Special investigation: How Blair rescued Palestine deal worth $200m to his £2m-a-year paymasters

By David Rose, Mail Online Sep 12, 2010

Tony Blair mounted an intense political lobbying campaign to rescue a struggling mobile-phone business owned by a client of the bank that pays him a £2 million annual salary.

The firm, Wataniya, had already built a brand-new network in the Israeli-occupied Palestinian West Bank.

But it almost collapsed before launching its service, jeopardising a £450 million investment, because Israel’s government was refusing to let it use the frequencies it needed to operate.

Rescue bid: Tony Blair, at the launch of the mobile phone network, put pressure on Israel's prime minister to save WataniyaRescue bid: Tony Blair, at the launch of the mobile phone network, put pressure on Israel’s prime minister to save Wataniya

Acting in his capacity as the international Middle East peace envoy, Mr Blair helped to save the company by spending months putting pressure on Israel’s prime minister and his colleagues in a bid to change their minds.

An investigation by The Mail on Sunday has revealed:

* Mr Blair spoke of the need to get Wataniya up and running in order to boost the Palestinian economy. However JP Morgan, the American investment bank that employs him as a consultant, has a financial stake in Wataniya through Wataniya’s owner, the Qatari firm Qtel, which is an important client of JP Morgan.

* Financial documents show that back in 2007, JP Morgan had been one of four ‘mandated lead arrangers’ of a $2 billion loan with which Qtel bought Wataniya from its original Kuwaiti owners. Last year, the bank joined a syndicate that lent Qtel a further $500 million, and became a ‘lead arranger’ for a Qtel bond issue which raised yet another $1.5 billion.

In these deals, JP Morgan would have been paid many millions of pounds in fees, and if the loans had gone bad, could have been exposed to substantial losses. ‘Its original exposure was probably around $200 million,’ one Wall Street expert said yesterday.

Last night a bank spokesman refused to comment, or to disclose any further details. He did not deny that Qtel was a significant JP Morgan client.

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