British cash-for-peerage scandal deepens

LONDON - British Prime Minister Tony Blair was plunged into a damaging new row over the cash-for-peerages scandal after an Indian food magnate was blocked from joining the House of Lords following disclosures that he had made a secret loan to the Labour Party.

Blair's nomination of Sir Gulam Noon has been rejected by an independent watchdog, reversing its initial approval.

The blocking of a fourth Labour donor prompted one member of Labour's ruling body to condemn as "toxic" the growing sleaze threatening to engulf Blair.

Blair was forced last week to admit keeping the party's treasurer and other senior figures and ministerial colleagues in the dark about almost £14 million ($38 million) worth of loans raised before the general election.

His difficulties over a list of proposed working Labour peers that includes a number of controversial donors intensified when the House of Lords Appointments Commission privately recommended that Sir Gulam's name be withdrawn, expressing concerns about his nomination.

The Appointments Commission acted after learning that Sir Gulam, worth around £50 million, had made a £250,000 loan to Labour, and a £200,000 donation.

A senior Government figure admitted the watchdog was "furious" it had not been told of the loan when the nomination was made.

Barry Townsley, Sir David Garrard and Dr Chai Patel have also previously been rejected.

Labour has debts of around £23 million and faces a financial crisis as loans taken to pay for its election campaign come up for repayment.

- INDEPENDENT