CABINET minister Jack Straw faced questions today over a donation from a Saudi-backed firm.

The Electoral Commission was urged to investigate whether the £2,000 gift to his 2005 general election campaign was lawful.

The money from Westminster International Consultants was accepted by Blackburn constituency Labour party on the same day as it received a £3,000 sum from Lord Taylor of Blackburn - the peer at the centre of the "Lords for Hire" allegations.

But one of the founding partners of WIC has said that it did no business in the UK. Under electoral law, donations are permissible only if a firm or partnership can show that it "carries on business" in the UK.

WIC appears to have been run by Siraj Karbhari, a former Labour councillor in Blackburn with financial interests in the Saudi property industry.

Mr Karbhari operated out of a sub-post office in Chingford, Essex, and an address in the City of London. WIC was active in 2005 and 2006, but its accounts show tiny outgoings. Its wage bill at the time it made the £2,000 donation was just under £8,000.

Electoral Commission registers show that the Blackburn constituency Labour party received the cash on 1 April 2005. Mr Straw also listed the donation from "Mr Siraj Karbhari, Westminister International Consultants" in the MPs' register of interests. Yet Dr Yusuf Karbhari, the founding partner of the firm, denied it had made any such gift and said his brother Siraj had made the donation in an individual capacity. He added: "It [WIC] didn't carry out any business in the UK. It was doing a few things outside Mainly, it was in Saudi Arabia."

The only other founding partner for the WIC was Saudi property company Emaar Al-Bayadir for Development and Trading Co Ltd. Siraj Karbhari later added himself as a partner. He was chief adviser to Dar Al Arkan, a property developer in Saudi Arabia.

Siraj Karbhari today said he had made the donation as an individual, but refused to say whether WIC had carried on business in the UK.

Speaking from Saudi Arabia, he said: "I am UK citizen and this was not a foreign donation. I made a cheque from one of my companies. I can't recollect which chequebook I used. If they have listed a donation from Westminster, that is a mistake."

Mr Straw, who was Foreign Secretary in 2005, was last week criticised by the Commons Standards and Privileges Committee for failing to declare a £3,000 gift from US energy firm Canatxx.

Tory MP Ben Wallace today filed a complaint with the Electoral Commission over the WIC donation.

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