The Corruption of New Labour: Britain’s Watergate?

[John Simkin]

Here is an interesting article on John Prescott's friend.

http://www.nerve.com/dispatches/clark/citi...z/printcopy.asp

Citizen Anschutz

How the conservative Christian head of Regal Cinemas is trying to change how you see movies.

by Justin Clark

March 23, 2006

Consider the following scenario: It's Saturday, and you feel like going to the movies. You see the latest installment of The Chronicles of Narnia advertised in your local Examiner newspaper, part of a chain whose name has been trademarked in more than seventy cities. You decide to go to your local theater — a Regal, Edwards, or United Artists. You sit through twenty minutes of advertising, followed by the film itself, which has been delivered from studio to theater by a fiber-optic line.

The underlying theme? Every stage of your moviegoing experience — from production to promotion to distribution to exhibition — was controlled by one man: sixty-six-year-old religious conservative Philip Anschutz.

Named Fortune's "greediest executive" in 1999, the Denver resident is a generous supporter of anti-gay-rights legislation, intelligent design, the Bush administration and efforts to sanitize television. With a net worth of $5 billion, he is Forbes ' thirty-fourth richest American, two spots above Revlon's Ronald Perelman. Anschutz heads a vast media empire whose assets include the Examiner chain, twenty percent of the country's movie screens, and a sizeable stake in Qwest Communications, the scandal-ridden telecom giant he formerly directed. (Anschutz was accused of helping falsely inflate Qwest profit reports, then making millions by selling his own shares in the company — a claim he ultimately settled by paying millions to charity.)

Anschutz's stake in Hollywood has been growing since 2000, when he began buying the bankrupt Regal, Edwards and United Artists chains and founded two film studios, Walden Media and Bristol Bay. In many areas of the country, the Regal Cinemas chain is the only option for seeing first-run films. Carole Handler, a prominent Los Angeles anti-trust attorney, says this gives Anschutz considerable leverage in his latest domain of conquest. "Anschutz is the person who went and bought the theaters out of bankruptcy," she says. "Don't think that passed unnoticed by the studios."

Anschutz has gained considerable power in negotiating licensing agreements with the film studios, contracts which impact everything from where a movie is played, to how long it runs, how it's marketed, which upcoming releases are given trailer time, and how revenue is split between the studio and the theater. It is a kind of power, says Handler, that harkens back to the early days of cinema, when studios, distributors, exhibitors and even movie star magazines were concentrated into the same relatively few hands.

There's a twist, though: Anschutz's politics. A heavy contributor to the Republican Party for decades, Anschutz helped fund Amendment 2, a ballot initiative to overturn a state law protecting gay rights, and helped stop another initiative promoting medical marijuana. More recently, he helped fund the Discovery Institute, a conservative Christian think tank that mounted a public relations campaign and financed "research" into intelligent design. He has also supported the Media Research Council, the group that generated nearly all the indecency complaints with the FCC in 2003. Ironically, it was Hollywood that saved Anschutz.

As a friend of his told Fortune, Anschutz "has a latent interest in doing something significant in American Christianity. He is working deliberately and diligently on it."

Anschutz did not respond to Nerve's request for an interview, and he has given only a handful over the past few decades. This is not for lack of an opinion or a story to tell. A devout Presbyterian who grew up in Kansas, Anschutz is married with two daughters and a son. He inherited his father's land investment and oil exploration business, but didn't grow up wealthy; in fact, he gave up his plans to attend law school because the family business was failing.

Ironically, it was Hollywood that saved Anschutz. After discovering a major oil well in Wyoming, the well caught fire. Anschutz sought to hire Red Adair, the legendary oil well firefighter to put it out, but wasn't able to pay Adair's fee. Anschutz realized he could pay Adair — and make $100,000 on top of that — by selling the rights to the footage to Hollywood.

Having faced tough times before, Anschutz is probably not overly concerned about the fact that theater attendance was down six percent this year, even in an industry with thin profit margins. Earlier this month Regal reported a forty-three percent increase in fourth quarter profits, a windfall partly credited to another Anschutz venture, the holiday blockbuster and Christian allegory The Chronicles of Narnia: The Lion, the Witch and the Wardrobe. Narnia has grossed close to $300 million, a far cry from the first film Anschutz produced, 2002's Joshua. A depiction of the Second Coming, Joshua pulled in less than $1.5 million for its studio, Epiphany Films, a specialty label of Anschutz's proselytic-sounding Crusader Entertainment. While websites are usually maintained even for box office flops — 2003's Gigli, for instance — Joshua's site has been taken down, and its URL redirects visitors to the studio's new name, Bristol Bay.

To some, redirection might be an appropriate metaphor for Anschutz's entire enterprise, which they fear is all about bringing God and conservatism to Hollywood under a more secular and apolitical guise. Or, as Joshua co-producer Bob Beltz told Christianity Today in 2002, "We wanted something that we thought would have more of a mainstream impact, that would expose unchurched people to the person of Christ in a way that they might walk out of the theater saying, 'Is it possible that Jesus could really be that wonderful?'"

Some have speculated that Narnia might be what Anschutz's friend meant by the "significant" contribution the media mogul wants to make: using his wealth to buy a place for evangelicals in Hollywood. The film's distributor, Disney, initially Redemption might be an appropriate metaphor for Anschutz's entire enterprise.

wasn't interested in Narnia. Gradually, Disney began to realize the Christian allegory's potential appeal among evangelicals, who demonstrated their box-office clout with The Passion of the Christ.

Anschutz isn't just blurring religious and secular lines with his film, but taking advantage of a softened divide between production and exhibition. In the early days of Hollywood, film studios dominated the exhibition business, obligating independent theater owners to accept bad films in exchange for the right to play good ones. In 1948, the federal government issued the Paramount Consent Decree, forcing the major studios to divest their theater holdings. Recent theater mergers, such as the consolidation of AMC and Loews (the number two and number three chains, respectively) must pass antitrust scrutiny. AMC/Loews, whose merger closed in January, was forced to sell off theaters in key markets such as Boston and San Francisco last year to avoid creating a monopoly.

"In the 1970s and 1980s, exhibition overbuilt [too many expensive theaters] in shopping centers. The centers declined in value while the rents did not," says Handler. "Then in the 1990s most of the exhibition houses sought bankruptcy. Many emerged from bankruptcy under aegis not of common ownership but of common investment."

