Levy may have to repay party loans

Tony Blair and Lord Levy could be held personally responsible for repaying loans to the Labour Party from wealthy supporters. Labour broke its own rules in obtaining loans from millionaire donors but party funds may not have to pay them back, senior party figures have told the leadership.

City figures and senior lawyers, who are members of the party said that the it could face a court challenge because the loans were obtained ultra vires and without the knowledge of Labour's ruling body.

A group of MPs, lawyers and city experts believes that Labour may have acted illegally by soliciting the loans without telling the party treasurer, Jack Dromey, or the party's ruling body the National Executive Committee.

Among the figures to believe that the party could face a challenge in court is Bob Marshall-Andrews, Queens Counsel and the MP for Medway. He said: "In my view the whole question as to the manner in which the loans were raised and whether they were authorised by the party or ultra vires is going to be really significant party of these investigations."

This weekend another senior Labour figure wrote to Peter Watt, general secretary of the Labour Party, warning him that there may be no legal requirement to pay back the loans.

Bill Sadleir, a chartered accountant who is the treasurer of Devizes Labour Party, has questioned whether those who solicited the loans had the authority to do so. Mr Sadleir believes Labour could face a court challenge from the lenders.

"Clearly we were doing something ultra vires. The NEC were not aware of what was going on and if a lender were to sue on this the people in the frame would be Matt Carter, the Prime Minister and Lord Levy," he told The Independent on Sunday.