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The Corruption of New Labour: Britain’s Watergate?


John Simkin
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You can see a video of Norman Baker discussing the death of Dr. David Kelly here:

http://video.google.com/videoplay?docid=4780290451650428491

Also see Tom Mangold's interview afterwards.

I found the Tom Mangold piece interesting. I was recently given a copy of a CIA document Of Moles and Molehunters: A Review of Counterintelligence Literature. It was written by retired top CIA official, Cleveland Cram, for the CIA's Center for the Study of Intelligence (CSI). Written in 1993 it was declassified in 2003.

Cram had been asked to investigate the leaks that were coming out of the CIA during the 1970s. He discovered that several journalists, including Tom Mangold, were receiving information from senior officers in the CIA. Some of this information was accurate but some was disinformation. In other words, journalists like Mangold were being used as CIA assets. These journalists are given exclusives but are also expected to write stories that help the CIA when they are in trouble. For example, Hal Hendrix won the Pulitzer Prize for journalism as a result of his reports on Cuba in 1962. However, it was later discovered that he was working for the CIA and ITT in the overthrow of Salvador Allende in 1973.

It is therefore understandable that Mangold should be used to rubbish your investigation. Interestingly, Mangold admits that the CIA was involved in the investigation of Kelly’s death. I expect he was not supposed to say that.

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I remember seeing Tony Blair's face on TV at the time the Kelly death first hit the headlines. It was the face of a man way out of his depth. He looked frightened and cowed - someone who saw little alternative than to enter deeper into the quagmire of lies, cover-up and complicity in murder set out for him by his masters.

David Shayler claims that Blair was an MI5 stooge since the 1980s, if not before. It probably began with a quite innocent commitment by Blair to "do something good for the country". In return for a political leg up the young Labour MP may have had to provide a few details to the spooks about some of his CND buddies. Nothing too excacting. But over the years, the price extracted for smoothing Blair's path to the top has become higher.

It has always been CIA policy to pick out young prospective leaders of left-wing political parties or trade unions. This started in the late 1940s when they gave help to Hugh Gaitskell and Dennis Healey. The CIA actually believed that the KGB had identified this policy and were responsible for the death of Gaitskell in 1963. James Angleton was convinced that the new leader, Harold Wilson, was a KGB agent.

This created a crisis in the CIA. Wilson was indeed elected and despite the efforts of the CIA to undermine his government, he refused to support US foreign policy by sending troops to Vietnam. He also did what he could to bring down racist but anti-communist governments in Rhodesia (now Zimbabwe). His domestic policy was also much too left-wing for the CIA (increased taxes on the rich, more spending on the welfare state, legislation to create more sexual and racial equality).

The constant attempts to undermine Wilson by the intelligence agencies (see Peter Wright’s Spycatcher) turned him paranoid and he eventually resigned in in 1976 to be replaced by James Callaghan who along with Dennis Healey quickly moved the party to the right (it was actually these two politicians who introduced monetarism, not Thatcher who was elected to power in 1979).

The same problem existed in the 1990s. It was clear that the British people had turned against its right-wing government. CIA loyalists like Healey had lost his position in the party. They needed someone else to help get to the top. The man they chose was Tony Blair. At the time he was advocating left-wing policies. For example, he was a member of CND.

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. Powell had been recruited into the CIA while studying for his Masters degree at the Massachusetts Institute of Technology. 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.

For the next three years Tony Blair and Gordon Brown made regular visits to the US. These visits were funded by CIA fronted organizations such as BAP and TUCETU (see below).

Powell was also a member of the CIA-fronted organization the British-American Project for a Successor Generation (BAP). Other members that became senior figures in Blair’s government were Peter Mandelson, Mo Mowlam, George Robertson, Chris Smith and Lady Elizabeth Symons.

Another CIA-front organization was the Trade Union Committee for European and Transatlantic Unity (TUCETU). The entire defence team in Blair’s first government were members or closely associated with the TUCETU.

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(1) Is Tony Blair the most corrupt prime minister in recent history?

