The Marketplace Report: U.K. Royalty for Sale? British Prime Minister Tony Blair's ruling Labour Party faces an investigation into claims it sold British honorary titles in exchange for large contributions. Madeleine Brand talks to Stephen Beard of Marketplace about the probe, and the allegation that some seats in the House of Lords -- Britain's upper house of Parliament -- were for sale.

The Marketplace Report: U.K. Royalty for Sale?

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MADELEINE BRAND, Host:

British Prime Minister Tony Blair is in the middle of a row about his party's finances. A senior official in the party says Tony Blair's office ran a secret funding operation involving millions of pounds. It's also been claimed that Blair's government handed over knighthoods and other titles in return for party donations. Joining us from London is Marketplace's Stephen Beard. And Steve, first of all, who is this mysterious senior official and what's he saying?

STEPHEN BEARD: He's the treasurer of the Labour Party, Tony Blair's ruling Labour Party, and he says that during the general election last year, the party received loans worth several million dollars from wealthy supporters. But that money didn't go through him, the treasurer. It didn't go through the party books. It was, in effect, funneled secretly through the Prime Minister's office.

BRAND: And what is he saying happened with that money?

BEARD: Well, he's simply saying I wasn't aware of this money. Why wasn't I aware of it? Why wasn't it brought to my attention? What happened to it? He wants an independent inquiry.

BRAND: And what does Tony Blair say about that?

BEARD: In his weekly news conference today, the Prime Minister said he was aware of the loans. He didn't explain why the money hadn't passed through the Labour Party's books, but he insisted there was absolutely nothing improper about the cash and nothing mysterious about what had happened to it.

TONY BLAIR: This idea that somehow there was some sort of secret account, that the money has gone and been spent on something completely different, as far as I'm aware, is complete rubbish; I mean it will have gone to fight the general election.

BEARD: Opposition critics are not satisfied, however. They say these loans look suspicious. They look as if they may be connected with the whole cash-for-title scandal.

BRAND: Right, and tell us more about that, this allegation that the Labour Party handed out knighthoods in return for donations.

BEARD: That's right, and it's an allegation that's been leveled against this government and many previous governments; that secret deals were done with wealthy supporters. Give us some cash, and we'll give you an honor, like a knighthood or a peerage.

BRAND: But these are supposedly for a public service, right?

BEARD: Anyway, later today in Marketplace, a complete change of gear. From the sleaze-ridden British Parliament to your own noble institution, we'll be taking a closer look at the first stage of the U.S. budget process.

BRAND: Stephen Beard of public radio's daily business show Marketplace, and Marketplace is produced by American Public Media.

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