Labour faces probe into cash allegations

Nelson's Column is seen behind a Union flag in Trafalgar Square in London February 19, 2005.

LONDON (Reuters) - The Labour Party on Monday ordered a parliamentary investigation of allegations four of its members in the Lords were prepared to take large sums of cash for trying to get laws amended.

The scandal has echoes of sleaze allegations that contributed to the downfall of Prime Minister John Major's Conservative government in 1997.

Two committees in the Lords will investigate the accusations, which came after reporters from the Sunday Times posed as lobbyists on behalf of a fake Hong Kong entrepreneur seeking changes to legislation on business taxes.

The newspaper claims that the peers asked for as much as 120,000 pounds to get the law amended.

The Labour peers -- Peter Truscott, a former energy minister, Thomas Taylor, Peter Snape and former defence minister Lewis Moonie -- all deny any wrongdoing.

The Lords acts as a revising chamber for laws passed in the Commons. Its rules ban any form of advocacy by its members, known as peers.

"The allegations in The Sunday Times have, in essence, brought this House into disrepute in the whole of the world," said Janet Royall, Labour's leader in the Lords.

The affair creates a new headache for Prime Minister Gordon Brown, who is lagging in the opinion polls and faces an election in less than 18 months.

The last Conservative government in the 1990s was hurt by allegations that members took cash to ask questions in parliament and suffered a crushing electoral defeat at the hands of Tony Blair's resurgent Labour Party in 1997. Labour has been in power since then.

TRUST

Snape and Taylor were both in the red-upholstered chamber to hear Royall say that the matter had been referred to a committee on Lords' interests and another that looks at privileges to find ways to toughen up the rules.

"We have to take whatever actions are necessary in order to restore trust and confidence in this House."

Royall added that she would be meeting the accused peers individually.

Members of the Lords do not receive a salary for their work in the upper chamber, though they are paid an attendance allowance and expenses.

The Lords contains senior members of the Church of England, judges, figures from outside the world of politics and nominees from political parties. There is also a rump group of lords elected internally to stay on after a major reform in 1999 sidelined most of the country's hereditary peers.

(Reporting by Frank Prenesti; Editing by Jon Boyle)