Labour begged Mittal for cash

Labour went cap-in-hand to tycoon Lakshmi Mittal for the £125,000 donation at the centre of the "steelgate" affair, party chairman Charles Clarke disclosed today.

Mr Clarke admitted that the party had "solicited" the cash from Mr Mittal. The money was paid only two months before the tycoon's LNM Group clinched a £300million Romanian deal, controversially backed by Tony Blair.

It had been assumed that Mr Mittal, a previous smaller-scale Labour donor, had simply offered the party the cash. Mr Clarke's admission that Labour had effectively got out its begging bowl raised fresh and urgent questions about the affair.

The Tories were set to demand who exactly had solicited the £125,000 from Mr Mittal - and when. Potential suitors included fundraiser Lord Levy, who is understood to have introduced Mr Blair to Mr Mittal, and Jonathan Powell, Mr Blair's chief of staff. Mr Clarke's comments came as he was questioned on Radio 4's World At One about whether Labour had made mistakes on the issue.

He replied: "I don't think we did in particular. The fact is the donation was made - it was properly checked out. There was no relationship with the decision that was taken on the advice of ambassador in Romania to pursue the question of liberalisation of the economy of Romania.

"If people believe there's fire where there's smoke, of course they'll be worried about that but I don't think we made a mistake either in the soliciting of the donation or in the decision-taking process around the letter the Prime Minister wrote."