Blair - acting on advice

Any public inquiry into the letter sent by prime minister Tony Blair to support a bid for the Romanian steel industry should include the involvement of the British ambassador in the country, shadow cabinet office minister Tim Collins has said.

Speaking on Friday, he questioned Richard Ralph's connections to number 10 advisor Jonathan Powell, and called on the foreign affairs select committee to investigate the matter.

"There are now very serious questions surrounding the role of the British Ambassador to Bucharest in this whole affair. His close personal links both to Jonathan Powell and to those involved in arranging the steel deal mean that it is now imperative to establish exactly what conversations he has had with whom and when," he said.

"In addition to tabling parliamentary questions, Conservatives are now of the view that he should be summoned before the Foreign Affairs Select Committee in order to get to the truth. The more time goes by, the more it is clear that only an independent inquiry can satisfy taxpayers that nothing improper has occurred".

On Wednesday, Tony Blair defended his decision to send a letter to the Romanian government which helped a major Labour donor secure a lucrative steel contract.

The claim came as the Tory leader, Iain Duncan Smith, challenged the prime minister to say whether he or his chief of staff knew that the owner of the firm concerned had donated money to Labour.

Blair, who dismissed the allegations as "Garbagegate", said he was asked by the British embassy to write a letter supporting Lakshi Mittal's efforts to secure a major steel contract in Romania.

"The letter was written at the instigation of the British embassy in Romania. It was written for a very simple reason. I am delighted that it was a British based company that actually succeeded in it," said Blair.

"What is more I am pleased also that it was something that the embassy asked us to do. It was the right thing to do."

Duncan Smith called on the prime minister to set up a "full independent and public inquiry" into the allegations.

"The whole point that the prime minister seems to have missed is that until he is able to say whether he knew specifically, discussed the matter with his chief of staff, and then decided despite that to go ahead we will never be the clearer and we will always be left doubting whether or not the prime minister acted in the best interests of Britain," he said.

Blair hit back with an angry denial of any wrongdoing. "It is not Watergate, it is Garbagegate," he said. "It is the biggest load of garbage since the last load of garbage, which was Enron."

No Regrets

Speaking as confusion grew about the significance of the letter, Number 10 had earlier insisted that Blair had no regrets.

"The prime minister is totally unapologetic about accepting Foreign Office advice and signing a letter where that advice indicates British interests are involved," said a spokesman.

Number 10 insisted that the decision to give the green light to the contract was taken before Blair's letter was received. The British embassy in Romania has contradicted this claim, suggesting the letter was an important factor in the decision.

Donation

However, the Conservatives are demanding to know whether Blair's chief of staff, Jonathan Powell, was aware of the donation when he gave the green light to the letter supporting Mittal's bid for the Sidex steel firm.

Downing Street has been forced to admit that Mittal's LNM Group - described by Blair as a "British company" - is located in the Dutch Antilles and employs just a handful of staff in the UK.

"Whatever the technical definition of a UK company, this is an organisation which employs people in this country, which has its HQ in this country," Number 10 initially.

However a spokesman was later forced to admit that "we have never claimed that this is a company which employs a huge number of people in this country".

Acting on advice

The prime minister's spokesman insisted that he was acting on the advice of the Foreign Office and believes that the advice was correct.

He said Blair was relying on the advice of the British ambassador to Romania and "spent 30 seconds signing a letter" in support of Mittal's bid.

Whilst Downing Street insists that neither Blair nor the ambassador knew of the donation, opposition parties are demanding to know more about the role played by Powell.

Tim Collins, the shadow cabinet minister, said the government was clearly prepared to lobby on behalf of big Labour donors.

"If we are looking at the record of this government I don't know why they don't simply hang a 'for hire' sign over Downing Street," he said.

Plaid Cymru said that the prime minister had misled parliament over the affair.

"In his entire response to the 'Steelgate' affair the prime minister has misled parliament, the press and the people of this country," said Plaid MP Adam Price.

"His repeated assertions that LNM is a British Company, and that the deal was signed, sealed and delivered are now proven to be completely without foundation. The prime minister has either been badly advised, extraordinarily naïve - or he has been deliberately trying to cover his tracks."