A SECOND businessman linked to the loans-for-peerages controversy has quit as chairman of his company.

Andrew Rosenfeld, 43, announced yesterday that he would stand down as executive chairman of the property company Minerva. He lent the Labour Party £1 million.

Mr Rosenfeld took over the role in March last year from Sir David Garrard, who lent the Labour Party £2.3 million. Sir David’s nomination for a peerage was blocked by the House of Lords Appointments Commission.

Sir David has also made a £2.5 million donation to Tony Blair’s city academies project. Last week Des Smith, a former fundraiser for the academies scheme, was arrested and questioned over whether there had been a breach of the Honours (Prevention of Abuses) Act, an allegation that Mr Smith denies.

Mr Rosenfeld has also pledged up to £2 million to an academy project in North London.

Both Mr Rosenfeld and Sir David, 67, are close friends of Lord Levy, Mr Blair’s personal fundraiser, who was one of only three people who were aware of the secret loans scheme that raised £14 million for Labour in the 2005 election year.

Lord Levy’s wife, Gilda, runs an interfaith charity from Minerva’s headquarters in London. Mr Rosenfeld is a director of Jewish Care, the charity of which Lord Levy is president. Sir David Garrard is a patron, as is Barry Townsley, whose peerage nomination was also blocked. He made a £1 million loan to the Labour Party and a £1.5 million donation to a city academy.

The loans by Mr Rosenfeld and Sir David were made to the Labour Party months before Minerva secured planning permission for a £500 million shopping centre scheme in Croydon, South London.

Minerva and the Government angrily rejected any links between the financial support and the planning approval.

Both Sir David and Mr Rosenfeld have been warned that they will face questioning by the police in the first criminal investigation for 70 years under the honours Act. Mr Rosenfeld’s is the second big resignation in the City since the controversy over party political funding erupted.

Last month Rod Aldridge announced that he was standing down as executive chairman of the technology company Capita after a commercial backlash to the revelation that he had made a £1 million loan.

Capita has won billions of pounds of contracts in the public sector.

Weeks after making the loan, Mr Aldridge — who has not been nominated for an honour — was made the head of Gordon Brown’s youth community service scheme, which he and the Chancellor will launch with Charles Clarke, the Home Secretary. The Chancellor praised the scheme in his Budget last month.

Mr Rosenfeld co-founded Minerva in 1989 with capital of £70,500 in partnership with Sir David. The company floated on the Stock Exchange in 1996 and today has a market value of about £500 million.

Mr Rosenfeld declined to answer questions about whether he had quit because of the loans row, but insisted that he had been planning to announce his departure for months.

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