Rich businessmen who lent money to Prime Minister Tony Blair's Labour Party have been warned they will be questioned by police as part of An investigation into the "sale" of British peerages, the Timesnewspaper said today.
The 12 businessmen, who Mr Blair's Labour party revealed last month had loaned it nearly £14 million, will be questioned after the Easter holiday, the paper reported.
Police, who would not comment on the paper's story, have been investigating all political parties in Britain after a row broke out in March over claims that peerages had been awarded to party donors.
A peerage gives membership in the House of Lords, the unelected upper house of parliament. The scandal comes as Prime Minister Tony Blair, who swept to power in 1997 promising to clean up after a string of sleaze allegations damaged the previous Conservative government, faces persistent questions about when he will step down after he declared he would not seek a fourth term.
Mr Blair has also lost popularity because of the Iraq war. On Thursday, detectives arrested Des Smith, a former adviser on Blair's flagship schools programme. He was later released on police bail after questioning.
Smith (60) resigned in January after telling an undercover reporter from the Sunday Timesnewspaper that anyone making donations to Blair's schools programme could expect to receive honours, knighthoods and peerages.
Newspapers have reported that a number of sponsors who gave money to the government's education programme were later awarded honours.
The criminal investigation was launched after several members of parliament asked police to look into possible breaches of a law dating from 1925 that forbids selling public honours. Under British law, parties have to declare major donations but can keep details of loans under wraps.
The Labour Party has denied "selling" the peerages and dismissed allegations from political opponents that donors' companies got favourable treatment in return for their support. A spokesman for Downing Street on Thursday said Smith's arrest was a matter for the police and they would be making no further comment.
Mr Blair ousted most hereditary peers in 1999, ending hundreds of years of tradition, but further attempts to change the make-up of the upper chamber have stalled.
Most peers in the House of Lords have been appointed for life. Some are politically appointed, others are recommended by the House of Lords Appointments Committee.