Instead of buying United Artists, Edwards, and Regal Cinema outright, Anschutz avoided antitrust concerns by acquiring their debt, Handler explains. Regal already has a distribution monopoly in many areas of the country, and Anschutz's power extends beyond Regal to joint ventures he has formed with his competitors. His partner, Oaktree Capital Management, is financing Sundance's new art-house chain. Instead of selling off pieces of Regal Cinemas' overbuilt empire, Anschutz launched The 2wenty, twenty minutes of pre-show advertising that launched with a free ad for the military, Enduring Freedom: The Opening Chapter. In 2004, Anschutz merged his pre-show advertising business with AMC's and Cinemark's. The result was National Cinemedia, a company that now runs its ads on more than half of the nation's screens, and whose president is a former co-chairman of Regal Entertainment Group.

Some viewers have sued the theater chains that run the ads, alleging that delaying the start of movie trailers until twenty minutes past the posted show time constitutes false advertising. But the ads aren't going away. Cinema advertising is an increasingly lucrative source of revenue, with sales up forty-eight percent in 2004. The theaters that haven't succumbed to the trend Anschutz started are having trouble surviving, says Jason Thompson, director of Captive Motion Picture Audience of America, an organization that protests theater advertising.

Where advertising and programming were once left to theater managers, Anschutz now has centralized control of every Regal Theater through its proprietary Digital Content Network. Anschutz has also bought up television ad time and billboards for his "For a Better Life" campaign, which emphasizes values such as "faith" and "integrity," sometimes promoting them with Disney characters such as Kermit the Frog and Shrek. While the campaign is not explicitly religious, it does offer unsolicited moral advice to movie patrons at Regal's 6,000 screens. The ads were produced by Bonneville Communications, a Salt Lake City agency that produces ads for the Mormon Church.

In 2005, PG-rated films outperformed R-rated films in the theater for the first time in two decades. Conservatives have touted weak theater attendance as proof that the heartland isn't interested in Hollywood's As a financial backer of Ray, Anschutz reportedly insisted on altering the details of subject Ray Charles' life, downplaying his drug use and womanizing to obtain a PG-13 rating.

licentiousness and liberal politics. The Dove Foundation, non-profit advocates of "wholesome family entertainment", published a study showing that G-rated movies are eleven times more profitable than R-rated flicks. Indeed: as a co-producer and financial backer of Oscar contender Ray, Anschutz reportedly insisted on altering the details of subject Ray Charles' life, downplaying his drug use and womanizing to obtain a PG-13 rating.

Although Hollywood didn't heed the Dove Foundation's advice in 2005 — the key Oscar nominations were all low-grossing films that are very political — studios have begun looking into releasing PG versions of their R-rated fare, an innovation made possible by the advent of digital cinema. The double release would allow theaters to play the cleaner version during more lucrative screening times earlier in the day, and the director's cut later on.

What's good for the theater lobby isn't necessarily good for those of us who don't want our entertainment censored. Yet there is no shortage of screenwriters willing to lend Hollywood's product a cleaner sensibility. In December, the Atlantic Monthly reported on Christian screenwriting school Act One, whose faculty includes producers and writers from mainstream shows like Buffy the Vampire Slayer and That '70s Show. In 2004, conservatives launched the Liberty Film Festival; last October the festival included a panel discussion titled, "Was Communism a Threat to Hollywood?"

Perhaps the more pressing question: is Hollywood ready to compensate exhibitors by eschewing edgy politics for movies with a built-in audience? A sequel — or, more accurately, prequel — to The Passion of the Christ is rumored. New Line Cinema is producing The Nativity, a film based on the life of Mary and Joseph, directed by Catherine Hardwicke (Thirteen, Lords of Dogtown). The End of the Spear tells the story of five missionaries whose families forgive the South American tribe that killed them.

Fears of a boycott of one of the year's most eagerly anticipated releases, The Da Vinci Code, has Sony Pictures mounting a public relations campaign among evangelicals and Catholics. Madea's Family Reunion, which recently opened at the top of the box office, is a comedy about an African-American Christian fundamentalist family, whose evangelical producer Tyler Perry has, according to the L.A. Times, helped sell studio heads on the African-American Christian film market. Besides working on the Narnia franchise, Anschutz's Walden Media is releasing Amazing Grace, a biopic of the Christian revivalist Wilbur Wilberforce.

Anschutz may well see himself as someone like Wilberforce, the wealthy merchant's son whose embrace of evangelical Christianity led him to fight to abolish the British slave trade. Wilberforce, however, was open about his intentions. Anschutz may better resemble another openly conservative Presbyterian, one who acquired his own vertically integrated empire of newspapers, film studios, and television stations years before anyone realized he would turn those media outlets into his personal political mouthpiece. That man was Rupert Murdoch.

[John Simkin]

Prescott claims he visited Anschutz to discuss William Wilberforce. Prescott represents the same constituency as Wilberforce and sees himself as some sort of expert on the subject. It is true that Anschutz is currently involved in producing a film on Wilberforce. Anschutz, a right-wing conservative, will no doubt be stressing the role that rich white men played in bringing slavery to an end. I suppose Prescott goes along with this false interpretation of the past.

Maybe Prescott discussed with Anschutz his views on homosexuality. Over the last few years Anschutz has spent large sums of money on campaigning against gay rights. Another subject Anschutz feels strongly about is creationism and intelligent design. It is possible that with this way out views he might be considering sponsoring a City Technology College in Hull.

Maybe Prescott was discussing how to make money from owning a company in financial trouble. For example, Anschutz used to run Quest Communications. He then showed Kenneth Lay of Enron how to falsely inflate profit reports before selling your shares in the company. Anschutz kept out of prison by donating millions to charity.

Anschutz is very concerned about moral issues. He is very much against sexual content in movies, the taking of soft drugs and gay rights. However, he has never showed much interest in gambling before. This is a new venture instigated by his business partner, Sol Kerzner. The media have had very little to say about Kerzner but he has an interesting background. Kerner is a white South African who made his fortune from Sun City. During 1985, Kerzner's Sun City, South Africa resort was the topic of anti-Apartheid rock album titled Sun City by a group of rock musicians calling themselves Artists United Against Apartheid.