Hard to say. I don't think he has personally enriched himself. Cherie has done some trivial grabby things, the children have had a very privileged upbringing. Euan leads a playboy lifestyle. Blair has effected a corrupt financial support system for Labour to escape the clutches of the trade unions. I believe that Lord Levy will be charged before year end. But Blair is complicit.

(2) What is the main reason for Blair’s corruption? What motivates him? Or is he just guilty of poor judgement?

Blair believes he is serving a higher purpose. He is motivated by that end. it will be shown to have been poor judgement only if he pays a price.

(3) In your book you have catalogued a long list of corrupt acts. Which one do you think is the worse example of the corruption of New Labour?

Maybe it is my Irish rebel streak, but the idea that someone can buy their way into the legislature offends me greatly. Lord Drayson is offensive. He negotiated his peerage over breakfast with Blair. Half a million quid now, half a million quid later. He is now a government minister.

(4) What should the Labour Party do to clean up its act?

Spend less and raise money from voluntary supporters, that applies to all the parties. They will have to listen to their supporters as well. No bad thing. State funding will only make things worse.

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(3) In your book you have catalogued a long list of corrupt acts. Which one do you think is the worse example of the corruption of New Labour?

Maybe it is my Irish rebel streak, but the idea that someone can buy their way into the legislature offends me greatly. Lord Drayson is offensive. He negotiated his peerage over breakfast with Blair. Half a million quid now, half a million quid later. He is now a government minister.

I agree that the Drayson case is one of the worst cases of Blair's corruption. However, I am more concerned with his NHS contracts than his peerage. Blair had a meeting with Drayson on 6th December, 2001. Soon afterwards two things happened: (1) Drayson donated £100,000 to the Labour Party; (2) Drayson’s company, PowerJect, won a £32 million contract to produce a smallpox vaccine. The most surprising aspect of this contract was that it was not put out to open tender. If it had of been the contract would have gone to a German-Danish company called Bavarian Nordic. It is this company that Drayson has purchased the smallpox vaccine from. It is believed that Drayson paid Bavarian Nordic £12m for the vaccine. In other words his £100,000 investment has resulted in a £20m profit. In all, Drayson has given £1.1m to New Labour.

(1) Is Tony Blair the most corrupt prime minister in recent history?

Hard to say. I don't think he has personally enriched himself. Cherie has done some trivial grabby things, the children have had a very privileged upbringing. Euan leads a playboy lifestyle. Blair has effected a corrupt financial support system for Labour to escape the clutches of the trade unions. I believe that Lord Levy will be charged before year end. But Blair is complicit.

I disagree. I believe money is an important factor in understanding his actions. Most of the money will come in after he retires. For example, his £3.5m contract for his memoirs from HarperCollins (Rupert Murdoch). It will be interesting to see what kind of directorships he gets after leaving office.

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I don't believe he is personally intrinsically corrupt, but he has failed to ensure that his government acted in the 'whiter than white' manner which he promised us. However, until we know the result of Inspector Yates' inquiries it is difficult to answer the question properly. If it is found that there is a direct link between donations to the Labour Party and Peerages then he will certainly rival Lloyd George for the title of the most corrupt Prime Minister in recent history.

I think the high percentage of donations/loans that comes from people who received honours suggests that there is a link between these two things. However, it is likely to be difficult to prove.

Where to start? I think the Cash for Peerages episode is the worst and potentially the most damaging if it leads where I think it's going to. All I hope is that Lord Levy gets its just desserts.

Personally, I am more concerned with the link between donations/loans and PFI contracts. This mirrors the kind of thing that has been going on in America since the 1930s. It seems that the main attraction for the Labour Party in privatization (something they were very much against when they were in opposition) is the kickbacks that they receive for these contracts. It is true that most of this money has gone to the party, but some have already left government to take highly paid jobs in these companies benefiting from these new “enlightened” policies.

It is also necessary to ask why these rich businessmen all of a sudden became converts to “socialism”. They did not give money to the Labour Party when they were in opposition.

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  • 4 weeks later...

