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(photo credit: AP)
Lord Levy, who was dramatically re-arrested on Tuesday in the "cash for honors" scandal that continues to dominate front pages in the UK, was released on bail Tuesday evening.
Tuesday marked the second time since last July, when he was also questioned and released, that Lord Levy - Prime Minister Tony Blair's chief and unofficial envoy to the Middle East - had been taken into custody.
This time, Lord Levy was arrested on suspicion of conspiring to obstruct justice, a move that suggests police have broadened their inquiry in an attempt to cover the possibility that they have failed to conduct their investigations properly.
The latest development comes 10 days after another of Blair's closest aides, Director of Government Relations Ruth Turner, was also arrested on suspicion of obstructing justice.
A spokesman for Lord Levy said Levy completely denied any allegations of wrongdoing.
"Lord Levy went to the police station as asked. He was interviewed again and left the police station in the early afternoon. Since there is a continuing investigation he will not make any further comments at this time," the spokesman said.
Levy was released on bail pending further inquiries.
Downing Street refused to comment on Lord Levy's latest arrest, but the development will fuel speculation that Blair, who has already been questioned in the scandal, may be interrogated again.
The police are investigating whether peerages have been offered in exchange for donations and loans to political parties after it was revealed at the beginning of last year that all three major parties were given secret loans before the last general election. Traditionally, there is no wrongdoing in lending political parties money, but officials suspect that lenders are trying to buy influence.
Blair was accused of selling peerages after four businessmen, who gave Labor 4.5 million in unpublicized loans, were subsequently nominated for honors. Labor then went on to reveal it had received nearly 14m. in secret loans ahead of the last election. The Conservative party revealed they had borrowed 16m. from 13 wealthy backers, while the Liberal Democrat party received 50,000 from three backers.
Lord Levy is a prominent and respected philanthropist and member of the Jewish community in the UK. Since 1992, he has been chairman of Jewish Care, one of the UK's biggest charities, for which he has helped raise as much as 60m. He is also a member of the Board of Deputies of British Jews.
Following Labor's victory in 1997, Lord Levy was made a life peer by Blair. In 2000, Blair made Lord Levy his personal envoy to the Middle East, with an office inside the Foreign and Commonwealth Office.