Kerzner then got involved in gambling. He owns the Mohegan Sun casino located in Uncasville, Connecticut. Kerzner has been investigated for corruption a number of times, none of which have resulted in a conviction. Like Anschutz, he knows the politicians you need to keep happy.

Simon Jenkins interviewed Sol Kerzner a few months ago. Kerzner admitted that his investment in the Dome depended on winning a casino licence.

It is estimated that Kerzner, Anschutz and others wanting to win contracts to open casinos in the UK, have spent over $100m on a campaign to open-up gambling in the country. Blair’s government was targeted as “the soft moral underbelly of Europe”. The industry is rightly barred from most European countries.

Despite pressure from Blair and Prescott, the Home Office refused to introduce new gambling regulations. Therefore, Blair had the good idea to move gambling legislation from the Home Office to the Culture Department. This was very convenient as Tessa Jowell, the minister concerned, was married to David Mills, a gambling political lobbyist. It was probably Mills who arranged for Kerzner and Anschutz to meet Jowell, Richard Caborn (minister of gambling) and Gideon Hoffman, head of Whitehall’s gambling division.

One of the reasons that people like Kerzner and Anschutz are willing to pay millions corrupting our politicians and civil servants concerns the way the contracts are organized. Each contract will give the company a total monopoly in the city or town that gets it. It is indeed a licence to print money. It is also the reason why organized crime is behind these businessmen who have so far been able to use their money to keep out of prison.

One of the features of this story is that the people making the most noise about Prescott are conservative politicians representing those gambling organizations that are in competition with Kerzner and Anschutz.

[John Simkin]

There are several claims in today’s newspapers that people close to Tony Blair are briefing against John Prescott. It is suggested that Blair will ditch Prescott before he goes on holiday next month. He will be replaced by one of the following: Alan Johnson, David Miliband, Jack Straw or Margaret Beckett. Ideally he would like the first two but that will upset Gordon Brown, who sees both men as having the ability to deny him the premiership.

Prescott is also unlikely to go quietly. He is already saying off the record that he was only carrying out Blair’s orders when he did his deals with Philip Anschutz. According to Prescott, Blair became anxious when the government could not find a buyer of the £758m Millennium Dome when it closed in 2000. Blair saw the dome as a symbol of his premiership and a beacon for the redevelopment of London. As Lord James, the dome chairman, pointed out, this became a crisis when it was discovered in October, 2000, that according to the original contract, if it was not sold by November, 2000, it would have to be demolished. Blair was particularly concerned about the images of the dome being pulled down.

Prescott was ordered to use any means at his disposal to sell the dome. He did this by doing a deal with Philip Anschutz. It was the most appalling deal possible. The £758m dome was given away for nothing. His company, AEG, would turn the site into a sports and entertainment complex. The government claimed victory by arguing that they would get a share of any future profits in the venture. AEG also promised to invest £300m on developing the site. This included the building of 10,000 homes and the creation of 24,000 jobs. This deal was eventually signed in May 2002.

What the public was not told about was that Prescott had promised Anschutz and his business partner, Sol Kerzner, that London would win the 2012 Olympics bid. This would draw large crowds to the dome. As a result of this promise, Blair had to do everything possible in order to get the Olympics. It is possible that Blair was forced to resort to illegal methods in order to obtain the 2012 Olympics. (I am sure the French will have a lot to say about this over the next few years.)

The second promise involved passing a law that would allow the building of “supercasinos” in Britain. The Home Office would not do as it was told and so the new gambling bill was given to Tessa Jowell at the Department of Culture, Media and Sport (DCMS). In July, 2003, AEG had its first meeting with Richard Caborn, the junior minister at DCMS, involved in drafting this new gambling bill. According to the minutes of the meeting, AEG said it was their intention to build a massive Las Vegas style casino next to the dome. However, the problem was that this kind of casino was banned in the UK, as it is in most of Europe.

A few weeks later, Lord McIntosh, another junior minister at DCMS, wrote a memo that said: “The deputy prime minister’s office are suggesting a further meeting with AEG. The important thing that AEG needs to hear is high-level confirmation of the government’s commitment to the gambling reform programme.”

Another DCMS briefing note on 20 November 2003 pointed out that Sol Kerzner had now joined forces with AEG and that he was insisting on being given permission to build a “super casino” in London. Two months later Prescott had a meeting with Anschutz in London. A memo sent to Lord McIntosh stated: “You should be aware that John Prescott recently met Phil Anschutz… the casino is a key plank in AEG’s long-term business strategy.”

In July 2004 Prescott flew to Los Angeles to have another meeting with Anschutz (at a cost to the taxpayer of £8,868). The official reason given for the trip was “various regeneration, development and new urbanism site visits.”

In October, 2004, Tessa Jowell published the proposed new legislation. It announced the granting of an unlimited number of licences to build and run super casinos. It was thought that if this happened, people would not notice the possible link between the selling of the dome and the building of a super casino in London. Understandably, this proposal caused a great deal of concern. Under extreme pressure, Jowell offered to limit it to 10 super casinos.

This became an issue during the run-up to the last general election and Jowell was forced to promise that she would cut the number to one super casino. In May 2005, a short-list of 8 locations, including the dome site, was announced. This meant that several bidders were not on the list. This included Thames Gateway South Essex, who wanted to build a super casino in Southend. Rob Tinlin, chief executive of Southend Council, claimed that John Prescott had been using his influence to get the AEG bid on the short-list.

The super-casino licence will be announced later this year. If it is granted to AEG everyone will believe it is as a result of government corruption. If it is not, AEG is likely to reveal details of promises that have been made by government ministers. It will also refuse to invest in the building of the homes on the site. Anschutz might even announce that it was him and not Lord Sainsbury who provided the £2 million loan to the Labour Party. Tony Blair and John Prescott have got themselves into a lose-lose situation.

[John Simkin]

It has been revealed today that Scotland Yard has purchased Guidance Software as part of the investigation of the loans for honours scandal. This software, that was during the investigation of Jack Abramoff, the Republican lobbyist, searches computer hard drives for deleted emails. It is possible that today’s arrest of Lord Levy is connected to the use of this software. Isn’t technology great?

Lord Vevy Lord Levy made his money in the 1960s and 1970s, managing singers like Alvin Stardust and Chris Rea. He has made his money since 1997 by managing Tony Blair.

