UK loan scandal hearing delayed for police probe

LONDON, Mar 28 (Reuters) British police investigating whether Tony Blair's Labour party committed crimes by selling seats in the upper house of parliament has told parliamentarians to delay hearings into the affair pending their probe.

London's Metropolitan Police are investigating whether the prime minister's party broke a 1925 law that bans selling Lordships, in a scandal has threatened to tarnish Blair's final years in office with allegations of sleaze.

A parliamentary committee had planned hearings for today to ask millionaire donors whether Blair's fundraisers had promised to make them lords -- with lifetime seats in the House of Lords -- in return for cash they secretly loaned to Labour.

But Deputy Assistant Commissioner John Yates of London's Metropolitan Police, who is leading a criminal probe into the affair, persuaded the committee to put off its hearing because it might hurt his investigation.

''DAC John Yates has met the Public Administration Select Committee at their invitation today to present the Met's views, that for the (committee) to hold a public evidence session may cause abuse of process issues for any potential future criminal trial,'' a police spokeswoman said yesterday.

The committee put off today's hearings, but media reports said committee members still intend to question the witnesses in a few weeks.

The scandal erupted this month after it emerged that a body which vets nominees for the House of Lords had disqualified four millionaires offered Lordships by Labour who had secretly loaned the party millions.

Under Britain's system, political parties nominate luminaries for ''peerages'', making them lords and ladies with lifetime seats in the upper house of parliament.

Parties must disclose the names of any donors who give them money outright. But a loophole allows parties to accept money in secret if it is offered as a loan.

A list of 12 businessmen who made large loans to Labour, which the party published last week, includes four men the party tried to make lords, but whose peerages were rejected by the House of Lords Appointments Commission, the body that vets them.

The opposition Conservative Party acknowledges it also received large secret loans. Unlike Labour, it has not named the donors.

Reuters PDS VP0647