BRITAIN:Police in the cash-for-honours inquiry are examining details of meetings attended by Lord Levy, the British Labour Party's chief fundraiser, at which the question of political honours may have been discussed.
Detectives are investigating whether Lord Levy later suggested to colleagues that they should not draw attention to his involvement in the discussions because of the fevered atmosphere surrounding the inquiry.
Lord Levy has been arrested on suspicion of conspiracy to pervert the course of justice, but yesterday vigorously denied any wrongdoing. His rabbi said Lord Levy believed he was being leaked against by the police, and was the victim of anti-Semitism.
The Labour peer had an advisory role in the submission of honours nominations. The shortlists are drawn up before they are presented to the Lords Appointments Commission. Typically, those meetings would include Downing Street staff and senior members of the party. But the final decision about who is to be nominated is taken by the prime minister.
Political sources said yesterday it would be perfectly legitimate for Lord Levy to attend meetings at which honours were discussed. Loans or donations given by party members should not preclude anyone from being considered for an honour by the prime minister, they said.
It is understood that Lord Levy did not contribute any names to the lists nor offer honours to any financial backer, but was simply asked for his opinion on potential peers.
The latest twists in the investigation came as it emerged that detectives investigating whether political parties broke election law by accepting uncommercial loans in the run-up to the last election have run into problems after the Electoral Commission admitted its rules were too vague.
An injunction against the BBC was lifted, enabling it to publish its story which concerned a note written by the Downing Street aide Ruth Turner to her lawyers about Lord Levy.
The Metropolitan Police and the attorney general, Lord Goldsmith, expressed their anger that the Guardianhad revealed that a meeting between Lord Levy and Ms Turner lay at the centre of the police inquiry.
A high court judge permitted the newspaper to go ahead with the publication of its story on Monday night despite a desperate two-hour attempt by Lord Goldsmith to seek an injunction preventing publication.
The Guardianreported that Ms Turner expressed concern in a legal document that Lord Levy was asking her to shape her recollection of events leading up to the nomination of honours to some Labour donors. The document was passed by her lawyers to the police. There is no evidence that this document recounting her differences with Lord Levy was passed to Jonathan Powell, Tony Blair's chief of staff, although at one point she apparently considered doing so.
It was being stressed by police sources yesterday they did not regard Ms Turner, still under police bail, as in the clear, and she still had issues to answer about her co-operation with the inquiry.
Following the judges' decision on Monday night not to grant an injunction preventing publication of the story, the attorney general decided yesterday morning to no longer seek to maintain a separate injunction imposed on the BBC preventing it from publishing its own similar version of the same story and a high court judge lifted the injunction.
In a vehement and emotional statement yesterday Lord Levy protested his innocence, claimed he was the victim of a smear campaign and raised doubts about whether he would be able to secure a fair trial if a criminal case were ever brought. He said the near year-long investigation was placing a huge strain on his family.
Despite the difficult meeting with Ms Turner, Lord Levy continued to secure support from some of the prime minister's closest allies yesterday who insisted that no offence had been committed or covered up.
In the statement his lawyers said: "Lord Levy categorically denies any wrongdoing whatsoever. He has done so throughout this very protracted police investigation. The current round of reports in the media, which are said to be based on leaked material under consideration by the police, are partial, contradictory, confused and inaccurate. There has been a regular stream of leaks to the media, all of which have presented a prejudiced and distorted view.
"Cumulatively, these leaks and reports have created a climate which does not allow for any fair assessment of the investigation.
"All the reports appear to be based on secondhand information given by someone or some people who are intent on smearing Lord Levy. They also seem to want to manipulate the outcome of the police inquiry.
"Any fair-minded person must realise the intolerable burden that is placed on Lord Levy and his family by this media-style trial. Lord Levy respects the integrity of the police inquiry and so is unable to comment further. We have asked the police, whose investigation this is, to find out where the leaks are coming from."