Cash for honours: Blair held meeting with key witness

Tony Blair held a secret meeting with the "key witness" in the cash for honours scandal at the height of the police investigation, The Independent on Sunday has learnt.

The Prime Minister had a personal conversation with Sir Gulam Noon, the Labour donor whose nomination forms were changed after the intervention of Labour fundraiser Lord Levy, less than four weeks ago. The meeting was " very friendly". Friends of the curry magnate say he believes Downing Street is still "very keen" for him to become a peer.

Opposition politicians last night questioned Mr Blair's judgement and called on the police to interview him about the meeting. There is now speculation that Sir Gulam, who lent the party £250,000, could be included on Tony Blair's resignation honours list: such a list may not have to be independently vetted.

The Independent on Sunday has also learnt that the Prime Minister sent handwritten notes to two other Labour donors after their peerages were blocked by the House of Lords Appointments Commission. Barry Townsley, who lent £1m to the party, and Sir David Garrard, who lent £2m, both received personal letters from Mr Blair, who had nominated them for Labour seats in the House of Lords, after their peerages were blocked.

Lord Oakeshott of Seagrove Bay, a Liberal Democrat peer and former member of the joint committee on House of Lords reform who last night questioned his judgement in meeting Sir Gulam Noon, is to table questions in Parliament. "This is very grave for Mr Blair," he said. "The Prime Minister must now tell the police why he invited a key witness in their corruption inquiry to meet him in Downing Street. Did they really just discuss the weather or the World Cup?"

The meeting appears to contradict the Government's line that it should not become involved during the police investigation. Last week, Lord Falconer the Lord Chancellor who is a close personal friend of the Prime Minister, told the BBC it would be "wrong to comment on a pending investigation." Downing Street said last night that it "does not comment on private meetings."

The Independent on Sunday has learnt that Lord Levy also advised Chai Patel, another Labour lender who was nominated by Mr Blair for a peerage, that he did not need to mention the loan on his nomination forms. The two men are believed to have spoken last autumn when Mr Patel was filling out the paperwork. Mr Patel's loan, for £1.5m, expires next month, but it has been extended until next year.

Lord Levy is understood to have discussed his arrest with party chiefs on Friday night adding to fears he may implicate the Prime Minister and others.

The IoS has learnt that Lord Levy was the "senior member of the PM's circle" quoted in March as saying: "Blair knew exactly what was going on. As far as he was concerned, it was absolutely legal. It wasn't a matter of convincing him... It was a matter of everyone convincing each other."

Lord Levy was arrested last week and questioned over two days after it emerged that he advised Sir Gulam Noon to withdraw a reference to the loan he made to Labour. Sir Gulam recorded the £250,000 loan he submitted to Downing Street after consulting his accountant but he withdrew the reference after his conversation with Lord Levy and filled in new forms.

The police are now expected to examine how Lord Levy, the Prime Minister's fundraiser, knew that Sir Gulam had recorded the loan on the nomination forms submitted to Downing Street. Officers will want to find out whether Downing Street officials dealing with the Prime Ministers' honours nomination spoke to Lord Levy about the nomination form. The office of the party's general secretary, Matt Carter, also failed to mention the loans in the papers it submitted to the House of Lords watchdog.

Meanwhile one of Labour's leading business supporters claimed it was only "human" that donors should give in expectation of honours and that Mr Blair should reward his friends. In an extraordinary intervention, Simon Woodroffe, the businessman behind Yo Sushi! told the IoS that he was sure Lord Levy had not sold honours.

"That said," he added, "would it have crossed the minds of a donor that a possible outcome could be an award at some point? We are but human beings with all our pride and ambition and dreams. Would the Prime Minister as he looked through the shortlist of candidates not have warmed to one who had helped him? Of course he would."

Last week MPs criticised Downing Street for only giving "vague assurances" that the House of Lords Appointments Commission would vet Mr Blair's resignation list. The pressure on Mr Blair intensified after it emerged that Gordon Brown held a second meeting with Sir Alistair Graham, the sleaze watchdog, on the day Lord Levy was arrested.