Mahmoud Khayami has given a total of £830,000 to Labour in the past eight months, making him Labour’s biggest individual backer after Lord Sainsbury.
Khayami made his first donation of £500,000 just 24 hours after becoming legally allowed to do so. In 2005 he began giving money to Labour’s city academy programme.
The tycoon, who runs a car dealership in California and has a villa in Cannes in the south of France, is a close friend of Labour-supporting “fixer” Anthony Bailey, whose own £500,000 donation was rejected by Labour in 2005.
Bailey claims to have raised more than £8 million for Labour’s academy schools programme. He worked in the past for both BAe Systems and the Saudi regime. The relationship between the company and the Saudis was the subject of a recent Serious Fraud Office inquiry.
He has been an adviser to the department of education and skills, a member of the ministerial task force on gifted and talented education and a special counsel to Saudi Arabia’s King Faisal Foundation.
Both Khayami and Bailey gave money to Hazel Blears’s deputy leadership campaign.
The government has accepted £1 million from a secret donor to help fund Islington Green academy in north London. The go ahead for this academy is expected to be signed soon by Jim Knight, the schools minister.
Details of the anonymous donor have emerged only because of an application under the Freedom of Information Act.
By giving money through City University, the official sponsor, the donor can stay anonymous.