Shall we tell the Prime Minister?

His gang has scattered like rats

After an extraordinary few days in the cash-for-honours investigation, Fraser Nelson plots the downfall of the cosy Blairite elite — and reveals the suspicions of the police that the Crown Prosecution Service briefed No. 10 on its inquiries Only a few months into the protracted loans-for-honours investigation, the Metropolitan Police noticed something amiss. The No. 10 Downing Street officials they had interviewed seemed suspiciously well-prepared, almost as if they had an inside track. This perplexed Assistant Commissioner John Yates, who had handpicked his team precisely for their discretion, and in the knowledge that they had no links with the government. But such a claim could not be made for the director of public prosecutions, Ken Macdonald, QC.

While not directly privy to the investigation, Mr Macdonald (knighted this year) was in social contact with those who were. He is head of the Crown Prosecution Service, which was working with the Met as its investigation proceeded, and he has known Cherie Blair since they worked together at Matrix Chambers. More to the point, he attended a dinner party last summer where, it is believed, a senior member of Scotland Yard unwisely discussed details of the investigation. It is impossible to say with certainty whether this was the conduit for information back to No. 10 or not, but it appears to have been all too much of a coincidence for Mr Yates.

The police made their case gently: they wanted this investigation to be watertight, and to be seen to be watertight. And the way things were going, it seemed they would be presenting files to the CPS that might lead to charges. Soon after, Mr Macdonald quietly decided to exclude himself from the case, declining even to make a formal announcement. The CPS insists his decision had nothing to do with the police. He stepped aside, they say, because he knew that the investigation under the Honours (Prevention of Abuses) Act 1925 was gathering pace and stood a reasonable chance of culminating in a file landing on the CPS desk — and that, as a known friend of Mrs Blair, he could not be seen to have a part in the inquiry.

As it happens, the police are now confident that Tony Blair has been more or less in the dark about their investigation. That would certainly explain his cheery prediction last month that the investigation would be over in a few weeks, and that the whole sorry affair — what, in private, he calls ‘the ghastly business’ — would prove an ‘ephemeral’ footnote in the history of his time in Downing Street. The accumulation of evidence points to a very different conclusion. By his sheer single-mindedness, Mr Yates has uncovered an alleged conspiracy to pervert the course of justice that may yet become the epitaph of the Blair government.

The events of the last week have been unusual, even by the rollercoaster standards of this investigation. This is not the first time an extraordinary piece of evidence has been leaked: the note from the biotech entrepreneur Sir Christopher Evans suggesting Lord Levy had offered him ‘a K or a big P’ — a reference to knighthood and peerage — was made public in December. But even then Blair aides appeared to be united in protesting their collective innocence. This solidarity has now collapsed.

Instead we are witnessing what detectives call a ‘cut-throat defence’, where suspects and witnesses attempt to exculpate themselves by blaming each other. Ruth Turner, Mr Blair’s director of government relations, John McTernan, his political secretary, and Jonathan Powell, his chief of staff, are facing similar allegations — yet each is being advised by separate lawyers. It may now become a case of each man (and woman) for themselves — and everyone against Lord Levy. Unity used to be the Blairites’ guiding principle but now, in the twilight of this Prime Minister, it is sauve qui peut.

It must now be horribly clear to the Prime Minister’s chief fundraiser that he is being embalmed prior to burial. After years as Mr Blair’s personal envoy to the Middle East, his final role is to be the scapegoat of the gang he bankrolled. The document at the heart of the police investigation, written by Ms Turner on a computer and handed to her lawyers, expresses her concern to Jonathan Powell that Lord Levy was putting forward an untrue version of events. It ends with her asking whether the Prime Minister should be told. It could scarcely be more incendiary: a note from the Prime Minister’s head of government relations to his chief of staff, expressing grave reservations about his chief fundraiser and wondering whether to involve the PM.

It portrays Ms Turner, who liaises with the Lords appointments commission, in a state of bewildered ignorance. It suggests that Mr Powell, for whom her memo was apparently intended but to whom it was never sent, was also oblivious to Lord Levy’s plans. And at the crux of it was whether the PM should be alerted to the alleged malfeasance of this freelancing outsider. The leaks, observed Lord Levy’s lawyers, ‘seem to want to manipulate the outcome of the police inquiry against Lord Levy’. It is a fair observation.

Yet where could the leaks have sprung from? The multitude of plausible options is testimony to the success with which New Labour and its sympathisers now permeate Britain’s constitutional apparatus. The CPS may be a hotbed of London’s liberal legal establishment, but it angrily denies any leaks. It has been amusing to watch the Prime Minister’s official spokesman indignantly do the same, as if such tactics would never be deployed by No. 10 civil servants. But in this case, both, I understand, speak the truth.

Crucially, no journalist has actually seen the Turner document. The BBC was served an injunction because it intended to report the gist of it. All that is circulating is a short verbal summary, which could have come from any one of the suspects spoken to by the police. Several complex strategies are at work, serving to make the investigation sound far more clear-cut than it is. The ‘blame Levy’ gambit may suit all others in the investigation, but the truth is more complex.

