UK police target January for end of honours probe

LONDON, Nov 17 (Reuters) British police investigating whether Tony Blair's Labour Party gave state honours in return for loans hope to send evidence to prosecutors in January.

Police have interviewed 90 people and have obtained ''significant and valuable'' material, John Yates, the senior police officer leading the politically explosive enquiry said in a letter to legislators made public yesterday.

Prime Minister Blair has been hurt by the row which blew up this year after it was disclosed businessmen had been nominated for seats in the upper house of parliament after lending the Labour Party large sums to bankroll its 2005 election campaign.

A host of senior government ministers have been contacted by police seeking evidence and opposition political parties are also under the spotlight.

Police have not yet interviewed Blair, who is in his 10th year as prime minister.

As part of their investigation, police have arrested the Labour Party's top fundraiser Lord Michael Levy; Des Smith, a 60-year-old former adviser on Blair's flagship schools programme; and Christopher Evans, founder of biotechnology company Merlin Biosciences.

All three were released on bail without charge and deny wrongdoing.

Yates said the cash-for-honours probe was entering its final stages but he could not comment in detail because of ''the possibility of future criminal proceedings''.

''Assuming the cooperation of the parties and individuals involved, then I hope to be able to forward a file to the Crown Prosecution Service in January 2007,'' he said in a letter to a parliamentary body that has also been investigating the affair.

SUFFICIENT EVIDENCE Prosecutors will decide whether there is sufficient evidence to file charges and they would have to consider ''what are likely to be complex and sensitive legal issues'', Yates wrote.

Many business figures have been elevated to the peerage over recent decades for a variety of reasons including philanthropy, giving them titles such as Lord and seats in the upper house.

The sale of state honours has been a crime since 1925.

Yates aroused curiosity among political commentators by saying ''the major developments in this inquiry are not in the public domain''.

Of the interviews conducted, 35 were linked to Blair's Labour Party, 29 to the main opposition Conservatives, four to the Liberal Democrats and 22 were not connected to a party, Yates said.

The row has led to demands for the reform of political party funding in Britain and fuelled calls for Blair to stand down.

His popularity hit by the Iraq war and a series of government scandals, Blair has pledged to leave office within a year.

REUTERS PDS PM0416