[John Simkin]

The arrest of Tony Blair’s chief fundraiser yesterday brings the scandal closer to 10 Downing Street. However, there is a long way to go and it is still possible that Scotland Yard will not prosecute Levy.

I am informed that one of the four businessmen (David Gerrard, Gulum Noon, Barry Townsley, Chai Patel) has admitted that Levy offered him an honour in exchange for money. I suspect it is Gulum Noon who appears to be the one who is talking. He gave an interview to the BBC earlier this week and claimed that Levy contacted him the day after his submitted his peerage application form. Levy told him to get the form back and remove the fact that he had given the Labour Party a £250,000 loan. Who tipped off Levy about this application form? Why was it necessary to remove this information?

Will they arrest Lord Levy on the testimony of one individual? Probably, not, as it will be argued it is one man’s word against another. As I reported yesterday, the investigation team are seizing computer systems and checking for deleted emails. However, I am informed that Lord Levy is very careful in his use of emails.

We also have the Des Smith's confession that he gave to an undercover reporter about obtaining honours in return for funding city technology schools. According to one source: "Smith's admission is prima facie evidence of what we all know. If you wanted a peerage, a seven-figure loan to the Labour party and the same again donated to a city academy obtained it. Levy induced it. He covertly procured the money for the Labour party. The public donations were the cover story. Take the case of Sir David Garrard, a city academy backer whose £2 million loan to the party was followed by the Prime Minister nominating him as a working peer. Was it really a coincidence? If it was nothing to be ashamed of, why did they tell donors not to openly donate the cash as they intended, but to lend it secretly? If it was honest, why did they mislead the Lord's Appointment Commission about the true nature of the financial relationship between Blair's nominees and the Labour Party?"

We also have the evidence of the £14m secret loans to the Labour Party that Blair and Levy knew about. However, this information was not given to the Labour Party treasurer and consequently was not known about by other senior figures in the party.

David Blunkett condemned the police action yesterday and suggested that it was a “theatrical” act. He also asked why no Tory fundraisers were arrested. I am sure they will be. However, one can understand why the police are currently investigating the present administration.

Picture competition: What is Levy saying to Blair?

[John Simkin]

Deputy assistant commissioner John Yates told the Commons Public Administration committee in private for just over an hour today. He pointed out that the police had so far interviewed 48 people, 13 under caution. Three Labour Party donars have refused to answer questions. It is expected they will be arrested in order to get them to talk.

Mr Yates had refused to say whether Mr Blair would be interviewed, said Mr Wright, but told the MPs the police "will go wherever the investigation leads". He added that "the police had stressed that the inquiry was covering both the main parties, and said more Conservatives had been interviewed than Labour people."

Lord Levy is currently being questioned again by police.

[Jonathan Freedland]

Until now, New Labour's political scandals have remained just that - political. Peter Mandelson's run-ins over his home loan or the Hindujas' passports may have cost him his job - twice - but they stayed within the sphere of politics. Battle was conducted in the Commons, on the front pages and in the TV studios - not in a police station. Once the word "arrest" is uttered, a scandal enters a new, and much graver, category.

Yesterday's Guardian story revealing that Scotland Yard had embarked on a trawl for all deleted emails relating to gifts and loans to Labour will have come as a warning - an indication that the police were not about to let this go quietly. The fact that Levy was arrested - rather than merely questioned informally - is a similar sign. In the US these would be the hallmarks of an aggressive prosecutor, bent on securing convictions. As it is, the theatrics of an arrest suggest someone in the Met has taken a leaf out of the US book, which stipulates that even the highest and mightiest suspects should be treated as if they were lowlifes. Alleged white-collar criminals on Wall Street know they will always be led out in handcuffs; yesterday's events have something of that aura.

For every Downing Street grimace there will be an opposition smile. Sleaze did for the Major government a decade ago; most Tories believed it would be spin or incompetence that would hang the Blair government. Now they must be crossing their fingers, hoping that allegations of corruption will work their destructive power for a second time.

But, truth be told, there will be some muted cheering too. Michael Levy has no shortage of enemies within the Labour party. Some dislike his circumvention of the traditional fundraising routes; others see him as the embodiment of a change in Labour culture which they despise. In the media, there has been plenty of snobbery hurled at him by those who regard him as nothing more than a glorified accountant and dislike his larger-than-life, Hackney-boy-made-good persona. In the routine descriptions of him as a "flamboyant north London businessman" many in Britain's Jewish community have long detected old-fashioned prejudice.

Levy can surely look after himself, but his critics should bear two things in mind. First, Levy has been a convenient personification of what is, in fact, a wider phenomenon: a New Labour weakness for corporate power. Whether it was the willingness to take Bernie Ecclestone's cash or the sweet deals granted in the name of the public finance initiative, this Labour government has displayed a wide-eyed eagerness to cosy up to big money that has no precedent. We've seen it again in John Prescott's desperation to make nice with the US casino tycoon Philip Anschutz. This is a defect of New Labour itself; it is lazy to make Levy the scapegoat for it.

Similarly, if Labour has been in the wrong over loans-for-peerages, it is a delusion to think that the blame should rest solely with Levy. He has reportedly warned that he will not play the fall guy; if he is taken down, he will tell the truth of others' roles. Put succinctly, there is no way that Lord Levy could have been selling honours without the blessing of his boss, the prime minister.

It is an old tradition in British politics, going back at least to Tudor times, to refrain from accusing the king, preferring to charge his "evil ministers" instead. Those close to the prime minister will hope that doctrine still holds. But it may not - and it should not.

http://www.guardian.co.uk/comment/story/0,,1818988,00.html

[John Simkin]

For every Downing Street grimace there will be an opposition smile. Sleaze did for the Major government a decade ago; most Tories believed it would be spin or incompetence that would hang the Blair government. Now they must be crossing their fingers, hoping that allegations of corruption will work their destructive power for a second time.

But, truth be told, there will be some muted cheering too. Michael Levy has no shortage of enemies within the Labour party. Some dislike his circumvention of the traditional fundraising routes; others see him as the embodiment of a change in Labour culture which they despise. In the media, there has been plenty of snobbery hurled at him by those who regard him as nothing more than a glorified accountant and dislike his larger-than-life, Hackney-boy-made-good persona. In the routine descriptions of him as a "flamboyant north London businessman" many in Britain's Jewish community have long detected old-fashioned prejudice.

