Party donor made Number Ten adviser

Tony Blair faced a fresh party funding row last night after it emerged that a City financier had donated a large sum to the Labour Party months before being given a senior post at Downing Street.

Arnab Banerji, a high-flying investment fund manager, was appointed last year to the Prime Minister's Forward Strategy Unit along with Lord Birt, the former BBC director general.

Dr Banerji could also be in line for a second high-profile job. He stunned the City last week when he quit his job at F&C Management for a "senior post in the public sector", which is expected to be announced this week when the Stock Exchange is formally told of his departure.

The Independent has learned that Dr Banerji is one of 15 donors previously unlisted by Labour. His contribution will be published in next month's annual report for 2001-02. The gift, described as "£5,000 or more", was made before last February, when the Electoral Commission's new rules on regular disclosure of income came into force.

Dr Banerji, 46, is one of five "blue skies thinkers" in Downing Street, working on policy alongside Lord Birt, the former CBI chief Adair Turner, and others.

Although other members of the Forward Strategy Unit have been identified with specific projects, his contribution has been shrouded in secrecy. That he was working on "policy and the economy" is all that is known. Dr Banerji was chairman of group investment policy at F&C, formerly Foreign & Colonial, and was credited with overseeing its success in recent years.

Theresa May, chairman of the Tory party, called on the Government to reveal what Dr Banerji had been doing in Downing Street and what his job would be. "Yet again, we have someone who gives Labour a large donation and is then given a major say over policy and ... the opportunity of a senior Government job. It's this sort of thing that makes the public cynical," Mrs May said.

Labour's annual report will show that Dr Banerji joined big donors such as Richard Desmond, owner of Express Newspapers, and Paul Drayson, head of the drug firm Powderject, in giving cash in the run-up to the 2001 general election.

A Downing Street spokesman refused to comment last night on Dr Banerji's appointment.