It has been revealed that John Prescott’s son, David Prescott, has been using a House of Commons pass granting him full access to parliament. It was given to him by his father. This is not normally a problem but David Prescott is director of the public relations consultancy Geronimo Communications. Parliamentary rules prevent working lobbyists from holding Commons passes.

Another son, Jonathan Prescott is also involved in shady business dealings. He runs Estate Partnerships, a company much used by property developers. His main job is to identify land that would jump in value if granted planning permission by the government. The question is – does he benefit from receiving inside information?

It was recently revealed by the Sunday Times that Jonathan Prescott recently held a meeting for several property developers at his father’s official apartment in Whitehall.

In recent years there has been a tendency for the sons of football managers to set themselves as football agents. They then go on to earn large sums of money by arranging deals with their father’s clubs. It seems the same kind of thing is happening in politics.

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  • 2 weeks later...

I would like to report that Tony Blair will leave office during the next couple of weeks because of large-scale corruption. However, it seems he is to be removed because previous Blair devotees who have willingly ignored his crimes, fear that they might lose their seats in the next election.

It is believed that Blair will today make a statement saying that he will leave next year. This will not be good enough and if he does take this approach I expect at least one senior member of the government to resign. If that does not work, Brown himself might resign.

New Labour’s poll ratings are not the only reason that Brown wants to replace Blair. He is also keen to leave his post as chancellor. All the evidence is suggesting a downturn in the economy. The period of cheap money is over. Interest rates are going up and the UK is already experiencing record bankruptcy figures. This time Brown will not be able to use his budget surplus to boost public spending. If the economy goes pear-shaped later this year, Brown will find it much more difficult to become leader of the Labour Party if the contest takes place in 2007.

Candidates for the leadership of the Labour Party will need to consider why Blair is so unpopular with party members. The main reason is his foreign policy. PFI and the privatization of the public services and the increasing income gap between the rich and the poor are other factors. Yet Brown is closely associated with all these policies. This is reflected in the polls that suggest that Brown will get only 33% compared to Blair’s 32% in a future election. The same is true of other possible contenders like John Reid and Jack Straw.

While Brown is likely to get the support of most MPs he might have difficulty winning over grassroots members. It has to be remembered that all individual members of trade unions affiliated to the Labour Party have a vote. The Labour Party can only be renewed if the winning candidate distances himself from Blair’s policies.

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Former Cabinet minister Clare Short says she will be stepping down as a Labour MP at the next General Election. Short partly blamed Tony Blair's foreign policy and said: "I have reached a stage where I am profoundly ashamed of the government." She quit as international development secretary in 2003 in protest at the post-invasion plans for Iraq.

Interviewed on the Jeremy Vine show this afternoon she explained that she was asked by Blair to see Gordon Brown to offer him a deal. Blair promised to resign early as PM if Brown would be willing to recommend adoption of the Euro. So far the major news outlets have not picked up on this story. However, I believe it has the potential to cause Blair a lot of problems, especially with his mate Rupert Murdoch.

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This thread should really be entitled “The Corruption of Tony Blair and Gordon Brown: Britain’s Watergate?”. Brown has been just as responsible as Blair for allowing the corruption of the Labour government. The most shocking aspect of this government’s corruption concerns the Private Finance Initiative (PFI).

In opposition Brown described Norman Lamont’s PFI scheme as “creeping privatization” and “a cynical distortion of public finance”. At this point Brown and Blair were totally opposed to privatization. They pledged that they would renationalize British Rail and other public utilities.

After being elected in 1997 Brown and Blair did a complete U-turn. Blair now told us: “Privatization should have a role to play not out of dogmatism but out of pragmatism.” Not only did the new Labour government not renationalize these industries, it added its own list of proposed targets: the Royal Mint, the Tote, air traffic control, and the Post Office.

One of the most controversial policies of the Thatcher government was the selling of council houses to tenants. Brown and Blair took it one stage further and private property speculators were invited to bid for government buildings and council homes were offered to private developers.

Brown spent more than £500m in City fees to protect John Major’s privatization of the Tube. As a result, the new Tube companies are now drawing bigger subsidies than under nationalization, accepting no financial risk and delivering a worse public service.

