Twist as No10 praises Mandelson

Tony Blair today cleared the way for Peter Mandelson to come back to a top job with a virtual apology from Downing Street for the way he was forced out of the Cabinet.

As a new report reaffirmed that Mr Mandelson had committed no wrongdoing in his dealings with the wealthy Hinduja brothers, No10 said the former Northern Ireland Secretary had been the victim of "a muddle".

The report found Mr Mandelson innocent of the charges that he used improper pressure to back an application by Srichand Hinduja for British citizenship in return for a donation to the Millennium Dome.

The Prime Minister's official spokesman said that Mr Blair welcomed the re-opened report from Sir Anthony Hammond demonstrating there had been "no impropriety, no wrongdoing, no passport for favours".

He went on: "We have always said that the reason why Peter Mandelson left government was because of the muddle that arose as a result of the general handling of this issue when it became an issue of political controversy, rather than the substance of the charges, which have again been shown to be totally baseless.

"Had the documents been available at the time, the picture of events would have been far clearer and less open to misinterpretation, the sequence of events including the resignation may well have been different."

Despite the "not guilty" verdict, the Downing Street disclaimer and a welcome from Mr Mandelson himself, today's report threw up new and potentially damaging questions.

Critically, Sir Anthony is still unable to say whether or not a telephone call, which became central to the affair, took place between Mr Mandelson and the then immigration minister Mike O'Brien.

And his report reveals an extraordinary memo, warning the minister to put nothing in writing, which Sir Anthony himself concedes could lead people to believe there was a "conspiracy" over Mr Mandelson's backing for British citizenship to be granted to Srichand Hinduja.

The handwritten memo from Mr Mandelson's ministerial private secretary, Mark Langdale, was written in July, 1998.

With its key words underlined, it says: "Perfectly legitimate for you to raise issue with Mike O'Brien. Agree that you cannot be seen to push this personally much further. No matter how justified SP ( Hinduja's) nationality claim is, media and others will (if your involvement becomes public) accuse you of improper influence (motivated by Dome connection).

"Advise that we await outcome minister of state's own investigations - and avoid anything in writing for time being."

Sir Anthony, in his report, says he questioned both Mr Mandelson and Mr Langdale "because I knew some would cite this as further evidence of a conspiracy, designed to influence the decision to grant naturalisation to Mr SP Hinduja without Mr Mandelson's involvement being apparent".

Sir Anthony concludes that he rejects "the idea that Mr Langdale and Mr Mandelson were conspiring in any way," pointing out that both of them had protested to him that if they were hatching a plot they would hardly have done so by means of a signed and dated written note.

Mr Mandelson, 48, is unique in modern times for being forced to quit the Cabinet twice.

He has said he would not accept another ministerial post even if one was offered. But there have already been suggestions he could replace former Labour leader Neil Kinnock as one of Britain's two Euro commissioners or go to Washington as ambassador.

Downing Street refused to say whether Mr Mandelson had now been given an apology from Mr Blair or from Alastair Campbell, the Prime Minister's Press Secretary at the time he resigned, who played a central role in his departure.

Opposition MPs and others have already demanded to know why Mr Blair should have taken the unusual step of authorising the inquiry to be reopened, at a cost believed to be upwards of £30,000, when the first attempt had already cleared Mr Mandelson and the new look had produced no fresh result.

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