Socialist Worker

Labour and Mittal steel: favours just for business friends

Issue No. 1788

Trade Unions give money to New Labour and get kicked. Businessmen hand over cash and get favours. That's what has been revealed around the scandal of the £125,000 donation to the government by steel magnate Lakshmi Mittal. Mittal wanted to buy a privatised Romanian steel plant last year. He made a donation to New Labour's election campaign.

Soon afterwards he got a letter of support from Tony Blair to the Romanian prime minister. Blair claims this had no impact on Mittal getting the deal. Yet the French government was pushing its own rival bidder at the same time. Mittal needed help. His LNM steel group's plant in Cork, Southern Ireland, had just gone belly-up, with the loss of 400 jobs and debts of £36 million. Despite this record, Blair backed Mittal.

Blair wrote to his Romanian counterpart, 'I am delighted by the news that you are to sign the contract for the privatisation of your biggest steel plant with the LNM group. 'I am particularly pleased that it is a British company which is your partner.' Mittal's wife, Usha, had also made a £5,000 donation to the local party of Keith Vaz, the disgraced former Europe minister. Blair said when this scandal broke that he was unaware that Mittal was a major donor.

But Blair went to a thank-you party for big donors last June hosted by Lord Levy. This was one month before the letter was written. Mittal was one of only three Asians present. The right wing press attack Blair for being 'unpatriotic'.

LNM's parent company is registered offshore in the Dutch Antilles tax haven. Mittal is also bankrolling a US campaign to put a 40 percent tariff on steel imports that could hit the Anglo-Dutch steel company Corus.

But the problem with Mittal is not his nationality. It is his wealth, and the fact that he is one more example of business whispering in ministers' ears.

Mittal avoids paying personal tax in Britain by exploiting a legal loophole that Labour pledged to close in 1997. His £6 million house in Hampstead, north London, is owned by an offshore company.

Blair's helping hand

  • BERNIE ECCLESTONE: The Formula One boss gave £1 million to New Labour in January 1997, four months before it was elected. The government decided after the election to make Formula One exempt from the ban on tobacco advertising.
  • RUPERT MURDOCH: Tony Blair intervened in March 1998 to help the billionaire media magnate and union-buster expand his empire. He phoned the then Italian prime minister Romano Prodi on Murdoch's behalf to see if there would be any obstacles to his takeover of Mediaset, an Italian-based media company.
  • ENRON BOSSES: The now bankrupt energy multinational sponsored successive Labour Party conferences after the 1997 election. New Labour changed its energy policy allowing Enron to build a gas-fired power station on Teesside. It also allowed Enron to buy Wessex Water in 1998 without referring it to the Monopolies and Mergers Commission.

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Article information

Sat 23 Feb 2002, 00:00 GMT
Issue No. 1788
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