Brown was now a passionate supporter of PFI. By July 2003 Brown was able to announce the completion of 450 PFI projects, including 34 hospitals, 239 schools, 34 fire and police stations and 12 prisons. Virtually all NHS investment was now in the private sector. By 2007 some 20% of all current public expenditure is expected to be delivered by private contractors.

Why would Brown and Blair change their minds about PFI? It is not about saving money. Research shows that the cost of private finance is around 30% more than money lent by the exchequer. Of course, much of this spending does not appear in the current balance sheet. This is money that has to be repaid by a future generation of taxpayers. It is hard to work out how the country will be able to afford building schools and hospitals when the current government’s debts are being repaid.

The answer can be found in identifying who has benefited out of PFI. For example, why do Brown and Blair always use the bank UBS Warburg for their privatization deals? In 1997 the government was spending £300m a year on consultants. In 2005 it reached £2.4 billion. I wonder how much Brown and Blair are getting of this in backhanders.

Then there are the companies who get these PFI contracts. The most important of these are Capita, Carillion, Serco, Skanska and Jarvis. These companies also did well under the Tories. However, they have done even better under New Labour. It is no surprise that these companies now give money to New Labour rather than the Conservative Party. For example, Capita, had a turnover of £112 in 1997. By 2005 it had reached £1.4 billion. Capita, a major donor to New Labour, got the contracts to run Individual Learning Accounts, the Criminal Records Bureau, teacher pensions, miners’ compensation, London congestion charge and collecting the BBC licence fee.

Not satisfied with making large profits from these ventures, these companies often resort to fraud. For example, when the police investigated Capita’s Individual Learning Accounts they discovered that over a £100m from a budget of £274m had been stolen. However, no one was ever charged with these crimes.

Other PFI schemes initiated by Brown have been great failures. His University for Industry collapsed with losses of more than £200m. An E-University spent over £50m and never opened.

While enjoying a “holiday” in New England Brown arranged an Anglo-American science partnership. This deal involved Brown arranging for £13m being transferred to the Massachusetts Institute of Technology. So far, the British taxpayer has received no return for this money. Can the same be said of Gordon Brown?

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It has just been announced that the third person involved in the "cash for honours" scandal is Sir Christopher Evans (the other two are Lord Levy and Des Smith).

Evans founded Merlin Biosciences in 1996. He was one of the millionaires who gave secret loans to Labour in the run-up to the 2005 election.

This artcle about Andrew Alderson in the Daily Telegraph a few weeks ago (6/08/2006)

http://www.telegraph.co.uk/news/main.jhtml...06/nloans06.xml

Tony Blair and Gordon Brown publicly supported a project launched by a Labour backer, just weeks after the wealthy businessman had secretly lent the party £1 million for its general election campaign last year.

Sir Christopher Evans was knighted five years ago

The disclosure comes as Scotland Yard investigates the cash-for-honours scandal in which 12 Labour supporters lent the party nearly £14 million to fight the election. Four of them were subsequently proposed by the Prime Minister for a peerage.

Mr Blair knew of the loan from Sir Christopher Evans, the founder of Merlin Biosciences, when he agreed to back the multi-millionaire's initiative, a charity that funds cutting-edge medical research. And the Treasury, which is headed by the Chancellor, was listed as one of just four "partners" in the United Kingdom Stem Cell Foundation (UKSCF).

Sir Christopher, a New Labour supporter who was knighted five years ago, is the founder of the charity. It funds pioneering research into stem cells, which offer the hope of treatments for Parkinson's and Alzheimer's diseases, cancer and other illnesses.

The UKSCF website says: "The creation of the foundation has been personally endorsed by the Prime Minister and the Chancellor."

Opposition parties are concerned by the emergence of links between Labour's two most senior politicians and Sir Christopher.

Elfyn Llwyd, the Plaid Cymru leader and one of two MPs who alerted police to possible corruption, said that Scotland Yard's investigation should include an examination of favours by the party on behalf of those who had lent money. "We have Mr Blair and Mr Brown at the centre of this spider's web and, as you look out from Number 10, you find numerous examples of this kind," he said. "I believe the whole thing is rotten to the core."

