He was interviewed as part of a nine-month Scotland Yard investigation into whether political parties asked wealthy individuals to make secret loans in exchange for peerages.

The investigation began after a complaint in March from Angus MacNeil, the Scottish National Party MP.

Why did he make the complaint?

It came after revelations that Labour was given millions in secret loans before last year’s election, and subsequently nominated some of those lending the money for honours.

Four donors who were nominated by Downing Street for peerages were later rejected by the independent House of Lords Appointments Commission.

Who are they?

Barry Townsley, a stockbroker who has also donated money towards a city academy; Sir David Garrard, a property developer who donated money to a city academy; Chai Patel, the chief executive of Priory Clinics; and Sir Gulam Noon, the curry magnate. Sir Gulam claimed that he offered to make a donation, which would have been made public, but had been advised by Lord Levy, the Prime Minister’s chief fundraiser, to make £250,000 secret loans instead.

What are Scotland Yard investigating?

The investigation, headed by Assistant Commissioner John Yates, was widened to look at two issues: whether honours were offered in exchange for loans and whether laws preventing secret donations were breached.

What would police have to prove?

The Honours (Prevention of Abuses) Act 1925 makes it illegal to accept “any gift, money or valuable consideration as an inducement for . . . a dignity or title of honour”. For a conviction, Scotland Yard is likely to need documentary evidence, such as e-mails, proving that peerages were offered directly in return for loans.

The Political Parties, Elections and Referendums Act 2000 forces political parties to declare publicly donations of more than £5,000. If the loans given to political parties turn out to be concealed donations, which should have been declared, then the law would be broken. This involves judging whether the loans were at commercial rates.

What do the Prime Minister and Labour say in their defence?

Mr Blair’s spokesman said yesterday that the peerage nominations that were rejected were made because of the individuals’ service to the Labour Party.

The Labour Party says that all the loans they received were at “commercial” rates because they claim that the terms were similar to a loan from the Co-operative Bank, which opposition MPs have disputed.

Lord Levy, who negotiated the loans, has said that everything he did was with the agreement of the Prime Minister.

Where does this go next?

Mr Yates has promised to report his finding to the Crown Prosecution Service in January. Scotland Yard will also disclose its dossier to the House of Commons’ Public Administration Committee, even if the Crown Prosecution Service decides that there is no case to answer.

What are the longer-term repercussions?

After the secret loans were made public, Mr Blair promised to overhaul the way that political parties are funded.

He commissioned a review from Sir Hayden Phillips, the former Permanent Secretary of the Department for Culture Media and Sport, to look at caps on donations and whether spending should be limited.

There could also be repercussions in the Labour Party. Jack Dromey, treasurer of the Labour Party, sparked an internal party inquiry after revealing in March that neither he nor anyone else had been told about the loans at the time of the election.

Mr Blair has promised to talk in full about the investigation after it has ended — providing that he is not charged.

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