LONDON, Feb 13: British Prime Minister Tony Blair gave his support for the purchase of a Romanian steel firm by an Indian billionaire and Labour Party donor just as a French firm was trying to secure a deal, the Guardian reported on Wednesday.

Blair wrote to Romanian Prime Minister Adrian Nastase on July 23 welcoming a shortly anticipated agreement to sell the Romanian state steel producer Sidex to businessman Lakshmi Mittal and his LNM company, the newspaper reported.

Far from being a formality, as Downing Street has claimed, Blair’s letter was sent at a crucial time, when a French firm, Usinor, was still manoeuvring to acquire a contract to run Sidex, the Guardian said, quoting Usinor sources.

The French company reportedly wanted a deal under which it would manage the loss-making Sidex for two years and then consider buying it.

But the Romanian government has denied that Blair’s intervention had helped the Indian tycoon to buy Sidex.

A government spokesman in Bucharest insisted on Monday that the sale and privatization of the state steelworks had been totally transparent, and that the letter from Blair to Nastase arrived after a decision had been made.

However, in Britain opposition politicians have demanded an inquiry into the affair, particularly into the fact that Blair’s letter referred to the Romanians dealing with a “British” business.

Mittal’s company employs 125,000 people across the world, with only about 100 of these in Britain.

While LNM Group, the parent company, is based in London, Sidex was bought by LNM Holdings, which is based in the Dutch Antilles and competed against Britain’s main steel company Corus, formerly British Steel — which is in difficulties and has had to dismiss 6,000 workers.

Downing Street said on Wednesday: “Whatever the technical definition of a British company, this is a company which employs people in this country and has headquarters in this country.”

Newspapers here have demanded answers after pointing out that a month before the prime minister’s letter, Mittal had made a donation of 125,000 pounds (177,000 dollars) to Blair’s Labour Party.

Downing Street has denied any irregularity, saying Blair did not know of the donation when he signed the letter supporting LNM’s bid for Sidex.—AFP