Labour MP joins call for Mittal inquiry

A SENIOR Labour MP yesterday heaped embarrassment on Tony Blair by echoing Tory calls for an inquiry into the increasingly tangled web surrounding the government and its links with the Indian businessman, Lakshmi Mittal.

The condemnation by Kate Hoey, a former minister, capped a dismal week for the Prime Minister, whose failure to kill off the story has mired Labour in sleaze allegations.

Although Downing Street dismissed new reports as "hysteria overload", the Mittal affair is clearly damaging the government. An opinion poll published yesterday found 60 per cent of people think Labour is more ridden with sleaze than the Conservative Party was before the 1997 general election.

The Downing Street offensive failed to explain how Mr Blair’s intervention to help Mr Mittal’s company, LNM, acquire the Romanian Sidex steelworks had been in Britain’s interests.

The Prime Minister’s spokesman also refused to comment on revelations that Mr Mittal had spent hundreds of thousands of pounds in the United States lobbying against British interests and jobs.

The Indian tycoon, who donated £125,000 to the Labour Party before last year's general election, was a key financier of a pressure group lobbying President George Bush to impose a 40 per cent tariff on all steel imports to the US. It was also revealed British ministers had helped LNM to clinch a £70 million "soft" loan from the European Bank for Reconstruction and Development which became crucial in the company's Romanian take-over bid.

Mr Blair’s spokesman accused the media of orchestrating a concerted negative campaign against the government. He said: "If you want to put every piece of advice through the prism of suspicion and allegation and if you say everybody is at it and everyone’s reasons are disreputable, you are going to have thousands of stories."

He denied all suggestions of government impropriety and insisted Mr Blair signed a letter of support for Mr Mittal only after being advised by the British ambassador in Romania that it would be in Britain’s interests.

However, the denials failed to calm unrest among some Labour backbenchers, some of whom were privately backing calls by Iain Duncan Smith, the Conservative leader, for an independent inquiry into the affair.

Mr Duncan Smith used the revelations to step up his attacks on Labour ministers: "My concern is that what the Prime Minister and what the government seem to be doing is leaving us with huge doubts about their probity, huge doubts about their honesty."

Ms Hoey found herself echoing Mr Duncan Smith’s remarks during a candid television interview. She said: "If you’re going to take advice from advisers and have people around you, then you have to be absolutely sure they are people who are completely going to look at the interests of the country.

"Now in this case, he [Mr Blair] may have thought it was in the interests of the country; the problem is if you’re in Wales and working for the steel industry, it doesn’t look very good. I think there will be a lot of businesses that say, ‘Well, why haven’t we had that [kind of] support?’.

"I think there’s going to have to be some kind of select committee inquiry into this. I don’t think this is going to go away."