Now leading Blair fundraiser is suspected of fixing papal honours

One of Tony Blair’s key fundraisers has been accused of offering papal knighthoods in return for charity donations.

Labour ‘fixer’ Anthony Bailey encouraged wealthy businessmen – including a controversial Iraqi billionaire convicted of fraud and bribery – to support a charity run by a Vatican ambassador with the power to make nominations for the honour.

Nadhmi Auchi agreed to back Archbishop Eugenio Sbarbaro’s projects in the Balkans, and was subsequently made a knight of the order of Pope Saint Sylvester for his support. 

Another controversial figure, Iranian-born car dealer Mahmoud Khayami, also received the honour after making a donation. Mr Khayami, a friend of Mr Blair, made headlines in 2007 when he gave £830,000 to the Labour Party, more than half of it only 24 hours after he joined the electoral roll.

A third wealthy donor recruited at the same time, Steven Wilkinson, said Mr Bailey had dropped hints that he would receive a papal knighthood for the donation. He said Mr Bailey told him: ‘Eugenio can arrange for you to be issued with a particular honour.’

A year before receiving his papal honour, Mr Auchi was embroiled in a corruption scandal involving the French oil giant Elf Aquitaine. While facing extradition to France, the tycoon allegedly held secret meetings with Blair in the run-up to the 2003 invasion of Iraq.

A court subsequently found he had accepted illegal commissions stemming from Elf’s purchase of a Spanish oil refinery, and paid secret backhanders to some of the firm’s directors. He was given a 15-month suspended sentence and fined £1.37million, though he is appealing this conviction.

Mr Auchi and Mr Khayami were among a group of businessmen given papal knighthoods in 2004 by Archbishop Sbarbaro after donating tens of thousands of pounds. All were recruited by Mr Bailey.

Papal knighthoods are among the highest honours the Pope can bestow. Not all recipients are Catholics.

The disclosures follow Mail on Sunday revelations last week that senior priest Father Michael Seed fixed papal honours for donations.Like Mr Bailey, Fr Seed also solicited funds for Archbishop Sbarbaro, the former Vatican ambassador to Serbia.

One businessman Fr Seed tried to cultivate was Israeli arms dealer Hezi Bezalel, arranging a papal knighthood before even approaching him. Mr Bezalel declined the offer.

It was Fr Seed who introduced Archbishop Sbarbaro to multi-millionaire Mr Bailey, a prolific professional networker. Mr Bailey is thought to have met Blair many times and is credited with raising £8million for his flagship City academies project.

His impressive network of contacts includes many powerful Vatican figures, and he is married to Austrian noblewoman Princess Marie Therese von Hohenberg.Although he has been a generous Labour donor, the party rejected £500,000 Mr Bailey offered in 2005 over fears he was acting on behalf of foreign businessmen.

Another donor he recruited for Archbishop Sbarbaro was Mr Wilkinson, managing partner of German finance house Buchanan Capital Group. Along with the other donors, his money helped rebuild the Papal nunciature – or embassy – in Belgrade and create an interfaith centre there.‘We were part of an international group of donors put together by Anthony Bailey,’ said Mr Wilkinson.

Asked if he had been promised papal knighthoods in return for donations, Mr Wilkinson said: ‘He [Mr Bailey] certainly mentioned that it was something Eugenio might organise as a reward. Anthony moves in circles for whom honours are stock in trade.’

Describing his reasons for donating, he said: ‘Eugenio is an unbelievably charismatic man who was doing something tangible you could get excited about. Another motivation – at least when I made my commitment to Anthony – was that he said, “Eugenio can arrange for you to be issued with a particular honour”. I have always seen that as being a very special honour. It certainly felt like that at the time.’

Mr Bailey declined to answer questions about his recruitment of donors. But a spokesman denied that he suggested donations would ‘result in any kind of honour’.

Mr Auchi’s lawyer said in a statement: ‘My client has donated millions of pounds to charitable causes without expecting any return benefit except the satisfaction of having been ableto help. At the time when he made the donation to which your question refers, my client did not know and had never met Archbishop Eugenio Sbarbaro and expected nothing in return.’