Sir Gulam Noon

London, March 19: Indian businessman Sir Gulam Noon is the latest person to have his nomination for a peerage blocked because a ?250,000 loan made to the Labour Party last year was not declared, it was reported today.

“I have done nothing illegal,” said Noon, who is nicknamed the “curry king” and is one of the most respected figures in the Indian community in the UK.

The whole problem has arisen because Labour told businessmen willing to help the party financially that, under the rules, they would be required to declare gifts but loans could be kept confidential.

Noon has made donations totalling ?200,000 to Labour over the past five years, which were all declared but the loan of ?250,000, which was given at commercial rates of interest, was not.

If Noon’s peerage is blocked by the Appointments Commission, the watchdog body which scrutinises nominations, the move will go down badly in the large Indian community where he is an influential figure. He has also been an important figure at the Indo-British governmental level, who has helped to bring the two sides together on crucial business dealings.

“If the commission had asked me about a loan, I would have declared it,” he told The Telegraph. “I was only asked about donations and I declared that.”

Noon, 70, pointed out that he had set up his Noon Foundation to channel the many requests for donations that he received.

“I have donated ?100,000 towards the ?500,000 needed to set up the India Room at the Oval cricket ground; I have donated ?100,000 to Delia Smith (a well known cookery writer, TV personality and owner of a football club) for her Norwich City Football Club and ?200,000 to Tower Hamlets College for a mentoring scheme to help young people. Only last week, I gave ?18,000 to Surrey County to fund a pre-season tour of Mumbai by its cricketers.”

There is no doubt that while Noon has a record of being philanthropic, the loans issue is being used by opponents of Tony Blair to target the Prime Minister whose standing has slipped to an all time low in the opinion polls.

Today’s Sunday Times reported: “Sir Gulam Noon, the curry magnate nominated to become a lord by Tony Blair, is the latest name to be dragged into the scandal surrounding Labour’s covert loans. Sources close to the Appointments Commission, the body that vets potential peerages, say it is withdrawing its previous endorsement of Noon because neither he nor the party disclosed his loan of up to ?250,000.”

The paper said: “Labour received almost ?14 million in loans to bankroll its 2005 election campaign. Sources close to Downing Street have said there were at least eight wealthy backers who gave loans, including the four who were recommended for peerages.”

The paper said: “Sources close to the commission confirmed it would now be recommending that Noon’s proposed peerage did not proceed. Although the commission has no formal power to reject nominations and only makes recommendations, Blair has indicated he will follow its advice.”

There had been an identical leak to the Independent today, which reported today: “Mr Blair’s nomination of Sir Gulam Noon has been rejected by an independent watchdog, reversing its initial approval.”

The paper went on: “Downing Street received a hand-delivered letter containing the watchdog’s reservations last week.”

The Independent quoted Lord Oakeshott, a Liberal Democrat, who asked: “How many more amazing coincidences do we need before Tony Blair confesses the connection between loans, donations and peerages?”

The paper said: “Barry Townsley, Sir David Garrard and Dr Chai Patel have previously been rejected.”

While Townsley and Garrard have said they no longer wish to be considered for a peerage, Patel still intends to go on fighting for his.

“Dr Patel indicated yesterday that he was not willing to withdraw, issuing a statement calling for ‘fairness’ in his treatment after the leak of his name,” according to the Independent.

“The watchdog has written to him to apologise for the ‘considerable distress’ caused by the ‘stories appearing in the media’. A ?1.5 million loan made by Patel falls due in August. Labour has debts of around ?23 million and faces crisis as loans come up for repayment.”

Critics of Blair have alleged that several donors have been offered peerages but this has happened with candidates nominated by all the major parties.

Noon said: “When the loan was made last year, the question of the peerage did not come up at all.”

Noon was given his knighthood in 2002. He has also contributed generously to the Prince’s Trust, the charity run by Prince Charles to help young people.

Unlike Patel, Noon does not intend lodging a protest if his nomination is indeed blocked.

“I shall abide by the decision of the commission,” he said. “I’m quite relaxed about it.”

Noon is known to be one Indian businessman who has prided himself on being transparent in his business dealings. After he had made an estimated ?50 million from selling Noon Products, the company he founded, he said he was advised by his accountant to become a tax exile.

“I refused,” he said. “I told him that I wanted to pay my taxes in Britain because Britain is my home. I did not want to move to Monte Carlo.”

One dilemma for successful Indian tycoons is that they are put under heavy moral pressure to make all manner of donations (“you should put something back into the country which has been so good to you”). Lakshmi Mittal, for example, has given over ?2 million to Labour. But once they make their donations, they are, ironically, accused of seeking favours for the cash they have given (“I suppose you want an honour now?”).