Merlin was founded by Sir Christopher in 1996. Last year the Serious Fraud Office and City of London police disclosed that they were conducting an investigation into an investment made by one of the company's funds. The inquiry continues, although the company and the entrepreneur deny wrongdoing.

Sir Christopher's support for Mr Blair dates back to the late 1990s, when he began giving substantial donations to the party. Their size was undisclosed.

By early last year he and other business leaders were trying to persuade Mr Brown of the importance of not being left behind in the worldwide race in stem-cell research. In early February last year Sir Christopher and other leading scientists called for a foundation to promote and fund stem-cell research.

By May 2005 the foundation had been established, with charitable status, and was billed as "medicine's brightest hope".

It was not known at the time, however, that Sir Christopher had lent Labour £1 million - a move of which even Jack Dromey, the party treasurer, was unaware. Labour refuses to give the exact dates of each loan in the cash-for honours saga but they were between January 1 and polling day on May 5 last year.

On March 16, 2005, the Chancellor announced the setting up of the UK Stem Cell Initiative (UKSCI) to advise the Government on research. Sir Christopher, representing the UK Stem Cell Foundation, was later appointed one of its members.

In November of the same year the UKSCI made 11 recommendations to Mr Brown, which he adopted. They included the commitment to spend £100 million of Government funds on stem-cell research.

Merlin specialises in providing venture capital to life-sciences companies. It manages three funds with more than £300 million of equity capital.

George Osborne, the shadow chancellor, said: "Gordon Brown tries to make out he has nothing to do with Labour's murky financial dealings but this suggests he is closer to the heart of the cash-for-favours culture than he cares to admit."

A spokesman for Sir Christopher denied that he or his companies had sought or received "a penny" from his roles with the UKSCF charity or UKSCI, the advisory body. "Any suggestion that Sir Christopher loaned £1 million to benefit him or his company is completely off-beam."

The spokesman denied that Sir Christopher had sought to make the loan to Labour secret. "As he has stated before, the loan was made on commercial terms early in 2005 and is due to be repaid later this year."

He said that of the 38 companies in which Merlin had invested, only one had an interest in stem-cell research.

The spokesman said the entrepreneur had "no idea" whether Mr Brown knew of his loan, adding: "Better ask the Treasury that one." He said the UKSCF charity had received no Government funding.

Mr Brown has said he did not know of the loans to the party last year. The Treasury yesterday denied doing any favours for Sir Christopher or Merlin.

Its spokesman said: "There has been a partnership between many groups from the public and private sectors to help Britain become a world leader in stem-cell research."

A Downing Street spokesman said: "The Prime Minister strongly backs the stem-cell research industry in this country."

A source close to the Chancellor said Mr Brown did not know about any individual loans to Labour last year and that any funding for medical research cames from the Department of Health, not the Treasury.

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Geoff Mulgan was Tony Blair's chief policy guru from 1997 to 2004. His book Good and Bad Power was published last summer before Lord Levy was arrested. On page 84 he claims: "In later years the scarcely concealed sale of peerages to wealthy party donors, and the appointment of the party's top donor - Lord Sainsbury - to ministerial office, did little to restore the British public's confidence."

Mulgan was interviewed by Martin Bright for last night's documentary on Channel 4 on the Loans for Honours Scandal. He said: "There's no doubt that to the outside world it looked as if there was a correlation between people making donations to all three political parties and getting peerages." Although he had no direct evidence of peerages being sold, "the level of coincidence would be fairly extraordinary", he added.

Lance Price, Labour's former head of communications, told Bright that he had argued vociferously to make donors' names public to pre-empt the government's own legislation, the Political Parties, Elections and Referendums Act 2000, which obliged parties to declare all large donations.

"So I got on the phone to Lord Levy. I said I had had a conversation with the Prime Minister [and] that we wanted to go back to people who'd already given us money and say: 'Actually, we would now like to make your name public.' He absolutely hit the roof. I mean he was apoplectic with rage. He was threatening to resign and never work for the party again." Price said Levy went to Blair and won the argument.

