[JURIST] British police on Thursday arrested Des Smith, the first person held in police custody in the "cash for honors" probe [BBC Q/A, video], before releasing him on bail later in the day. The arrest stemmed from allegations that the government was selling "honors" such as peerages and knighthoods to wealthy individuals in exchange for educational funding. Smith, who worked at the Specialist Schools and Academies Trust (SSAT) [official website] at the time, allegedly met an undercover reporter [Times report] from the Sunday Times posed as a representative of a potential investor in January, and promised such an exchange. Smith has since quit the position and described the disclosure as "naive."
Scottish and Welsh nationalist MPs initiated the probe by alleging that Tony Blair's Labour Party [party website] traded cash for honors in violation of the 1925 Honours (Prevention of Abuses) Act [BBC backgrounder]. The investigation was later extended [AFP report] to include the opposition Conservative Party [party website]. The Labour Party has since revealed receipt of approximately £14 million in secret loans before the past election, while the Conservatives have revealed £16 million in loans and a debt of £37 million to local Conservative associations and individuals. The Liberal Democrats [party website] owe £850,000 to three lenders. In response to the scandal, the UK government has suggested that new laws be enacted [JURIST report] requiring loans to political parties to be publicly disclosed. BBC News has more.