathan Powell.

Liberal Democrat chief of staff Edward Davey said: "Increasingly this sorry affair has the whiff of Watergate about it.

April 2006 - Des Smith
July 2006 - Lord Levy
Sept 2006 - Sir Christopher Evans
Jan 2007 - Ruth Turner
Jan 2007 - Lord Levy

"For [former US president Richard] Nixon the crime was the cover up, but we must await the result of the police investigation to see whether something similar is now happening in Downing Street. "

It is understood Lord Levy was questioned for more than four hours.

His spokesman issued a statement saying: "Lord Levy went to the police station as asked. He was interviewed again. He completely denies any allegation of wrongdoing whatsoever.

"He left the police station in the early afternoon and since there is a continuing investigation he will not make any further comments at this time."

Conservative MP Nigel Evans said the arrest was a "seismic" development, adding: "It is important, we have to realise that the allegations are very serious indeed.

"Nobody is above the law, not the prime minister and not Lord Levy either, and this is something I think that we all have to learn."

Lord Levy was first arrested last July, in connection with alleged offences under the Honours (Prevention of Abuses) Act 1925 and Political Parties, Elections and Referendums Act 2000.

The inquiry began after it emerged that a number of large secret loans had been made to the Labour Party before the 2005 general election, and that some of those lenders had subsequently been nominated for peerages.

SNP reaction

The investigation has since widened to cover the other main parties.

The cash-for-honours inquiry was prompted by a complaint by Scottish National Party MP Angus MacNeil that financial support was being rewarded with honours.

He said of Lord Levy: "This of course is the man who's been closest to Tony Blair in the whole fundraising escapade for Labour.

"And it really doesn't look good for Labour at all."

At the weekend, appearing on BBC One's Politics Show, Mr Blair repeatedly declined to answer questions on the police investigation.

He said: "Let the thing run its course and then we will see."

Last week, Downing Street denied allegations it had a hidden e-mail system from which messages were deleted after the cash-for-honours inquiry began.

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