Police quiz biotech chief in honours probe -reports

LONDON, Sep 21 (Reuters) A third man to be quizzed by police investigating a loans-for-Lordships scandal is a leading businessman in the biotechnology industry, media reports said.

Reports citing unnamed sources said Sir Christopher Evans, founder of Merlin Biosciences, had been arrested yesterday by detectives probing whether political parties had offered honours, knighthoods or peerages to their donors.

Police have already questioned Lord Michael Levy, Labour's top fundraiser, and Des Smyth, a former government adviser.

''A man was arrested by police officers in connection with alleged offences under the Honours (Prevention of Abuses) Act 1925,'' London police said in a statement.

The man was released on police bail after questioning.

The Daily Telegraph newspaper said Evans, whose venture capital business is one of the largest investors in companies working in biosciences across Europe, had loaned Labour 1 million pounds between January and May last year.

There was no immediate response from Merlin today.

Detectives are investigating allegations that Labour promised peerages in return for loans to help the 2005 general election campaign.

The long-simmering party funding scandal boiled over in July when police arrested Levy, who is Prime Minister Tony Blair's sometime tennis partner and personal W Asia envoy.

Levy was bailed without charge in July but faced further police questioning yesterday, Levy's spokesman said.

''Lord Levy returned as requested to meet the police today to help with their ongoing investigation,'' the spokesman said, without giving any further details.

The scandal has hurt Blair and fuelled calls that he should stand down amid a series of sleaze and mismanagement allegations that have surrounded several members of his cabinet.

Blair, who could face a turbulent reception later this month at Labour's annual conference, has pledged to step down within a year after three terms in office, but has refused to give a precise date.

REUTERS SP BD1630