Blair's lawyers fail to gag report on funding probe

LONDON, Mar 6 (Reuters) Lawyers for British Prime Minister Tony Blair's government failed to stop the publication today of a newspaper story about a possible cover-up in an investigation into political party funding.

In a further embarrassment to Blair, who has struggled to dispel the scent of a funding scandal in his final months in office, a High Court judge refused to grant an injunction to Attorney General Lord Peter Goldsmith, who had applied for a gag on The Guardian newspaper at the request of the police.

After Goldsmith's legal challenge failed, the Guardian ran a front page story suggesting some of Blair's closest aides may have attempted to influence evidence given to police leading an investigation into party political funding.

Detectives have been investigating for the past year whether political parties nominated people for state honours in return for loans but are now also probing whether any Blair official sought to conceal evidence from police.

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

Blair has been questioned twice as a witness by police.

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

Goldsmith successfully secured an injunction last Friday to block the BBC from running a story about a message sent between two of Blair's aides.

The terms of that injunction were relaxed yesterday, allowing the BBC to report that the document in question was written by Ruth Turner, director of government relations in Blair's office, and that it concerned Lord Levy, Blair's top fundraiser and West Asia envoy.

Levy 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.

Turner, was also arrested in January on suspicion of perverting the course of justice and released without charge.

The Guardian said police were investigating whether Levy may have tried to ''shape'' Turner's evidence to the inquiry.

It said police were particularly interested in a meeting between Turner and Levy last year. It said Turner had given an account of that meeting to her lawyers and to police.

In a joint statement, Goldsmith's office and London's Scotland Yard police headquarter, said they had sought the injunction because the article ''gave us cause for concern''.

The injunction ''was refused by the judge on the grounds that the newspaper had already been printed,'' the statement said.

A spokesman for Blair's office said he did not want to comment in detail, but ''continued to believe that there are inaccuracies in some of the reports''.

A spokesman for Blair had yesterday contested the BBC report, saying: ''This story is not accurate because we dispute this version of events'', but declining to specify which aspect of the story he disputed.

Alan Rusbridger, editor of the Guardian, said in a statement its story was ''well-sourced and clearly in the public interest''.

''In this country there is a well-established principle that the state cannot exercise prior restraint on newspapers''.

REUTERS MS SSC1600