WHEN the Hinduja brothers hired Alexandra Palace for a lavish party marking the Indian festival of Diwali last year, Tony Blair was guest of honour.

His wife Cherie dressed up for the occasion in an elegant Indian churidar kameez made of silk and organza, designed with the help of the Hindujas. Peter Mandelson, who had been Minister for the Millennium Dome at the time that the Hindujas offered £3 million to save the Faith Zone, grinned broadly as he joined in the festivities.

Keith Vaz, now Minister for Europe and a long-standing associate of the Hinduja brothers, gave a laudatory speech. For the Conservatives, Lord Archer of Weston-super-Mare, then a London mayoral candidate, worked the hall.

The Hindujas were in their element. The audience sparkled with their fellow billionaires. The powerful and famous were prepared to pay homage on a night hosted by the brothers from Bombay.

The Hinduja family has enjoyed access to world leaders since they became friendly in the 1970s with the Shah of Iran, who was eager to increase trade with India and the West.

There are four Hinduja brothers: S. P, G. P, Prakash, who lives in Switzerland, and Ashok, the youngest, who stays in Bombay. Like a traditional Indian family, when in London the generations all live together in a suite of flats in Carlton House Terrace, off The Mall. There are also homes in New York's Trump Tower, in Washington and Geneva.

The family is usually at the top or in second place on the list of Britain's richest Asians, their wealth estimated around £2 billion. They have interests in transport, owning part of Lufthansa Cargo, in oil with Gulf Oil, and in Bollywood movies.

At that famous Diwali party, the Hindujas were surrounded by their network of influential friends, but there was one notable absentee: the Indian High Commission did not attend. The snub was seen in Delhi, and in London, as a signal that the government was distancing itself from the Hindujas. Yesterday's charge sheet, accusing three of the brothers — Srichand, Gopichand and Prakash — of corruption, suggests the tea leaves were accurately read. The fourth brother Ashok has never been accused of wrongdoing.

The Hindujas are significant philanthropists, but their businesses have sometimes attracted unwelcome attention. The Times has learned that they paid no value added tax on the £1 million they provided to sponsor the Dome's Faith Zone, a saving of £175,000.

The brothers argued strongly that, as a religious donation, it should be tax exempt. This could only be done if they received no benefits from the sponsorship. The New Millennium Experience Company wrote to the Hindujas saying that they would be getting 1,000 free tickets to the Dome, as a gift. The tickets were worth £20,000.

The sponsorship was arranged after the Hindujas were invited to the House of Lords by Lord Levy, Tony Blair's tennis partner and personal envoy to the Middle East.

The brothers, who follow the Vedic religious tradition, were prepared to offer £3 million but were asked for only £1 million. The rest of the zone's funding came from other faiths.

At the end of the meeting, Lord Levy asked to hug the oldest brother and patrician of the clan, Srichand Hinduja, who was impressed by the gesture. Lord Levy has not remained close to the Hindujas and there is no suggestion he knew about the tax arrangements.

The Hindujas have mingled with George Bush, Al Gore and Mother Teresa. They fund a research centre into Indian religion at Cambridge University. Srichand and Gopichand, known as S. P. and G. P, have been granted British citizenship.

Their contacts in Britain reach into every level of the Establishment, including Michael Heseltine, Sir Paddy Ashdown, Baroness Thatcher and John Major. Mr Major invited them to Downing Street. But the Hindujas eschew giving money to political parties.

They have kept their network in good repair over the years. Last year, they invited William Hague to their British headquarters. The following day, they wrote to Tony Blair inviting him to the Diwali party.

The Times has also seen a copy of a letter from Keith Vaz, a Foreign Office Minister, written when the MP was a backbencher, sent to the Hinduja Foundation, in which Mr Vaz apparently asks the Hindujas to draft a letter which he would then send to Tony Blair.

We agreed that you would prepare a draft letter which I would send both to the Prime Minister and to Peter Mandelson, Mr Vaz wrote on October 30, 1997. I have no problem with asking these points, but as I made clear to you, you will need to do the preparatory work. I will then top and tail the letters and send them out.

The Hindujas' network of friends outside politics is extensive. They brought Michael Jackson to the Dome where he wanted to perform the opening-night concert, but the Government invited The Corrs.

S. P. Hinduja and Jackson meet regularly to talk about property interests and humanitarian issues. On one of S. P.'s happiest occasions, he invited Indian millionaires to have dinner with Diana, Princess of Wales, at his home. The evening raised £80,000 for her Indian leprosy mission. Before the Dome, their most famous cause in Britain was the Hindu temple at Neasden, North London, to which they contributed £250,000. S. P.'s passion for bringing together the religions of the world springs from a family tragedy that still wounds him. His son Dharam, heir to the family empire, defied their wishes by marrying a girl outside his faith. The lovers eloped to Mauritius and Dharam later died after apparently setting himself on fire.

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