Ex-government adviser arrested in UK sleaze probe

LONDON, Apr 13 (Reuters) A sleaze row surrounding the ''sale'' of British peerages in return for financial support to political parties threatened to damage Prime Minister Tony Blair today after police arrested a former government adviser.

Police sources told Reuters that Des Smith, a 60-year-old former adviser on Blair's flagship schools programme, had been held this morning in connection with a police inquiry.

Police have been investigating all political parties in Britain after a row broke out in March over claims that peerages had been awarded to party donors.

Smith has been in the spotlight before.

He resigned in January after telling an undercover reporter from the Sunday Times newspaper that anyone making donations to the schools programme could expect to receive honours, knighthoods and peerages.

A spokesman for Downing Street today said the arrest was a matter for the police and they would be making no further comment.

Blair swept to power in 1997 promising to be ''whiter than white'' after a string of sleaze allegations damaged the previous Conservative government.

But last month, Blair's Labour party revealed it had received nearly 14 million pounds in loans from 12 businessmen, some of whom were later nominated for seats in the upper House of Lords.

The party denied ''selling'' the peerages and dismissed allegations from political opponents that donors' companies got favourable treatment in return for their support.

Police launched their investigation after several members of parliament asked them to look into possible breaches of a law dating from 1925 that forbids selling public honours.

Scottish National MP Angus McNeil, one of the politicians who called for a probe, said he was pleased with the news.

''I think basically the clean-up of politics at Westminster has begun in earnest and of course I welcome that,'' he told BBC news.

Under British law, parties have to declare major donations but can keep details of loans under wraps.

The damaging ''cash for peerages'' row has come at a tough time for Blair as he faces persistent questions about when he will step down after he declared he would not seek a fourth term.

But the initial furore had calmed down as the opposition Conservatives, who also faced questions about their financial backers, failed to make any political capital out of the row.

Blair ousted most hereditary peers in 1999, ending hundreds of years of tradition, but further attempts to change the make-up of the upper chamber have stalled.

Most peers in the House of Lords have been appointed for life.

Some are politically appointed, others are recommended by the House of Lords Appointments Committee.

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