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The Hinduja file is reopened over lunch in New Delhi

The Hinduja scandal is the closest the Labour party has to radioactive waste

24 May 2006

3:49 PM

24 May 2006

3:49 PM

The Hinduja scandal is the closest the Labour party has to radioactive waste. Though officially buried five years ago, it remains lethal: the Indian billionaires had involved so many powerful people in their quest for British passports that the scandal threatened to engulf the whole government. In the event Peter Mandelson was — conveniently for New Labour — the only casualty of the affair. His downfall was so spectacular, and so gleefully received, that little attention was paid to the subtle, sometimes playful clues Sir Anthony Hammond left in his official report of March 2001, pointing those who cared to look towards a much deeper mystery.

The former Treasury solicitor turned Whitehall gumshoe disclosed without comment the astonishing influence which the Hindujas commanded at the highest reaches of government and how they lobbied for passports while discussing their contribution to the Millennium Dome. But Hammond’s findings suggested an intimacy between New Labour and the brothers that could not be explained by a single donation. Hammond tells us how Jack Straw, then home secretary, processed a memo asking about a passport for Prakash, the youngest brother, and scribbled on it ‘Zola Budd’, a reference to the South African athlete whose British passport was approved in ten days. Cabinet members spoke to junior ministers and private secretaries as if they should know who the Hindujas were, as if it were gauche to ask. So the real question — unanswered to this day — was how the brothers came to hold New Labour in such thrall.

Read again today, as the Metropolitan Police is investigating whether Labour sold honours, and the Home Office is in meltdown, the Hammond inquiry looks less like a whitewash and more like a terrible prophecy. Yet we still have no explanation for the Hindujas’ hold over Labour, especially as the brothers insist they gave nothing to the Labour party itself.

On 11 March the journalist and author Julian West — one of the most respected writers on the Hindujas with a string of scoops to her name — had lunch with Bobby Kewalramani, an experienced figure who is an official spokesman for the brothers and is close to both S.P. and G.P. Hinduja. Over a Chinese meal at the Habitat Centre in New Delhi, he explained to Ms West how the Hindujas fixed up a meeting between Tony Blair and Brijesh Mishra, then India’s national security adviser, in No. 10 Downing Street. He said, ‘There were problems with protocol. But the Hindujas got Tony Blair to meet him. They were able to do this because they had made a substantial donation to the Labour party — I’m not sure of the amount, but it was about five years ago, after their contribution to the Dome. The donations have been ongoing since then.’

This was plainly an extraordinary statement, made to a distinguished journalist by a professional PR man. Mr Kewalramani explicitly linked the Hindujas’ influence in No. 10 to a donation to Labour. He explicitly distinguished that contribution from the Dome money — he was not confusing apples with pears, in other words. Ms West took a detailed note of Mr Kewalramani’s remarks and passed it to The Spectator so that they could be put to the various players in London. Here, the response to my investigations has been predictably nervous and furious.

Charles Stewart-Smith, a lobbyist acting for the Hindujas’ interests in London, was emphatic. ‘The Hindujas have never made a donation or a loan to the Labour party or any UK political party,’ he said. Within his industry, Stewart-Smith has a rare reputation for integrity but it is possible he has not been kept fully abreast of the situation. ‘As far as we can tell, the Hindujas have never met Lord Levy.’

This, for a start, is untrue. Lord Levy, Tony Blair’s chief fundraiser, now at the heart of the loans-for-ermine scandal, met the Hindujas on 23 and 28 October 1998 — meetings both documented by Hammond. He turned up first at the Department of Trade and Industry to discuss funding for the Dome’s Faith Zone. One of those involved in the negotiations says, ‘People did ask why Levy was involved. But we used to just joke that he was one of Peter’s “friends and relations”: people dropped into the fundraising process by No. 10. Party funding certainly wasn’t discussed at the meeting at the DTI, but there was a more private meeting at the Lords six days later. How strange were the meetings? Very strange. But that doesn’t mean Levy was overtly pressing for party money.’

When asked by The Spectator to comment on Mr Kewalramani’s statement about the alleged Hinduja donations to Labour, Lord Levy’s office issued a statement explaining what had happened. The Hindujas had offered to underwrite the whole £6 million Faith Zone project, but he simply suggested a £1 million donation instead. And Tony Blair? ‘The only reference that I can recall making…is that he would be delighted with the Hindujas’ commitment to the Faith/Spirit Zone.’ Lord Levy flatly denies seeking money from the Hindujas for the Labour party.

So: Britain’s top political fundraiser met two of Britain’s richest men, and the best he could do was to walk away with a contribution which, after costs, worked out at £365,000 to the doomed £789 million Dome project. In March 1999 S.P. Hinduja signed the Oath of Allegiance. That November the Blairs were guests of honour at the brothers’ party for Diwali, the Hindu festival of light. Influence had come at a snip.

Might Mr Kewalramani’s memory have played him false? There will now be plenty of people on the phone from London to persuade him that it has. Indeed, as The Spectator went to press, he was seeking to retract the comments he gave to Ms West. ‘I had a lunch with her but we did not discuss Tony Blair or the Labour party,’ he said. Our six questions to the Labour party were answered in 13 words: ‘The Hindujas have never given any loans or donations to the Labour party.’

There was no response from Jack Straw’s office. By strange symmetry, his new job as Leader of the House now involves brokering a deal on party funding and, presumably, preventing future Hinduja scandals. Mr Straw escaped remarkably lightly from the Hammond report given that his department was responsible for expediting the Hinduja passports.

In an interview with Ms West in 2001, S.P. Hinduja seemed to taunt the British press for chasing the wrong scent, for missing the big picture. ‘I don’t understand why people are asking only about Mandelson, Vaz [Keith Vaz, the Labour MP] and Blair. You could name anyone, because we have so many contacts,’ he told her. ‘Do I know Lord Falconer? I know everybody.’ But why?

We have always been told that the Hindujas were the only billionaires to have achieved close links with Labour without donating a penny to the party. Yet in March Mr Kewalramani appears to have said something very different  to Ms West.

He says, she says. A terrible voice from Labour’s past vies with a chorus of denials. But after the original Hinduja inquiry, Mittal, Ecclestone and the current loans-for-peerages scandal, just ask yourself this: whom do you believe?

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