Envoy embroiled in scandal to quit with Blair

London, May 24: Michael Levy, Prime Minister Tony Blair's West Asia envoy who has been arrested in connection with a political funding scandal, will step down when Blair resigns at the end of June, a spokesman said today.

Lord Levy, who is also a top fundraiser for Blair's Labour Party, was arrested twice during the more than year-long police probe which has cast a shadow over Blair's last months in office. Levy has denied any wrongdoing.

Levy, 62, has handed in his resignation as Blair's West Asia envoy and will leave with the prime minister, who has said he will step down on June 27, a spokesman for Levy said.

His departure was in no way connected with the so-called ''cash-for-honours'' investigation, the spokesman said.

''He has always publicly stated that he would relinquish his duties as the prime minister's envoy when the prime minister stood down,'' he said.

Finance minister Gordon Brown will become prime minister at the end of June when Blair leaves after a decade in power.

A spokeswoman for Blair said it had always been understood Levy would stand down at the same time as Blair.

''The prime minister has thanked Lord Levy for all the work he has done. The prime minister believes ... he has done an excellent job as his personal envoy,'' she said.

A source close to Levy said he expected Levy would also give up his Labour Party fundraising activities.

The police probe focused on whether political parties nominated people for state honours that come with seats in parliament's unelected upper house, the House of Lords, in return for loans.

Police sent their case file to prosecutors on April 20 after interviewing 136 people as witnesses and suspects. Blair was questioned twice as a witness, the first serving prime minister to be quizzed in a criminal investigation.

Prosecutors are still considering whether to file charges against anyone.

Levy was first arrested in July 2006 as part of the party funding probe and again in January this year on suspicion of conspiracy to pervert the course of justice. He was released on bail each time.

Reuters>