It is possible that there is some old fashioned Jewish prejudice at work. However, you need to look back at the history of Levy’s relationship with Blair.

In March, 1994, Blair was introduced to Michael Levy at a dinner party at the Israeli embassy in London. Levy was a retired businessman who now spent his time raising money for Jewish pressure-groups. After this meeting, Levy acquired a new job, raising money for Tony Blair. According to Robin Ramsay (The Rise of New Labour, page 64), Levy raised over £7 million for Blair).

In an article by John Lloyd published in the New Statesman on 27th February, 1998, the main suppliers of this money included Sir Emmanuel Kaye (Kaye Enterprises), Sir Trevor Chin (Lex Garages), Maurice Hatter (IMO Precision Group) and Maurice Hatter (Sage Software).

In April, 1994, John Smith died and Blair won the leadership contest. With Levy’s money, Blair appointed Jonathan Powell as his Chief of Staff. A retired diplomat, Powell was not a member of the Labour Party. In fact, his brother, Charles Powell, was Margaret Thatcher's right hand man.

Alastair Campbell was the other man brought into his private office with Levy’s money. Powell and Campbell were later to become key figures in the later invasion of Iraq. It is of course a pure coincidence that this decision reflected the thinking of Israel’s government.

[Polly Toynbee]

The arrest of Lord Levy, the prime minister's swag collector, sends a tremor through the Labour party. Could this be the way the Blair era ends? The rising tide of this scandal may yet drown him, if no other dangerous flotsam in a tide of troubles sinks him first. But if this is to be his nemesis, how tragically unnecessary.

Many blame Tony Blair's bedazzlement with business, money and the glint of markets. Unfair, I suspect. Put this into the context of the many countries mired by this same conundrum: how do you pay for democracy when voters despise politics and won't join parties? To equate dubious party fundraising with "corruption" misleads the public into thinking this is about personal gain. But when a pair of undeclared cowboy boots can make the front page as an outrageous bribe, British politics is pretty clean. As for party donations for peerages, there is probably no prime minister or opposition leader who has not done it. That cuts no ice with police enforcing the 1925 Honours (Prevention of Abuses) Act - but it hardly makes Blair exceptionally venal.

Party fundraising did for Chancellor Kohl, the man who united East and West Germany at great political and financial risk; he deserved a better end than to sink under such a scandal. President Chirac's tainted past also concerns the collecting of money for politics. As for the US, the stink of cash-raising in its electoral process makes it barely a democracy at all.

Far too late, Blair now seeks a cross-party consensus with an inquiry lead by Sir Hayden Phillips. All parties are up to their eyes in unsavoury fundraising and questionable peerages. The Lib Dems' biggest donor faces 53 counts of forgery and perjury, while both Labour and Tories took secret loans.

But agreement looks unlikely. The Tories' shamelessly disingenuous proposal to cap all donations from individuals, companies or unions at £50,000 is cunningly designed to destroy Labour while leaving their own funds untouched. (They have hosts of rich members, Labour has few.) The unions this week gave indignant evidence that the cap would cut their annual contribution to Labour from £8m to £800,000.

Meanwhile the Tories glide along on a sea of money: in the year before the last election, 271 Tory constituencies raised £17m that they were free to spend alongside the official cap of £20m for the election itself. Wobbly Labour marginals watch anxiously as money is gushing in to newly selected Tory candidates buying a long, lavish lead-in to the next election. One marginal Labour MP watching his opponent says glumly: "To be frank, even if we had money for a big campaign, I'm not sure what we'd say. If we knocked on doors, what exactly would we ask people to join Labour for? Um, public service reform, nuclear power or what?" Labour's deep malaise - 10 points behind, and adrift until there is a change at the top - makes fundraising near impossible.

http://www.guardian.co.uk/commentisfree/st...1820256,00.html

[John Simkin]

The arrest of Lord Levy, the prime minister's swag collector, sends a tremor through the Labour party. Could this be the way the Blair era ends? The rising tide of this scandal may yet drown him, if no other dangerous flotsam in a tide of troubles sinks him first. But if this is to be his nemesis, how tragically unnecessary.

Many blame Tony Blair's bedazzlement with business, money and the glint of markets. Unfair, I suspect. Put this into the context of the many countries mired by this same conundrum: how do you pay for democracy when voters despise politics and won't join parties? To equate dubious party fundraising with "corruption" misleads the public into thinking this is about personal gain. But when a pair of undeclared cowboy boots can make the front page as an outrageous bribe, British politics is pretty clean. As for party donations for peerages, there is probably no prime minister or opposition leader who has not done it. That cuts no ice with police enforcing the 1925 Honours (Prevention of Abuses) Act - but it hardly makes Blair exceptionally venal.

Party fundraising did for Chancellor Kohl, the man who united East and West Germany at great political and financial risk; he deserved a better end than to sink under such a scandal. President Chirac's tainted past also concerns the collecting of money for politics. As for the US, the stink of cash-raising in its electoral process makes it barely a democracy at all.

Far too late, Blair now seeks a cross-party consensus with an inquiry lead by Sir Hayden Phillips. All parties are up to their eyes in unsavoury fundraising and questionable peerages. The Lib Dems' biggest donor faces 53 counts of forgery and perjury, while both Labour and Tories took secret loans.

But agreement looks unlikely. The Tories' shamelessly disingenuous proposal to cap all donations from individuals, companies or unions at £50,000 is cunningly designed to destroy Labour while leaving their own funds untouched. (They have hosts of rich members, Labour has few.) The unions this week gave indignant evidence that the cap would cut their annual contribution to Labour from £8m to £800,000.

Meanwhile the Tories glide along on a sea of money: in the year before the last election, 271 Tory constituencies raised £17m that they were free to spend alongside the official cap of £20m for the election itself. Wobbly Labour marginals watch anxiously as money is gushing in to newly selected Tory candidates buying a long, lavish lead-in to the next election. One marginal Labour MP watching his opponent says glumly: "To be frank, even if we had money for a big campaign, I'm not sure what we'd say. If we knocked on doors, what exactly would we ask people to join Labour for? Um, public service reform, nuclear power or what?" Labour's deep malaise - 10 points behind, and adrift until there is a change at the top - makes fundraising near impossible.

