The Hindujas, the £3.5m fund and a royal invitation

The super-rich Indian brothers who figured in Peter Mandelson's resignation are back. By Marie Woolf

The Hinduja brothers, the multi-millionaires even New Labour found too hot to handle, are back at the heart of the British establishment.

The super-rich Indian businessmen, who featured in the "cash for passports" saga that led to Peter Mandelson's second downfall, have formed a charitable "partnership" with the Royal Family. They have created a £3.5m fund to help raise large sums of money for the Duke of Edinburgh's Award Scheme and have already had the Earl of Wessex host a reception at St James's Palace. Now the prospect of invitations to a Buckingham Palace garden party for generous donors is being held out.

These developments, revealed in documents seen by The Independent on Sunday, come five years after Tony Blair was questioned about reports that the Prince's Trust had turned down money from the Hindujas after advice from the intelligence services.

The involvement of the Hindujas, whose fortune has grown with India's booming economy, has been welcomed by the Duke of Edinburgh's Award Scheme, which hopes to extend its contacts, through the Hindujas, to Britain's Asian business community. But the close involvement of Srichand and Gopichand Hinduja with the royals has raised eyebrows in the Indian business community and is bound to unsettle the Labour Party.

The Hinduja-royal association was launched three weeks ago by Prince Edward at a reception at St James's Palace. A letter celebrating the Hinduja "partnership", sent to wealthy Asian businessmen, offers the prospect of the "most generous supporters" being invited to a garden party at Buckingham Palace in July. A form is attached with a facility for placing a £100,000 donation to the scheme on a credit card.

Labour is still haunted by the "cash for passports" scandal which rocked the Government, amid controversy over the brothers' links with the Millennium Dome, to which they gave £1m. Now, in their latest charitable venture, they are supporting this famous royal cause.

A letter sent by Peter Westgarth, chief executive of the Duke of Edinburgh's Award, to Indian businessmen who attended the St James's Palace party on 21 February, speaks of the "partnership between the Hinduja Foundation and the Duke of Edinburgh's Award". Mr Westgarth was impressed by the "encouragement given by HRH the Earl of Wessex and the leadership demonstrated by the Hinduja family".

The letter to potential donors says: "The generosity of the Hinduja Foundation and our current supporters will only provide the first steps in achieving our goal of making the Award more widely available. We should like to invite you to consider joining with the Hinduja Foundation in supporting our work. This is particularly valuable in our 50th year, when we will be able to welcome our most generous supporters to a number of celebratory events, including our anniversary garden party at Buckingham Palace in July. To receive an invitation ... donations must be received by 30 April 2006."

The Hindujas have been cleared of bribery and conspiracy charges in India and there is no implication that they have acted improperly.

Srichand and Gopichand, who are resident in the UK, were guests of honour at the St James's Palace party, along with their brother Prakash, who flew in from India. They also plan to attend the garden party in July. The Hinduja Foundation, which does philanthropic work worldwide, has promised to put £3.5m in a fund which would raise about £100,000 a year for the Duke of Edinburgh Award.

"They have set aside a pot of money which is going to make an annual donation to the Duke of Edinburgh's Award Scheme quite possibly in perpetuity," said a foundation spokesman. "The foundation has long had an interest in encouraging multi-faith, multicultural understanding, and their involvement in the award is to further that end too: to try to increase Asian involvement and indeed investment in the award scheme.

"There is going to be a garden party and there is some thought about having something around Diwali time in October as well. I don't know which royals will be there."

The Duke of Edinburgh's Award said it welcomed the partnership with the Hindujas. It said it considered them generous donors, and they were expected at July's garden party, which will be attended by about 8,000 people, including young people and volunteers. Prince Philip is also expected to attend.

Mr Westgarth denied that a "generous" donation would guarantee a place at the garden party. "People who are our key funders will be invited along to join in the celebrations. Their funding is part of assisting us to build our penetration into ethnic communities. And they are helping to encourage other individuals and corporations to support us," he said.

Bombay Boys: From India to the Dome

The Hinduja brothers are estimated to be the 13th-richest people in Britain. Born into wealth in Bombay (Srichand Hinduja in 1935, Gopichand in 1940), the brothers joined the family business after finishing their education. Srichand is now chairman of the Hinduja Group, Gopichand is president. Together, they have expanded the group's interests across the globe. Through the Hinduja Foundation, the brothers have made a number of charitable donations, most notably in 1998 when they gave £1m to underwrite the Faith Zone in the Millennium Dome. Afterwards, the brothers successfully applied for UK passports. Peter Mandelson was accused of pulling strings to get Srichand's application approved. He resigned from the Cabinet for the second time after admitting he had made misleading statements, but the subsequent Whitehall inquiry cleared him of any wrongdoing. At the time, the brothers - along with Prakash, a third brother - were under investigation in India over corruption allegations. All three were acquitted last year.