The diamond dealer whose donations have proved awkward for both parties

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Indy Politics

The international diamond merchant Willie Nagel – one of the key backers of Peter Hain's campaign for the Labour deputy leadership – was embroiled in a political funding controversy a decade ago that involved his links to the former prime minister John Major.

The businessman, who gave Mr Hain's campaign a £35,000 interest-free loan on top of a £5,000 donation, was embroiled in a row after donating £20,000 to Mr Major's constituency association. The Independent revealed in 1997 that Mr Nagel had tried to interest the Prime Minister in an unmanned aircraft developed by Israel, despite the fact there was an embargo on Israeli equipment at the time.

Mr Nagel, 83, whose diamond-trading business has offices in Antwerp, Bangkok, Mumbai, New York and Tel Aviv, had offered sponsorship for two local party events after the Conservatives' 1992 election victory. He wrote to Mr Major suggesting he pass on details of the unmanned aircraft project to the relevant government department.

In 1992, Norma Major, the Prime Minister's wife, was reported to have viewed diamonds at his office in Holborn, central London. Mr Nagel arranged Wimbledon finals tickets for Mr Major's agent, Peter Brown, in 1992 and even telephoned Mr Major at home in 1994. But their relationship appeared to hit difficulties.

A note to Mr Major from the Huntingdon Conservative Association at the time pointed out that Mr Nagel's friends included "diplomats, industrialists and prominent members of the Jewish community". But it went on: "His persistence along with his ability never to take no for an answer is wearing in the extreme, which is part of the cause of the relationship souring."

However, relations improved and the businessman was invited on a trade mission to Israel in 1995.

Mr Nagel also forged links with Margaret Thatcher, once reportedly joking "even Mrs Thatcher listened to me".

Mr Nagel, a Romanian who fled to Palestine just after the outbreak of the Second World War, came to know Mr Hain through his work establishing the so-called Kimberley Process to stem the flow of "blood diamonds" from conflict zones in 2003, when Mr Hain was a minister at the Foreign Office. Mr Nagel said last week that he respected Mr Hain's work "both nationally and internationally".

Mr Nagel provided £30,000 for the Progressive Policy Forum (PPF), the controversial think-tank at the heart of the Hain controversy. The money was then used to help fund Mr Hain's failed bid for the Labour deputy leadership.

Mr Nagel insisted in a statement issued through his lawyers last week that he "donated and loaned money to PPF and had no objection that this money be used to support Peter Hain's campaign".

Mr Nagel, who has been chairman of W Nagel International Diamond Brokers since 1955, has been described as the "doyen of de Beers" for his work in the diamond industry.

A significant figure in the Jewish community, he has been repeatedly honoured. He was made a Companion of the Most Distinguished Order of St Michael and St George in 2001, to add to honours from Belgium, Germany and Romania.

Last year the German ambassador attended a service at the St John's Wood synagogue in north London organised by Mr Nagel where the Chief Rabbi, Sir Jonathan Sacks, gave a sermon.

Mr Nagel travelled to England from Tel Aviv to study law at University College London and was called to the Bar in 1949. He forged a career in the diamond business after failing to secure a position in the Israeli diplomatic service.

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