Polly, like Jonathan Freedland yesterday, you are attempting to convince the public that this problem is about loans for honours. In reality, it is only a partial exposure of Blair's corruption. As I said on 20th May, 2006, this is Blair's Watergate. In the sense that Nixon was forced to resign but the full account of his crimes were never revealed to the public.

Why do you think Lord Sainsbury first denied that he had given a £2m loan to the Labour Party and later claimed he "forgot" he had done so (it must be nice to be so rich that you forget giving a £2m loan). Is it possible he was initially telling the truth and this loan came from someone else whose name Tony Blair wished to keep from the public. Is it possible that this loan came from someone involved in the arms or gambling industry?

The real scandal is not about gifts or loans for political honours. As you say, this has been going on for a long time. The real scandal, which the mainstream media has been reluctant to tackle, is the use of party donations to shape government policy. This is what explains the belief in the current income-tax rates, the invasion of Iraq and the dishing out of PFI contracts to those who have given financial support to the Labour Party.

It is also about personal corruption. Why do you think HarperCollins (a company owned by Rupert Murdoch) paid Tony Blair £3.5m for his proposed memoirs? Could it be for the same reason he gave similar contracts to Margaret Thatcher and John Major?

It is not enough to say that the New Labour Party is only doing the same as the Conservatives when they were in power (a public opinion poll published today indicates that people believe that Blair’s government is more corrupt than that of the last Conservative government). Most people in the UK accept that the Tories are corrupt, however, we expect better of Labour politicians.

Nor is it convincing to point out “Lib Dems' biggest donor faces 53 counts of forgery and perjury”. This of course has nothing to do with his donation to the Lib Dems. You seem to have forgotten that the Lib Dems do not hold power in the UK. You must be pretty daft to give money to the Lib Dems in order to win PFI contracts or to be treated leniently by the courts.

[John Simkin]

Very good article by Anthony Barnett on this subject here:

http://www.opendemocracy.net/openblogs/blo....html&smm=y

It is especially rare in British politics. After many years of getting away with it, from the early home loan scandal of his spin doctor Peter Mandelson, to dodgy dossiers and super casinos that seemed to leave no trace on their Godfather, Tony Blair may finally be brought down by the arrest of his “brother” and bag-man, his “Lord cash-point” and confidant: Michael Levy.

The Prime Minister’s resignation has been long overdue for larger reasons, such as getting Iraq wrong. But the weird scandal of the “sale of peerages” is in its way a perfect symbol of the false modernisation of the Blair project, hence the justice of this moment.

It deserves to be Blair’s downfall. He ruled by image rather than substance. In 1997 he had three glittering faces: trust, competence and modernity. He projected himself as trustworthy – this went definitively with the Iraq war. He projected himself as efficient – only recently did this unravel with a series of departmental cock-ups, now it appears his closest mates can’t even sell a seat in the legislature with the necessary degree of competence.

But of the three the most important was the ‘modern’. The zeitgeist merchant of our time, Blair sold himself as the personification of progress.

However, inside his ‘third way’ lurked the glamour of backwardness, the hydra-headed inner demon of the United Kingdom. Blair’s reckless attraction to war can be seen as a demonstration of its fatal lure. Now a sordid fascination with the value of ermine and garters reveals him as yet another merchant of the old regime.

Britain is a strange country. Its heritage industry is world famous yet it is also fiercely capitalist and open to the world. In this context it was the Labour Party’s chosen role be the party of the people and especially the working-man, an arsenal of hope, progress and opportunity. Instead, by the 1980s it became a repository of hopelessness, regression and a deadening attachment to past failure – in short, of conservatism. Meanwhile, under Thatcher, the Tories became the apparent re-makers, the true radicals and the party of the wider world.

Tony Blair turned the tables on the Tories after 18 years in opposition. It was sexy and it was mesmerising - presented with shirt-sleeve incantations of sincerity, alongside a formidable will to power that fed the longing of a rapacious press.

Blair borrowed the Labour Party (which, desperate for power, returned the compliment), took out shares in globalisation and rented a new (for Britain) democratic agenda, not because he believed in democracy for Britain but because it was the modern thing at the time.

This was the image he mainlined and made him high. Years after he became Prime Minister, any mistake for which he might have to answer for, or any problem for which he might have to take responsibility, was turned away by the next initiative and headline. We were told, in effect, that it was not a matter of what was right or wrong so much as what was the future. Globalisation flowed through his veins. Next week’s headlines was already a glint in his eyes, and being shaped between his fingers and the phone. “It’s the future, stupid.” This was Blair’s case. If you were against it, then you were the past, and whether or not you were right was irrelevant. In this way, one of the most constantly moralising of men placed himself beyond questions of right or wrong.

It made him appear as the most contemporary of Prime Ministers. His style, his ‘openness’, his guitar, his media savvy grin, his fluent French and his ease with a Clinton or a Bush, his passion for ‘hard choices’, his simultaneous attraction to an enlarged Europe as well as a global America, all this suggested a man who had absorbed future-shock and was on the cusp of globalisation.

Indeed, should the more advanced occupants of another star cluster touch down tomorrow on globe-earth, Blair would be the first to elbow his way forward from the small fry of the G8 to hug the newcomers and declare that mere globalisation was yesterday and we all have to think galactic now.

The sale of peerages helps us see his commitment to ‘the modern’ in the true light of its opportunism. It is not a dedication to contemporary values such as transparency, accountability, freedom and democracy – any such appearance was smoke, mirrors and a lawyer’s sincerity. (It took me in for a while, I admit, when desire got the better of my judgement.) Blair was modern only in a cynical carelessness for tradition and an empty craving for money.

For what could be more regressive, rotten and plain out-of-date than selling peerages? And they were not even the real thing, at least Lloyd George sold hereditary earldoms not montage life-peerages!

Which assumes that the charges are true. They are. Not to be proven in court? Perhaps. But there are credibly sourced rumours in London that lists of candidates for the Lords were drawn up for Blair in 10 Downing Street and he himself wrote personal judgements upon them as Levy ran a tariff for their acquisition, any trace of which on his hard-drives will be prima facia evidence of a crime. Who can doubt that there was a Blair machinery of sleaze?

