2 Ministers Resign in British Loan Scandal

British Prime Minister Tony Blair, elected to office on a campaign against “Tory sleaze,” lost two of his key Cabinet ministers Wednesday to a housing loan scandal.

Trade and Industry Minister Peter Mandelson, architect of the “New Labor” Party and the government’s top spin doctor, resigned after revelations that he had borrowed $635,000 from Geoffrey Robinson, paymaster-general at the Treasury, to buy a posh house in central London.

Robinson, a multimillionaire businessman under investigation by Mandelson’s ministry, followed suit within hours, charging that he had been hounded from office by a “highly charged political campaign.”

Both ministers insisted that there was nothing illegal or unsavory about the low-interest loan that Robinson made to Mandelson in 1996, well before Labor came to power last year.

But Mandelson admitted in his resignation letter to Blair that he had erred, at least in judgment.

“I do not believe that I have done anything wrong or improper. But I should not, with all candor, have entered into the arrangement,” Mandelson wrote. Having done so, “I should have . . . told you and other colleagues whose advice I value. And I should have told my [deputy] on learning of the inquiry into Geoffrey Robinson.”

Robinson is under investigation for possible conflict of interest between the government jobs he has held and his business dealings.

He apologized to the House of Commons last month for having failed to publicly disclose some of his financial interests, including a stake in an offshore trust.

The resignations come just two months after the departure of another Cabinet minister under questionable circumstances and casts a long shadow over Blair’s promises of a “purer than pure” government.

Welsh Secretary Ron Davies quit Oct. 27 after reporting that he had been robbed in a South London park known as a gay pickup spot.

He cited a “serious error of judgment” as his reason for leaving government, but charges against the man arrested in connection with the theft were dropped, and it was never explained why Davies resigned if he was the victim of a crime.

While in opposition, Blair hounded the ruling Conservatives, or Tories, over a succession of ministerial “sleaze scandals” involving sex or money.

Yet Labor has not done well on money issues either. Blair supported exempting Formula One automobile racing from a proposed European ban on tobacco advertising in sports, and then it was disclosed that Formula One boss Bernie Ecclestone had given the party $1.7 million before the elections. Labor refunded his contribution.

Earlier this year, the government was embroiled in a “cash for access” scandal in which paid political consultants allegedly gave lobbyists improper access to policymakers. That led to the resignation of one of Mandelson’s pals, Derek Draper, from his lobbying job, but the issue faile1679818753to capture the public’s imagination or anger.

Now the opposition Tories, who failed to interest the public in the earlier scandals, are having a field day with “Tony’s cronies”--Mandelson and Robinson.

Peter Lilly, the Tory deputy party leader, charged that Mandelson had “thrown the most stones” at Conservatives while in the opposition and, therefore, “it was rather unwise of him to live in the most expensive glass house in London.”

Lilly said Mandelson “took out a loan that was 10 times his salary” and became beholden to “a businessman with doubtful business connections.”

The scandal is not likely to bring down the government, and no other resignations are expected, although the Guardian newspaper reported that questions have been raised about Robinson’s financial support for Gordon Brown, the Treasury chief, before last year’s elections.

However, the resignation of Mandelson in particular is a political blow to Blair.

Mandelson, 45, helped patch together a party splintered by 18 years in opposition and shifted it from its working-class, socialist roots toward a centrist party friendly to business. “New Labor” came to power in a landslide, and Mandelson has remained one of Blair’s closest advisors.

Slick, arrogant and ambitious, Mandelson is normally a sure-footed politician, although he has enemies on both sides of the political spectrum.

His fall surprised supporters, who said he had been naive and suffered a lapse of judgment. His critics on the left saw it as a just desert for a social-climbing “champagne socialist.”

Mandelson was the only member of the Labor government to attend Prince Charles’ 50th birthday celebrations.

Political foes on the right and left alike noted that the average price of a house in Britain last week was about $125,000. The country’s best-selling tabloid, the Sun, said Mandelson could have bought 18 houses in his poor northeastern constituency of Hartlepool with Robinson’s loan.

In his resignation letter, Mandelson said: “We came to power promising to uphold the highest possible standards in public life. We have not just to do so, but must be seen to do so.”

It was unclear whether Mandelson will face any legal challenges over the loan.

In a BBC television interview, he was asked whether he had declared Robinson’s loan in an application for a mortgage to finance the rest of the cost of the house in trendy Notting Hill.

“I can’t remember every question and every answer,” he said.

The story of the loan broke in Tuesday’s newspapers, and Mandelson used his formidable media skills to try to hang on to his job.

However, 24 hours after giving his full public support to Mandelson, Blair accepted his resignation, hinting that Mandelson might return to government in the future.

Mandelson remains in Parliament.