Of Lords And Loans

Lord Levy leaves his north London home by car

Alastair Grant / AP

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On Jan. 30 British Prime Minister Tony Blair's chief fund raiser, former music business impresario Lord Levy, was arrested — for a second time — by police investigating allegations that seats in the House of Lords were sold for political donations. Levy has denied any wrongdoing. A guide to the inquiry that has all the British classes chattering.

Why the fuss? British political parties nominate candidates for life peerages, which give recipients the title of lord or lady and allow them to sit in Britain's 748-member upper chamber of Parliament. Under a 1925 law, the sale of honors is illegal. Police are now attempting to find out if some peerages recommended since 2001 by all major parties were given in return for donations and secret loans. They are also investigating whether another law, which says that all donations of more than $10,000 must be declared, has been broken.

How did the investigation start? Police began to look into party finances after four businessmen nominated for peerages in 2005 were blocked by the House of Lords Appointments Commission. The body was concerned that the men had recently handed over large amounts of cash to the ruling Labour Party. A spokesman for one of the men, entrepreneur Sir Gulam Noon, claimed Noon had been encouraged by Levy to omit details of a $460,000 loan to the party from his application.

Has anyone been charged? No. Although police are still looking into the sale of honors, they have recently focused on alleged attempts by party employees to obstruct the investigation. Fund raiser Levy — who was arrested in July over suspicion of selling peerages — was arrested this time on suspicion of perverting the course of justice. He was released on bail later that day. Just 11 days earlier, Blair's director of government relations was arrested and also questioned. Both have denied any wrongdoing.

Has the scandal affected Tony Blair? Police interviewed Blair in December, but as a witness, not as a suspect. (More than 90 people have been questioned, including former Conservative leader Michael Howard.) But the allegations of Labour sleaze are damaging to a Prime Minister who came to power in 1997 promising that his government would be "whiter than white." If one of his close aides is charged with any crime, it could critically damage Blair and hasten his expected departure from office this year.

What happens next? Police were due to hand their investigation file to prosecutors at the end of January. However, recent arrests mean that the handover — and charges, if any — are not now expected until March.