One of Blair’s closest Cabinet colleagues is Tessa Jowell. Her husband, David Mills, represented the then Italian Prime Minister Berlusconi, whose own colleagues have Mafia connections and have been found guilty of fraud. This is not a movie. While Jowell and Mills were still together Blair went on holiday with Berlusconi. If a compliant press lets you get away with this in public why not raise your influence in private by the sale of peerages?

What the scandal illuminates is how Blair is no more the man of future than a Mafiosi who goes into on-line porn. Unlike his backward colleagues, we are told, he alone has the determination to lead old-fashioned Britain to its necessary destination with the global market. The media seems desperate to save him on this score (perish the thought that this might have anything to do with its ownership). In studios and op-eds the phrases roll: they all do it; there is no alternative; the money must come from somewhere; the Tories and Liberal Democrats are just the same; it’s life; there is no alternative.

Not so. There does not need to be a House of Lords. The scandal is not caused by the inevitability of people being on the make, it is a matter of democracy. After 1997 Blair had the opportunity, set out in his Party’s programme, to create a decisively (not completely) more honest political system, one with a democratic second chamber and a fairer electoral system.

Instead, he chose to stay dancing with the past, the sordid, grubby, cynical, cliquish, contemptible traditions of old England’s ‘thing’. He embraced its corruption, he belongs in its dustbin. Mr Twenty-First Century Zeitgeist will go down with “peerages, sale-of” in his Wiki and students will ask themselves “what were peerages”?

A Prime Minister that cannot be trusted and is not particularly competent is not unusual. But one that takes a country backwards in the name of progress is unbearable. This is the deeper crime he has perpetuated on his country.

[John Simkin]

Tony Blair yesterday claimed he had done nothing wrong. He said he could not see why Labour Party supporters should not be given seats in the House of Lords: “There are places in the House of Lords that are reserved for party nominees.” Indeed there are and no one has complained when people who have given long service to their party eventually find themselves in the House of Lords. The problem has arisen because people who have not been long-term supporters of the Labour Party who have been nominated for peerages or other honours. In fact, in most cases their political history shows them supporting the Conservative Party. It would appear that the Labour Party only became popular with these wealthy businessmen when Tony Blair became prime minister.

The problems for Blair arose when the committee set-up to oversee nominations to the House of Lords began rejecting them because it appeared that they had “bought” their honours. This is when Blair changed strategy. Lord Levy then asked his friends to supply loans rather than donations. He also told them not to declare these loans to the committee. The idea behind this was that the committee would not see the link between the loans and the nomination. The problem for Blair and Levy was that someone leaked information disclosing these loans to the committee. Once that had happened, they had no option but to reject them.

The initial plan was for these loans to become changed to donations after they had obtained their peerages. The recent publicity has destroyed this plan. It will be revealed later this week that the Labour Party has debts of £27m. It has little chance now of persuading the rich to pay off these debts. If it was a private company, the Labour Party would be declared bankrupt.

The government has of course now become converted to state funding of political parties. It offers the only way out of the mess it has got itself into. This should be resisted by taxpayers. Political parties should be funded by its members. In return for this, members should have control of its party. At the moment, a few rich people who are willing to donate money (and those who control the media) decide on party policy. This helps to explain why political parties are so keen on low-rates of income tax on the rich, etc. Once parties are controlled by all its members, the policies will reflect the ideology of the people paying their political subscriptions. This will result in an increase in membership and greater participation in the political process.

[John Simkin]

The real Blair scandal involves the money given to the Labour Party to change government policy or to get lucrative PFI contracts. It must not be forgotten that it was Lord Levy who organized the Bernie Ecclestone donation. Soon afterwards Blair announced that sport was being exempted from the ban on tobacco advertising.

It merged over the weekend that Allan Johnson had a meeting with Adrian Beecroft about donating £2m to Pickering High School. Beecroft duly obliged. However, he did not get a peerage for this donation. I wonder if the donation had anything to do with the fact that Beecroft’s company, Apax Partners, was facing the possibility of a DFI (Department of Trade and Industry) investigation at the time. It never happened of course. At the time of the meeting, Johnson was a minister at the DFI.

Then there is the case of Patricia Hewett, the Health Secretary. She had several meetings with David Samworth (the owner of the company which makes Ginsters pastries). Samworth was concerned about Hewitt imposing advertising and health warnings on his products. This never happened. Maybe it was because Samworth decided to sponsor the New College Academy in Leicester.

Then there is the case of the junior health minister, Stephen Ladyman. Before becoming an MP he worked for Pfizer Pharmaceuticals. In October 2004, Ladyman negotiated a new pricing agreement for prescription drugs on the National Health Service with the Association of the British Pharmaceutical Industry (ABPI). The ABPI is dominated by pharmaceutical giants like Pfizer. Complaints were made about this negotiated agreement and the Office of Fair Trading subsequently launched an investigation.

Ladyman used his connections with Pfizer to persuade the company to give £1m to the Marlowe Academy in Kent. Ladyman insists there is no connection between these two deals.

Phil Hope, MP for Corby, a junior minister under John Prescott (1999-2005) was involved in granting permission for the Bee Bee Developments to build thousands of homes in Corby. He also persuaded the same company to part-sponsor the Corby Community College.

It is not always government minister who are involved in setting up government contracts. Cherie Blair is a close friend of Harry Hyman of the Nexus Health Care Group. Hyman was trying to obtain NHS contracts. In a leaked email a senior civil servant in the Health Department wrote to Hyman: “I understand that you have recently met with Mrs Blair. Following that, she has asked if Paul Corrigan, as the prime minister’s senior policy advisor on health issues, could meet with you to discuss primary care.”

Harry Hyman later thanked Jonthan Metliss, a fellow director of Nexus, and partner of Cherie Blair’s close friend, Martha Greene, “for arranging through Martha the meeting with Professor Paul Corrigan.”

[John Simkin]

I believe this story goes to the heart of Blair’s corrupt administration. The main intention of Blair’s specialist schools (and the recent city academies) is to bring in money from the private sector to help fund education. On the surface it sounds a great idea. However, as Thatcher discovered, wealthy businessmen are unwilling to give money to help state education unless there is something in it for them. You will get the odd religious nutcase to put money into a city academy as long as they are allowed to teach creationism (as with the Middlesbrough City Academy). However, most will only entertain the idea if they can be given something in return. So far the concern has been the granting of honours. This is clearly part of the deal. Since 1997 city academy sponsors have received five knighthoods (Frank Lowe, David Garrard, Clive Bourne, Martin Arbib and Euan Harper) one CBE (Roger de Haan) and one OBE (Jack Petchey).

