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Blair defends support to Mittal's Romanian plant acquisition

British Prime Minister Tony Blair defended his intervention in helping Laxmi Mittal, Indian steel magnate, and a Labour Party donor, buy a Romanian steel plant even as the government rejected the opposition Conservatives' demand for an inquiry into the matter.

"Government will back companies to get contracts the whole time. If we are not careful, we will be in the absurd situation where governments don't have anything to do in promoting British business, which would make us a pretty unique government in the world," Blair said before leaving Senegal for London on Sunday in comments reported by the Daily Telegraph.

Simultaneously, brushing aside opposition Tory demands for an inquiry, officials in the Prime Minister's Office said Blair had done nothing wrong and regularly wrote letters to foreign leaders backing deals involving "British" companies.

Less than a month after Mittal was reported to have given the Labour Party £125,000, Blair wrote a letter to Adrian Nastase, the Romanian prime minister, on July 23 supporting the bid by Lakshmi Mittal, a London-based Indian billionaire, to buy the nationalised steel company, Sidex, according to media reports.

Before leaving Senegal, Blair challenged his critics to produce evidence. "If people have got a complaint to make, let them make it," Blair said according to the report.

In his letter Blair emphasised that privatisation of the Sidex plant, employing 27,000, would smoothen the way for Romania's entry into the European Union.

Mittal, who owns Ispat International, the world's fourth largest steel producer, is Britain's richest Asian.

On June 26, three weeks after the general election, Mittal gave £125,000 to Labour's headquarters.

In 1997, he was listed as one of the party's largest donors but the figure was not disclosed. The accounts list says 'more than £5,000'.

It is the latest in a series of allegations that the government has favoured firms that gave money to Labour.

Executives of Enron, the failed American energy company, claimed recently they had contributed £36,000 to Labour to ensure access to ministers. Michael Ancram, shadow foreign affairs spokesman, said a full inquiry was needed.

"We have seen a series of these allegations over Tony Blair's time in government, that giving large sums of money to the Labour Party ends up with the government changing its policy or withdrawing a moratorium or, as in this case, trying to help the person involved to do business."

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