Nolan 'should investigate Tory funding'

Labour last night demanded that the Prime Minister should allow the Nolan Commission to look into allegations of "secret and suspect" funding of the Conservative Party by the fugitive tycoon Asil Nadir.

The move came after the Tories were also accused of receiving pounds 100,000 from a Serb-born businessman linked to the Bosnian Serb leader Radovan Karadzic.

The claims resulted in the Conservative Party chairman, Dr Brian Mawhinney, ordering an immediate internal inquiry into the allegations - which have been strongly denied by the unnamed businessman through his lawyers.

The Labour deputy leader John Prescott said the case for the Tories to open up their party's books to public scrutiny was now "unanswerable" and Lord Nolan should be allowed to mount a full investigation.

A Commons motion sponsored by Labour's Andrew MacKinlay, MP for Thurrock, piled on the pressure, adding: "Any failure to open the books or to allow proper examination will be inevitably seen as confirmation that the Conservative Party has something serious to hide."

But Downing Street sources rejected the calls, insisting: "It is not in Lord Nolan's remit to investigate these allegations. There has already been a Home Affairs Select Committee report on the issue." The former Conservative Party Treasurer Lord McAlpine entered the row, calling for the money donated by former Polly Peck chief Nadir to be handed back.

Lord McAlpine, who was party treasurer when Nadir made his pounds 400,000 donation, said it now appeared the money was "dubious" and should be returned to the receivers of Nadir's failed business empire.

Accountants Touche Ross were reported to have advised Conservative Central Office secretly three years ago that pounds 365,000 of the money given by Nadir had been stolen from Polly Peck.

Lord McAlpine told BBC Radio 4's World at One programme: "At the time we took the donation from Asil Nadir, he was regarded as one of Britain's leading businessmen.

"It seems as if the money that we took was dubious. Personally, I would have given it back."

Insisting the Tories must now open their books, Mr Prescott said: "As things stand, a multi-million pound Tory campaign is being funded from secret sources.

"We have no idea what promises the Tories have given to foreign donors in return for the money. Such a situation is a constitutional outrage. The time has come for John Major to reverse his previous decision to deny Nolan the opportunity to investigate party funding.''