However, peerages, knighthoods, etc. have never been the main aspect of this corruption scandal. Rich businessmen don’t mind the odd title but what they are really interested in is government contracts. It is this aspect of city academy funding that journalists should be really investigating.

Report on the BBC News website:

http://news.bbc.co.uk/1/hi/uk_politics/4906504.stm

A head teacher who helped find sponsors for the government's flagship city academies programme has been arrested as part of a cash for honours probe.

Des Smith sparked a row earlier this year when he suggested donors would be given honours in exchange for funding.

He quit his post with the Specialist Schools and Academies Trust, which helps find sponsors, after the story.

Mr Smith, 60, was arrested in east London under the 1925 Honours (Prevention of Abuses) Act.

He is currently in custody at a London police station.

The Specialist Schools and Academies Trust helps the government recruit education sponsors. Set up in September 2005, its president is Lord Levy, Tony Blair's chief political fundraiser and close friend.

Mr Smith quit his post on the SATT council in January after admitting he had been "naive" when talking to a reporter posing as a potential donor's PR assistant.

He reportedly told the Sunday Times that "the prime minister's office would recommend someone like [the donor] for an OBE, a CBE or a knighthood".

After his resignation he told the Guardian he had "been shattered by the experience. I was naive, I shouldn't have said what I did. I'm desperately sorry".

Downing Street said at the time it was "nonsense to suggest that honours are awarded for giving money to an academy".

Mr Smith remains headmaster of the All Saints Catholic School and Technology College, Barking and Dagenham.

Local Labour MP Jon Cruddas told the BBC Mr Smith had greatly improved results at the school and should be judged on his "21 years as a significant local public servant".

"He is a fantastic head teacher," he added.

In a separate development, elections watchdog the Electoral Commission publishes a new draft code of conduct on reporting loans in the wake of discussions with the main political parties.

It says the parties agree to report any loan more than £5,000 - or more than £1,000 if the donor has given another amount that needed to be reported in that year.

The draft code says "this would apply whether or not the party regards the loan as having been made on commercial terms".

The cash-for-honours inquiry was originally launched in response to a complaint by Scottish and Welsh nationalist MPs that Labour had broken the law preventing the sale of honours such as peerages and knighthoods.

It has since been widened to cover the activities of other parties.

The investigation is being led by Deputy Assistant Commissioner John Yates, who has said he is prepared to widen the investigation to consider more general allegations of corruption.

It followed reports that the House of Lords Appointments Commission had blocked the appointment of four of Prime Minister Tony Blair's nominations for peerages - all wealthy businessmen who had made loans to Labour.

None was on the list of new working life peers when it was published on Monday. One Tory nominee - who had loaned the party £2m - also missed out on a seat in the upper house.

Mr Yates has already told MPs that he is prepared to widen the investigation to consider more general allegations of corruption.

The Specialist Schools and Academies Trust describes itself as the "leading national body for secondary education in England, part funded by the DfES (Education Department), delivering the government's Specialist Schools and Academies programme.

Anyone found guilty under the 1925 Honours (Prevention of Abuses) Act - designed to deal with those who both give and accept honours under inducement - could face imprisonment for up to two years or fined an unlimited amount.

The Act was introduced after the scandal of the early 1920s when David Lloyd George was offering peerages and lesser honours at a price.

It merged over the weekend that Allan Johnson had a meeting with Adrian Beecroft about donating £2m to Pickering High School. Beecroft duly obliged. However, he did not get a peerage for this donation. I wonder if the donation had anything to do with the fact that Beecroft’s company, Apax Partners, was facing the possibility of a DFI (Department of Trade and Industry) investigation at the time. It never happened of course. At the time of the meeting, Johnson was a minister at the DFI.

Then there is the case of Patricia Hewett, the Health Secretary. She had several meetings with David Samworth (the owner of the company which makes Ginsters pastries). Samworth was concerned about Hewitt imposing advertising and health warnings on his products. This never happened. Maybe it was because Samworth decided to sponsor the New College Academy in Leicester.

Then there is the case of the junior health minister, Stephen Ladyman. Before becoming an MP he worked for Pfizer Pharmaceuticals. In October 2004, Ladyman negotiated a new pricing agreement for prescription drugs on the National Health Service with the Association of the British Pharmaceutical Industry (ABPI). The ABPI is dominated by pharmaceutical giants like Pfizer. Complaints were made about this negotiated agreement and the Office of Fair Trading subsequently launched an investigation.

Ladyman used his connections with Pfizer to persuade the company to give £1m to the Marlowe Academy in Kent. Ladyman insists there is no connection between these two deals.

Phil Hope, MP for Corby, a junior minister under John Prescott (1999-2005) was involved in granting permission for the Bee Bee Developments to build thousands of homes in Corby. He also persuaded the same company to part-sponsor the Corby Community College.

It is no coincidence that there are so many examples of corruption connected to school funding. Lord Levy is president of New Labour's "Specialist Schools and Academies Trust". Unless they are religious nutcases (Sir Peter Vardy) who want these schools to teach creationism (Middlesbrough City Academy and Emmanuel City Technology College in Gateshead), the only ones willing to fund these schools are those who want political favours done. It is all part of the corrupt system installed by Tony Blair.

[Guest]

It is no coincidence that there are so many examples of corruption connected to school funding. Lord Levy is president of New Labour's "Specialist Schools and Academies Trust". Unless they are religious nutcases who want these schools to teach creationism (Middlesbrough City Academy), the only ones willing to fund these schools are those who want political favours done. It is all part of the corrupt system installed by Tony Blair.

I think it is also important to take stock of the smaller scale but much more widespread corruption in schools that has occurred since local financial management was introduced by the Education Reform Act 1988.

Failure to properly tender for services, misappropriation of school budgets through cronyism, ineffective auditing, lack of effective local authority control are all depressingly common features of many state schools.

Although we can scarcely blame Mr Blair for the ERA it is undeniable that he has created a climate where such practises are seen as the acceptable norm for the "charismatic leaders" who now lead schools.