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 Patel wrote to the House of Lords Appointments Commission to ask if his 
 nomination for a peerage had been blocked, though he denies that his 
 nomination was in exchange for his reported €1.5m loan to Labour. 
  
 "If they had said: 'You will get this by signing this,' I would have 
 walked out of the room," insisted Patel. 
  
 "I am very sad that whatever happens from here I am linked to an event 
 which has got nothing to do with the things I believe in, but has been 
 reduced to a bazaar where people are saying: 'What is the price of the 
 peerage?'" 
  
 New Labour has long been pilloried as having a love affair with lucre, 
 but what made this row stand out from previous scandals was the 
 implication that this time the money was loaned rather than donated so 
 that the transaction could be kept secret. 
  
 As revelations of the loans seeped out, one who shared this view was 
 none other than Jack Dromey, the Labour Party treasurer, who had no idea 
 of the apparent link between loans and nominations to the Lords. 
  
 While Downing Street was finally waking up to the implications of a 
 policy agreed a year before, a furious Dromey ploughed through last 
 Sunday's newspaper revelations about the loans with increasing alarm. 
 Across the room, his wife, the Constitutional Affairs Minister Harriet 
 Harman, was also weighing up the consequences. 
  
 Dromey, deputy general secretary of the Transport and General Workers' 
 Union, decided that Labour must investigate itself to prevent the matter 
 spiralling out of its control. He contacted Downing Street on Monday to 
 demand full details of the loans, and his increasingly irate public 
 interventions would propel the affair into a full-blown crisis. 
  
 "This was all about Jack's ego," one furious fellow party apparatchik 
 complained. "He didn't like being left out. He had his position and he 
 thought it gave him power, when really it is a purely honorific title." 
  
 Honorific or not, the party treasurer is an elected official and he 
 jointly signs the annual report on its finances. But Dromey was denied 
 access to information on a funding stream that had brought almost €14m 
 into Labour coffers. Unfortunately for an increasingly evasive party 
 establishment, Dromey, a veteran of the Grunwick strike and pickets of 
 the 1970s, is not one to give up. 
  
 Significantly, the usual rebel MPs who can always be relied upon to 
 oppose Blair were not the only ones to echo his complaints. On 
 Wednesday, as concerns over the policy began to accelerate, the Prime 
 Minister was waylaid by Warrington North MP Helen Jones as he rushed out 
 of Prime Minister's Question Time and berated, in public, over his 
 behaviour. When he arrived at the Labour MPs' ruling parliamentary 
 committee, one member, his former minister Angela Eagle, picked up the 
 theme. 
  
 "She really had a go," another member of the committee told Scotland on 
 Sunday. "When she mentioned the issue of the loans, the response was 
 like when your aged aunt farts at the dinner table. Pure embarrassment. 
 But his answers were not wholly convincing." 
  
 By the time Blair emerged from the meeting, his advisers were beginning 
 to accept that he could not simply ride out this storm. After a 
 last-ditch series of meetings with Dromey on Wednesday failed to allay 
 his concerns, it was decided that the Prime Minister would have to 
 demonstrate that he was taking action. His monthly press conference the 
 following day was identified as the ideal opportunity to begin the 
 fightback. 
  
 The tactic was not universally welcomed. Dromey sensed a stitch-up and, 
 according to one colleague, "retreated with Harriet to discuss what to 
 do". 
  
 "He seriously considered resigning his position with the party," the 
 source added, "but he decided to fight on in pretty dramatic fashion." 
  
 Less than an hour after Blair had survived the landmark vote on his 
 Education Bill on Wednesday, relieved ministerial advisers were winding 
 down in the bars in and around Westminster when they received texts 
 telling them to turn on TVs, wherever they were. 
  
 "They were all about Jack's interviews. It was incredible," said one 
 aide. In an attempt to get his retaliation in first, Dromey toured 
 television studios to announce his own inquiry into the "improper" 
 interpretation of Labour's own sleaze-busting party funding rules. 
  
 "Even Enron, I think, would be amazed at hearing the sort of accounting 
 practices that seem to be going on in the Labour Party," said Dromey. In 
 a neat move that signified the gravity of what he was entering into, 
 Harman immediately resigned her responsibility for electoral reform. 
  
 The loophole in the Political Parties and Referendum Act, which requires 
 parties to declare donations but enables them to "hide" loans, has been 
 known for some time. Indeed, it is believed that the Tories have used 
 the legislation to conceal details of up to €20m-worth of loans. But 
 previous Labour general-secretaries, particularly David (now Lord) 
 Triesman, forbade their party from following suit. 
  
 In the run-up to last year's election, however, his successor, Matt 
 Carter, was faced with a campaign bill estimated at €20m, while 
 donations were at an alarmingly slow rate. 
  
 Party insiders believe that Carter appealed to the party's legendary 
 fundraiser, Lord Levy, who helped devise the new loans-for-Labour 
 strategy. Whether that, in turn, developed into loans-for-peerages 
 remains a matter of debate and Dromey's investigation. 
  
 Patel was approached after the election, in July, as the party struggled 
 with a soaring overdraft, a slump in membership and gathering concerns 
 among its traditional bankers, the Co-op and Unity Trust banks. He was 
 schmoozed at dinner parties at Levy's north London home where, amid the 
 splendour of marble and a swimming-pool, Blair himself could be relied 
 upon to make an appearance. At the end of it, he agreed a loan at a 
 "commercial rate of interest" - which meant it did not have to be 
 disclosed. Three months later, he was on the fast-track to the House of 
 Lords. 
  
 "This kind of behind-the-scenes loan arrangement was invented by the 
 Conservatives to get around the law," complained Eagle, who is also a 
 member of the party's ruling National Executive Committee (NEC). "It's 
 therefore a great disappointment to me to come across the possibility 
 that someone in the Labour Party may have been doing the same thing." 
  
 Other MPs joined in: Gordon Prentice bemoaned the "swirling allegations" 
 and David Winnick called for current nominations for peerages to be 
 suspended while the entire process was "cleaned up". 
  
 While Tory backbenchers made hay with the row, David Cameron was unable 
 to put the government to the sword because of his party's own form on 
 the matter. But this offered only temporary relief for the increasingly 
 beleaguered Prime Minister in the wake of attacks from within his own 
 party, and especially those who hope to hasten Gordon Brown's takeover 
 at the top. 
  
 An august Blair launched a revised counter-attack at his press 
 conference, at noon on Thursday, in which he signalled an acceptance 
 that he had to give ground. In a nifty twist, he stressed his own 
 discontent at the system of party funding, and he then bestowed upon the 
 Cabinet Secretary, rather than himself, the right to recommend honours. 
  
 It was a traditionally polished performance, but Scotland on Sunday has 
 been told that the sleaze-busting blueprint was "pinched" wholesale from 
  
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 --- SoupGate-Win32 v1.05 
  * Origin: you cannot sedate... all the things you hate (1:229/2)