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They would have a devastating effect on the British steel industry, which exports £250million of steel to America every year.Labour's growing anxiety about the controversy was underlined yesterday by Cabinet Office minister Lord Macdonald, during an extraordinary series of exchanges with John Humphrys on BBC1's On the Record.He had yet to make his £125,000 donation to party funds.The Hinduja brothers had bankrolled the controversial Millennium Dome to the tune of £1million.'This was a good project for Romania - it was not about any particular bidder,' said a spokesman.However, the EBRD destroyed this defence by revealing that it started negotiations on the loan only after Mr Mittal's company had been awarded the contract last July.Britain is the second biggest contributor to the bank and British taxpayers would have accounted for around £ 6million of the Mittal loan.

By October, Clare Short's Department for International Development was formally backing proposals to hand Mr Mittal's LNM company a £70million loan to fund his Romanian bid.Nearby stand business tycoons Gopichand and Srichand Hinduja.Hence the look of smug satisfaction from Keith Vaz, then a high-flying Foreign Office minister, who in July 2000 found himself rubbing shoulders with the two richest Asian families in this country.Lord Macdonald repeatedly dodged questions about the number of times Mr Blair had written letters to support foreign firms like Mr Mittal's which employ only a handful of people in Britain.He was equally evasive when pressed on whether the Prime Minister had met Mr Mittal during a party organised by Labour fundraiser Lord Levy.

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They had yet to become embroiled in the passports scandal which cost Peter Mandelson his job.