The key issue in the current police investigation concerns the technical issue of whether or not the loans were taken out at a genuinely commercial rate of interest - the sort of loan a member of the public or a regular business could take out from a bank.

Peter Wardle, chief executive of the Electoral Commission, whose inquiry was suspended when the police launched their own investigation last April, told the C4 documentary: "I was surprised at the extent to which the parties had used loan finance. And I was surprised at the extent to which it was driven, at least in part, by a desire to avoid the transparency principle of letting people know where their money was coming from."

He added "The 2000 act requires that any element of a loan which is not on commercial terms should be treated as a donation and reported. The key thing is what interest rate did you pay, because that's the figure which determines what a party would have to declare if it was not commercial." He added: "I have no doubt that the parties were sufficiently familiar with the concept of commerciality."

According to Martin Bright, a source within the Labour Party gave him documentary evidence that the loans were taken out at 6.75 per cent per annum, the equivalent of the Bank of England base rate plus 2 per cent. Bright added: "Any quick internet search shows that it is impossible for an ordinary member of the public to get a loan for less than 7.9 per cent; the typical rate of interest quoted by Loans.co.uk, for instance, is 11.9 per cent. We took the evidence to Raj Bairoliya, an accountant whose company, Forensic Accounting, specialises in complex fraud cases. He concluded: 'One would normally expect a company in that sort of position, firstly, not to be able to borrow at all. Because if you have liabilities of tens of millions of pounds and you don't have the income stream, not many banks would entertain you.' So were the loans designed to be hidden?"

Asked what rate he would expect, Bairoliya said: "If someone did agree to give you a loan, they would expect to have a return which was in proportion to the risk they were taking. In this case they would judge the risk fairly high and they would require a margin of at least 4 or 5 per cent above base." By this calculation, Labour should have been charged between 8.75 and 9.75 per cent interest.

The real question was how did the Labour Party expect to pay back these loans. It currently has 27m worth of debts. As its income is so low no bank would loan it money. Of course, the Labour Party never intended to pay this money back. These loans were to become gifts after those who provided the money got their honours or government contracts.

A high level source within the Labour Party told Martin Bright that these loans were never intended to be paid back. According to this individual, they were never loans at all but purely and simply secret donations. What is more important is this source has given this information to the police.

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A report on passive smoking is currently being withheld by the government. According to the doctors who wrote the report, it clearly states that the evidence suggests a clear link between passive smoking and cancer.

Could this be something to do with Tony Blair’s relationship with British American Tobacco (BAT). Four years ago documents were leaked to a national newspaper that showed that BAT was involved in selling cigarettes in a way that avoided paying taxes (smuggling). Stephen Byers, trade secretary, decided to launch an investigation into this scandal. This included the seizing of company files, and forcing employees to be questioned on oath.

Martin Broughton, head of BAT, asked to have a meeting with Byers. He refused. BAT responded by employing two former senior Department of Trade and Industry officials as consultants (Nicola Shears and Ray Mingay). These men then arranged a secret breakfast meeting with Tony Blair and Martin Broughton. Byers was also ordered to attend. Soon afterwards Byers dropped the idea of a public inquiry. Instead, a private inquiry was launched under Section 447 of the Companies Act.

When Ash (the anti-smoking pressure group) heard the news asked for a meeting with Blair and Byers. This idea was rejected. If the inquiry had produced a damaging report, it would have opened the door to lawsuits from foreign governments cheated of taxes.

It is now four years since the investigation under Section 447 took place. After questions were raised in the House of Commons, Patricia Hewitt, the new trade secretary, announced that the investigation found insufficient evidence for legal action. The report will not be published and so it is impossible to check the genuineness of the investigation.

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A senior adviser to the prime minister has been questioned by police in the investigation into cash for honours. Ruth Turner is the director of government relations at Number 10 and was interviewed in London last week. She is known as Tony Blair's gatekeeper. This shows that the police are not only interested in cash for honours and are taking a look at other aspects of government corruption. This is about access to Blair. He has constantly refused to publish details of the people who attend meetings with him. Donations to the Labour Party buys the opportunity to lobby for policies or contracts for your company.

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