Rhodri Morgan

Welsh Labour leader Rhodri Morgan has dismissed Plaid Cymru claims linking a £125,000 donation to redundancies at Corus steel plants.

Welsh nationalist MP Adam Price had compared last June's donation from steel billionaire Lakshmi Mittal, chairman of steel giant Ispat, to the US Enron scandal.

The cash gift came just weeks after the end of a three-month consultation on Corus's lay-off of 6050 UK workers, job losses that Price believes may have benefited Ispat International, the world's fourth largest steel company and a possible buyer of Corus.

"In accepting cash from the company that stood to benefit most from the Corus closures, the Labour Party has broken its own rules and betrayed its principles," the Carmarthen East and Dinefwr MP said.

"Why was there no Longbridge solution for the steel industry in Wales? Was it because Blair was being urged not to intervene by one of Blair's biggest backers?"

Linking the donation to the Enron-Anderson scandal, Plaid Cymru has called for a detailed ministerial statement on government contacts with the steel company.

"There was a clear conflict of interest here between the Labour Party's financial interest and the Labour government's duty to take decisions in the public interest. On this occasion it seems that the pound signs won-out over principle," said Price.

Speaking in the Welsh assembly to announce a package of measures to aid recession-hit steel producing communities - on the first anniversary of job losses - first minister Rhodri Morgan dismissed the Plaid Cymru claims.

"I am totally at a loss to understand what Adam Price is alleging. What link is there between the Lakshmi Mittal Ispat steel company and what happened in Corus?," he asked AMs.

"The only connection he implies is that somebody had failed to support a workers' buyout option because Lakshmi Mittal had made a donation to the Labour Party. There was no question of any linkage with any donation made to the Labour Party. I really think Adam Price, if he wants to be taken seriously, had better come up with a better story than that."

A spokesman for Ispat, part of LNM Group, said the company was often regarded as a possible buyer of Corus as it was "the main acquisitor" in the steel industry. But she said the company, which operates in 11 countries, had little involvement in the UK - owning just a small wire mesh company in Kent.