The police are by no means satisfied that they were told the whole truth by Ms Turner. They had to haul her out of bed at 6.10 a.m. two months ago to extract from her the full details about what Lord Levy had said and, intriguingly, about why he was present at a meeting where honours were discussed. This fact had not been made known to them, and raises a damning question: why would a donations man be present at a gathering to decide whom to honour? And how does this square with Lord Levy’s insistence that he plays no part in the honours process?

It was Mr McTernan’s evidence, given in January, which led the police to discover this meeting. This knowledge transformed the inquiry, which had until mid-January been going nowhere. Astonishingly, police had managed to interview 35 people in the Labour party, many under caution, while being told nothing about the meeting. Mr McTernan was the first to sing. Even inside No. 10, he refuses to discuss or even acknowledge the case. He was dismayed by reports that he had turned Queen’s evidence and dumped on his colleagues. Yet these reports rang true because, like others, he has nothing to gain by hitching himself to the stern of the Blair Titanic.

Any ambitions he may have of winning a seat will not have been helped by his being portrayed as an archetypal dissembling Blairite, willing to say anything to protect his master. My experience of him has been the precise opposite. He has always struck me as unusually candid, and a free-thinker who has travelled from being a devout Brownite to the Blairite wing of the Labour party. He is no one’s dupe and will be shrewd enough to know that he’ll be fed to the investigators if Lord Levy’s body is not enough. He has good reason to declare loyalty only to himself.

No. 10 is no longer the Blair fan club it once was. Many officials are, frankly, underemployed as the Treasury takes command of government. Some jokingly refer to their office as ‘the bunker’, and most are preparing to serve under Gordon Brown — or not. Anyone too closely associated with the Prime Minister will be for the chop: staff in the Treasury are already discussing who will ‘come across’ to No. 10. Ms Turner will want to stay true to her memorable self-diagnosis as an ingénue, a former charity worker who ‘just fell in with the wrong crowd’.

Only Mr Powell is wandering around with the same deluded nonchalance shown by the Prime Minister, telling himself and others that the police have found nothing. Yet while there may be nothing specific on either him or the Prime Minister, I understand that police have found substantial evidence of a cash-for-access system where donors were granted meetings with ministers at a remarkably high level. While not illegal, it raises grave issues of political probity. Mr Yates has indicated he is willing to present this evidence to Tony Wright, chair of the Commons public administration committee.

Detectives have also hit a blank on the question of loans being issued at ‘commercial rates’ — as the Electoral Commission demands. There is a fundamental problem in that any loan to a near-bankrupt organisation like the Labour party cannot be properly considered ‘commercial’ unless its interest rate reflects the very high risk of default. Yet the guidelines are too fuzzy to suggest that any party (and some 30 Conservatives have been interviewed by police as well) has broken the rules.

In his increasingly hysterical public statements, Lord Levy suggests that the leaks have in some way left him in the clear. It is impossible, he says through his lawyers, to establish ‘any fair assessment of the investigation’. This has all the appearance of a plea pitched directly at the Crown Prosecution Service, which has so far decided not to press charges against Des Smith, the city academy headmaster who told an undercover newspaper reporter that a peerage would be ‘a certainty’ for anyone who donated to five schools. Its attitude is now No. 10’s greatest hope.

It will be a tortuous decision. Mr Yates has already made it clear that he is prepared to go public with his entire file, perhaps handing it to the public administration committee. If so, the CPS will find itself under the utmost scrutiny if it decides not to prosecute a case which is later found to be compelling. Then again, it faces an equal burden of responsibility should it press charges in time to bring down a prime minister for a prosecution that later proves to be flaky.

Those to whom I have spoken expect that the investigation may not be completed until May, so the CPS may not decide whether to prosecute until Blair has left office, taking his fellow suspects with him into political retirement. The fate of all those concerned in the investigation will then rest in the hands of two people chosen by the CPS to handle the case: Carmen Dowd, head of its specialist crime division, and Chris Newall, its principal legal adviser. Should Mr Brown be in No. 10 by then, he can only hope that the investigation will not have left a permanent stain on the reputation of the Labour party.

It was not Mr Yates’s intention to make a spectacular political intervention. From the outset, he regarded his task as a tiresome one, believing that the Metropolitan Police should not be treated as a parliamentary watchdog of last resort. If the House of Commons had an effective investigatory body, his small team of detectives would be solving serious crimes rather than probing New Labour’s dodgiest antics. He originally hoped he’d be finished in four months: that was almost a year ago. He did not bargain for the barrage of halftruths, obfuscation and outright obstruction his detectives have encountered.

The Watergate analogy is much overused in politics, but it is hard to ignore it when surveying the dying days of the Blair government. In Nixon’s case, of course, the coverup ended up being a much greater problem than the original offence. Had New Labour’s stalling tactics and evasiveness not been deployed so crudely against the police, the governing party would not now be bracing itself for charges of perverting the course of justice. For so many years, spin delivered Mr Blair from all kinds of trouble. It would be entirely appropriate if spin should prove to be his nemesis.