Labour backed loans to Mittal

Tony Blair faced new questions today over Indian steel magnate Lakshmi Mittal as it emerged that, since coming to power, Labour has backed loans worth more than £150million to his business empire.

Four separate loans from international banks were firmly supported by the Government for the Mittal empire. One of them was given in the same month that the billionaire businessman gave a £125,000 donation to the Labour Party.

The first dates back to 1997, when £45.7 millon from the International Finance Corporation, an offshoot of the World Bank, went to Mr Mittal's steel plant in Kazakhstan.

A few months later, International Development Secretary Clare Short's department backed a further £37million grant to the steel plant, but this money came from the European Bank for Reconstruction and Development, which gives loans to projects considered too risky for commercial banks.

Details emerged last month that Ms Short had backed a £70million loan from the EBRD for the Sidex steel plant in Romania.

And it was revealed today that a £2.3 million subsidy from the World Bank was approved by the Government in May 2001, as Mr Mittal was making his donation to Labour. The money went to a company run by Mr Mittal in Kazakhstan.

Ms Short said today that there was "absolutely no link of any kind between any UK politician and UK support for LNM projects."

She maintained that her officials had judged the projects involved as "responsible proposals which help restructure inefficient subsidised former communist industries."

However, the billionaire also received financial help from international banks well before Labour came to power.

There was also a grant made to a Mittal firm in June 1996, when the Tories were in power. This was a £19million loan from the International Finance Corporation.