Is Mittal buying favour from Blair?

London: Steel baron Lakshmi Mittal has landed himself in a controversy after his reported offer to gift a £2 million financial life jacket to Britain's Labour Party that will save the ruling party from a certain financial ruin.

Prime Minister Tony Blair's party is facing a financial crisis because donations have dried up following the cash-for-honours scandal. It was claimed by a London newspaper that the deal had been negotiated by Blair and Lord Levy, who is already facing police investigation for his alleged involvement in a cash-for-peerages affair. In fact, Levy had been arrested in the case and currently he is on bail.

Labour sources said not much should be seen in the report, because Mittal has been a long-time supporter of the party. It has nothing to do with Blair being the Prime Minister, who is anyway set to go by this summer.

Yet Blair has instantly become a subject to fierce criticism from Labour backbenchers for using the tainted Lord Levy. They say they would attack the Prime Minister for using Levy and there are also apprehensions that even Mittal could now be caught in it.

Mittal's intended largesse now threatens to leave him with a politically controversial dividend after it was pointed out that his generosity to Labour coincides with his negotiations for a stake in a multi-billion-barrel oilfield in Kazakhstan. Incidentally, Lord Levy happens to be Blair’s 'special envoy' to Kazakhstan.

Earlier also, the steel baron had faced strong criticism after he gave $125,000 to the Labour Party and Blair reportedly wrote a letter to the then Romanian PM to help him (Mittal) secure a deal for a steel plant there. Mittal had drawn the attention of the British press and they invariably mentioned Blair's help even though Mittal had hardly any investment in Britain and was not a British citizen.

The situation is slightly complex this time as Levy is under suspicion over the cash-for-peerages scandal. A British newpaper has reported that Blair had hoped the $2 million gift would remain confidential until May, when the Electoral Commission discloses all donations received by political parties in the first quarter of 2007.

On its part, the Labour is now worried that Mittal might withdraw his offer following the report in the media.