Labour faces probe over Enron links

LABOUR is facing a succession of inquiries into its links with the collapsed US energy giant Enron. The Conservatives will ask Cabinet Secretary Sir Richard Wilson to investigate claims that Enron paid Labour thousands of pounds to meet senior ministers.

MPs also called for a Commons inquiry into Labour's close relations with Arthur Andersen, the accountancy firm accused of shredding key documents about Enron's collapse.

The storm erupted after the man who headed Enron Europe between 1997 and 2000 said the company spent £36,000 on a series of Labour functions and gala dinners. Ralph Hodge said its donations helped open doors to Labour ministers, including former Trade Secretary Peter Mandelson.

One meeting with Mandelson, he said, happened shortly after the firm had sponsored a Labour gala dinner. The minister was accompanied by his special adviser and a department official. 'We had a good dialogue,' he said. Hodge believed Enron's chairman Ken Lay met Labour ministers on visits to Britain.

Cliff Baxter, the Enron director who committed suicide last week, also visited Britain when the firm was making its £ 1.5bn purchase of Wessex Water.

Hodge described how he helped to arrange to sponsor dinners at the 1998 and 1999 Labour Party conferences. The Prime Minister was guest of honour in 1998 and both dinners were attended by an impressive array of ministers. The company was trying to convince the Government to change its mind on the moratorium imposed on gas-fuelled power stations. The ban was eventually lifted in 1999.

Shadow Cabinet Office minister Tim Collins said: 'On the face of it, this constitutes a major cash-for-access scandal.'

Downing Street denies any impropriety, but Liberal Democrat Matthew Taylor stepped up the pressure by asking the Commons Public Administration committee to examine Labour's links with Arthur Andersen. The accountancy firm has faced accusations of malpractice and fraud after the shredding of the documents.

Andersen was banned from Government work 20 years ago by the Tories over its role in the De Lorean car scandal. It helped develop Labour's economic policies in opposition.

In America, Vice President Dick Cheney may be questioned by Congress over his secret meetings with Enron, which was President Bush's largest campaign contributor.

In another development, the Institute of Chartered Accountants is expected to hold an inquiry into former Tory Energy Minister Lord Wakeham's role as a non-executive director of Enron.