BBC gag centred on cover-up in funding probe

LONDON, Mar 4 (Reuters) The BBC said that a story about a political funding scandal it was barred from running could have been central to police inquiries into a potential cover-up involving aides to Prime Minister Tony Blair.

The British Broadcasting Corporation said the report, which was blocked by a court injunction late on Friday, referred to an internal e-mail between ''two members of Blair's inner circle''.

E-mail traffic between Blair aides is of key interest to police investigating whether officials hid evidence from them as they probed the alleged awarding of state honours by political parties in return for cash, media reports have said.

The government's top lawyer, Attorney General Lord Peter Goldsmith, obtained the court injunction against the BBC late on Friday following a request by police.

Detectives have been investigating since March last year whether parties awarded honours, which come with seats in parliament's House of Lords, in return for loans but in recent months their inquiry has widened to include a potential cover-up.

The investigation has cast a shadow over Blair's final months in office. He is expected to go in or by July this year.

Two Blair aides were recently arrested on suspicion of perverting the course of justice or conspiring to do so.

Blair has been questioned twice as a witness by police.

Police sought the injunction against the BBC ''because of their concern that disclosure of certain information at this stage would impede their inquiries,'' a joint statement from the Metropolitan police and Goldsmith said.

''The Attorney General acted in this regard completely independent of government and (in) his independent public interest capacity,'' said the statement.

The BBC said its reporting of the story was a matter of public interest.

The move sparked speculation among politicians and lawyers that officers were planning to bring charges against one or more individuals or that police could be on the verge of wrapping up their investigation.

The leader of the opposition Liberal Democrats Menzies Campbell suggested the blocking of the report implied detectives were planning to charge someone.

''I think what one might be able to infer from the fact that he (the attorney general) felt it necessary to seek this injunction is that he at least contemplates the possibility that a prosecution of some kind will follow,'' he told BBC's Newsnight programme late on Friday.

Lord Levy, Blair's top fundraiser and Middle East envoy, was arrested in January on suspicion of conspiracy to pervert the course of justice, signalling the inquiry had moved beyond the funding scandal. He was first arrested last year.

Ruth Turner, director of government relations in Blair's office, was also arrested in January on suspicion of perverting the course of justice and released without charge.

All those involved deny any wrongdoing.

Reuters DH VP0545