JOHN PRESCOTT made planning decisions in favour of two property developers who had given secret loans and a donation to the Labour party, it emerged this weekend.

The deputy prime minister gave his backing to a controversial £600m scheme proposed by Andrew Rosenfeld, chairman of the Minerva property company, only months after Rosenfeld had secretly loaned Labour £1m last year.

It was the second time Prescott had favoured the company. In 2003 he approved planning permission for a controversial skyscraper in London.

At that time the chairman of the company was Sir David Garrard, who had only months earlier given Labour £200,000. Garrard went on to lend the party £2.3m last year and was nominated for a peerage.

Given the company’s links with the Labour party, critics say Prescott should have stood aside because of the potential conflicts of interest. Prescott, however, insists that he did not know about the secret loans and that he was following his planning inspectors’ advice.

The disclosures come two weeks after The Sunday Times revealed a secret loans scheme that allowed Labour to conceal millions of pounds given by wealthy backers, who were then nominated for peerages. It also emerged this weekend that:

• Tony Blair knew four businessmen had secretly loaned millions of pounds to Labour when he chose them as his nominees for peerages, demonstrating for the first time his hands-on role in the loans for honours scandal.
  
  
• Police investigating the allegations have written to Downing Street asking for any documents, letters and e-mails relating to the award of honours to financial supporters to be disclosed immediately.
  
  
• Blair is believed to have been informally warned after the general election by the Appointments Commission, the watchdog that vets peerages, that it would no longer tolerate the elevation to the Lords of unsuitable candidates who had financially supported parties.
  

  Minerva has been chaired by Rosenfeld since April last year, after Garrard stepped down. Six months later — and after Rosenfeld had loaned Labour £1m — Prescott made his decision in favour of Minerva’s plans for Park Place, a 1m sq ft US-style shopping mall in Croydon, south London.

  The £600m mall had previously been granted planning permission but the development was at risk from a rival scheme, a proposed extension to a nearby existing shopping centre which, if allowed to go ahead, would have scuppered Minerva’s project.

  Prescott killed the rival scheme, put forward by a consortium called Whitgift, by rejecting its appeal against an earlier refusal by inspectors to give it planning permission.

  In a letter on October 5 from Prescott’s department to Whitgift, Prescott acknowledged that granting it planning permission would have meant Rosenfeld’s Minerva project was “unlikely to proceed”.

  The letter praised the Minerva scheme, saying: “The secretary of state agrees that Park Place would achieve development which is important to bring about the desirable quantitative and qualitative improvements in retail provision in Croydon.”

  Before the decision, Minerva had suffered heavy losses. Days after Prescott’s announcement, shares rallied, boosting the value of Rosenfeld’s personal shareholding by £4m.

  Park Place was the second of the company’s developments to benefit from a Prescott decision following cash support for Labour from a Minerva chairman. Prescott decided not to “call in” for further scrutiny plans for the 50- storey Minerva tower, due to become the tallest building in the City of London — despite intervening in two similar developments by other companies.

  Prescott was asked to decide the fate of the £500m tower six months after a £200,000 donation to Labour in June 2003 by Garrard, then chairman of Minerva.

  Garrard later gave his loan of £2.3m to Labour, although by the time of Prescott’s announcement on the Croydon scheme he had stepped down as chairman and sold his shares in the company.

  The loans from Rosenfeld and Garrard build on their earlier support for causes linked to Labour. Both have provided financial backing for Blair’s city academies, and the wife of Lord Levy, Labour’s chief fundraiser, runs a charity from Minerva’s headquarters.

  Last week a spokesman for Rosenfeld said Minerva share prices had risen in response to news of another of its London developments, Walbrook, and in line with the market generally.

  “The reason the share price has gone up — the principal reason — is to do with the announcement that Minerva was proceeding with its development at Walbrook in the City of London.

  “The other reason is that the share price has realigned — recovered — to the same level of other property companies. As they have all moved up, so has Minerva’s.”

  A spokesman for Prescott said yesterday that the deputy prime minister denied any impropriety in reaching decisions affecting the Minerva schemes.

  A spokesman for the Whitgift consortium refused to comment.

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