Cash-for-peerages tale gains a further twist

The team headed by John Yates, assistant commissioner of the Metropolitan Police, has already examined laptops from other key players in the politically explosive inquiry.

Carter's letters to rich Labour Party supporters who had agreed to lend money in the run-up to the 2005 general election are understood to have a key bearing on the police investigation.

He was one of only three people said to know the full details of secret loans worth £14 million made to the party. The others were Tony Blair and Lord Levy, Labour's most high-profile fund-raiser.

Officers at London's Holborn police station revealed details of the theft from Carter's office. The missing computers, along with accompanying bags, are officially logged on the Metropolitan Police's computer. The theft is being treated as a routine office crime. The four computers went missing over the weekend prior to October 9.

Carter's office is only one of a number of subsidiary firms owned by the international WPP agency which share an address at 24-28 Bloomsbury Way. Only Carter's office reported a theft. No other firm at the address reported anything missing, according to the police's file.

According to police sources, the theft of the laptops was regarded as a fairly unremarkable crime that is still being investigated but has so far thrown up no specific evidence as to where the computers ended up.

Around the time of the theft, Carter is understood to have been co-operating with the cash-for-peerages inquiry. Carter has made no formal admission that he has been questioned by Yates's team, but sources close to the investigation maintain he has been questioned on "more than one occasion" on what he knew of the £14m raised by Labour from private backers before the last general election.

So far two people have been arrested by Yates's Scotland Yard team. Levy was arrested in July and questioned by officers from the specialist crime directorate; he was later released on bail.

Laptop computers from Levy's office were also removed and examined by police before being returned to him.

Des Smith, the former Downing Street adviser and head teacher, was also arrested in April by the special inquiry team. Smith resigned as a government adviser after he told an undercover reporter that people who made donations to Labour's city academies programme could expect to be rewarded for their "services to education" by being given a honour by the prime minister.

When Smith was arrested in a surprise raid on his Wanstead home, detectives removed a laptop computer from his home; this was returned to him after being examined by officers.

The specialist crime directorate is said to be using new software from the US that has the ability to recover deleted email messages.

The loans scheme emerged when the Lords commission that scrutinises nominations for honours raised concerns about the backgrounds of those who had been put forward by Blair.

Four of the backers, who gave a total of £4.5m to the Labour Party, had their names put forward for peerages. One of the nominees, Chai Patel, chief executive of the Priory Clinic, subsequently revealed that he had loaned Labour £1.5m. Another nominee, Sir Gulam Noon, said he was advised by Labour to keep the loans he made a secret.

The inquiry team has been in contact with around 35 people connected to the Labour Party, including all the current members of the Cabinet.

A formal interview with the prime minister is believed to have been privately scheduled for next Friday. It has been suggested that the questioning - which police may carry out under caution and thus identify the prime minister as a suspect rather than a potential witness - will take place at Chequers, the PM's country residence.

The Sunday Herald contacted Carter's Bloomsbury office last week and asked about the missing laptops and what information had been given to Scotland Yard. No reply was received.

Scotland Yard initially said that any information concerning Matt Carter and the cash-for-honours investigation was "not up for discussion". They said that when Lord Levy had been arrested some information had been given out as to the time and date of his arrest. But as there had been no arrest in Carter's case "we can saying nothing that links him to this ie Yates's inquiry".

A later statement to the Sunday Herald from the Metropolitan Police said the theft of the computers from the offices of Penn, Schoen & Berland "did not form part of the cash-for-honours inquiry".

SNP leader Alex Salmond, a prominent figure in the push for the cash-for-honours inquiry, described the theft of the computers as "a curious tale in an investigation which continues to have many strands attached to it". Salmond said he had "full confidence" that the Metropolitan Police inquiry "will leave no stone unturned", but added: "Ultimately all roads lead to only one address, and that is 10 Downing Street because only the prime minister has the power to award honours."

Salmond added that he was surprised that Carter had not wanted to say more about the theft of the laptops from his office, given the unusual circumstances.

Carter began working for the firm headed by Mark Penn, one of the world's leading political advisers, when he left the Labour Party shortly before the 2005 annual conference.

Penn worked as a senior adviser and pollster to Bill Clinton when he was in the White House and is currently involved in putting together the campaign that could give Senator Hillary Clinton the next US presidency. He was the chief campaign adviser during her first Senate election.

In the run-up to last year's UK general election, Tony Blair personally hired Penn to help guide Labour's election campaign. He was paid more than £500,000 by the party for his services.

During 2004, Number 10 was told that Labour's two main banks, the Co-operative and Unity Trust, would not be extending a £6.9m overdraft, part of a £15.8m credit deficit listed in the party's 2004 accounts.

With Blair anticipating expensive re-election costs - a bill which eventually topped £18m - Levy, with the backing of Blair, contacted Carter to begin resurrecting the process of securing commercial loans from wealthy Labour supporters.

Carter, as Labour's general secretary and effectively its treasurer, wrote to the party's richer supporters, informing them that any money given in the form of commercial loans would not have to be publicly declared.

Under a new law put in place in 2000, any loans above £5000 have to be declared.

According to Labour's official version of events, all the loans were provided at "commercial rates" and Carter's letters were merely setting out the legal guidelines.

Yates began his investigation in March following a complaint by the SNP MP, Angus MacNeil, who maintained there was "growing circumstantial evidence surrounding the alleged selling of peerages".

Last month, after conducting 90 interviews - 35 connected to Labour, including all the current Cabinet plus senior Downing Street advisers and Alan Milburn, who ran the 2005 campaign, and 29 connected to the Conservative Party - Yates wrote to the Commons Public Administration Committee to inform them there had been "major developments" in the cash-for-honours inquiry that had not yet been made public. Entering what he called the "final stages" of what will have been a nine-month investigation, he said he expected a file to be delivered to the Crown Prosecution Service in January.

If the Political Parties, Election and Referendum Act is proved in court to have been broken, those who knowingly gave false information to the Electoral Commission about donations to political parties could face up to a year in prison.