Aga Khan threatens to take Islamic art overseas

The hopes of one of the world's richest men to build a museum on one of London's most prized sites suffered a blow yesterday when the site owner said it would prefer to sell to the NHS.

The Aga Khan had selected Block Nine, a disused Victorian hospital building on the Thames opposite the Houses of Parliament, to house the largest collection of Islamic art in the English-speaking world.

Boasting some of the finest examples of Middle Eastern painting over the centuries, the museum would be the latest multimillion-pound addition to the string of cultural complexes lining the South Bank.

Until last month, the chances of the billionaire, known for his horse racing empire, securing his goal looked high. Now, faced with losing the site, the fear is that he might take his philanthropy abroad.

In an effort to guarantee a sale, the Aga Khan's charitable foundation has tabled a bid of £24m, considerably more than its market value, to Block Nine's owner, King's College, part of London University.

King's College was thought to be preparing to accept the bid from the Aga Khan until it realised that St Thomas' Hospital, which adjoins the triangular site of 1.8 acres, also wanted the land.

But, constrained by public finances, the Guy's and St Thomas' NHS Trust could only offer a counter-bid of £10m to £12m ­ leaving its owners with a prickly choice between profit and the health service.

The 40-strong ruling council of King's College will meet on 2 July to decide which of the two bids to accept but a spokesman yesterday confirmed its first duty would be to the NHS.

The spokesman said: "We work closely with St Thomas' and our preferred solution is one that will work with the hospital.

"They are our partners and it would not be in anyone's interests if they are put in a position of considerable antagonism and distrust."

The stance substantially increases the chances of the college's council opting to sell to St Thomas' to develop new facilities, including a nursing school. King's College already runs its medical school at St Thomas', where consultants passionately opposed to the sale for an "inflated price" have threatened to chain themselves to the railings if it goes ahead.

The board of the Guy's and St Thomas' NHS Trust, which runs the hospital, has declared itself unanimously opposed to a sale to a third party by King's College, which gained ownership in 1998.

The price for expanding the hospital could be the loss to London of another South Bank cultural monument to sit alongside recent additions such as the Tate Modern and the proposed Saatchi Gallery.

The Aga Khan, who is spiritual leader of the Ismaili Shia Muslim sect, last year failed to secure his initial target site for his museum, the Royal Army Medical College next to the Tate Britain; that was sold to the Chelsea College of Art.

Senior sources within the Aga Khan's project said yesterday his desire to site his cultural complex in London could be eroded by a second failure to find a suitable premises.

One figure involved with the project said: "London was chosen because of its status as a crossroads between the East and the West but it would be understandable if, in the event that the current negotiations are not successful, the Aga Khan would eventually want to look elsewhere."