Ambassador in Mittal affair 'to be brought back to London'

The controversy surrounding Tony Blair's links to the Indian billionaire Lakshmi Mittal threatened to reignite last night because of the news that the British ambassador at the centre of the row was being moved from his post.

Richard Ralph, the ambassador to Romania, is being replaced in November by Quinton Quayle, the Foreign Office website said. Foreign Office sources said Mr Ralph could be moved back to London instead of being offered another posting abroad, a switch that the Tories said would be a clear demotion. The Government said no decision had been made about Mr Ralph's next job.

Mr Ralph was the man who drafted the Prime Minister's letter to his Romanian counterpart that backed Mr Mittal's attempt to buy the country's nationalised steel industry last year. The letter, which at one point described Mr Mittal as a friend of Mr Blair, came only months after the billionaire had made a £125,000 donation to the Labour Party. The word "friend" was removed, but Downing Street has always refused to reveal who inserted or withdrew it.

Mr Mittal's Ispat company bought the Sidex steel plant in Romania for £300m. Mr Blair claimed he had offered his support to Mr Mittal because of his "British company", but was later forced to admit it was only "British based".

Mr Blair backed Ispat even though Mr Mittal is an Indian citizen, employs fewer than 100 workers in Britain and registers his firm in a tax haven. He met Mr Mittal at a party attended by Lord Levy, Mr Blair's chief fund-raiser. Mr Ralph has repeatedly declined requests to be interviewed about his involvement with Mr Mittal, whom he met at least six times before the deal was done.

The Foreign Office insisted that the written endorsement from Mr Blair for the £300m deal was the ambassador's idea. But it has failed to identify who initiated the letter.

Michael Ancram, the shadow Foreign Secretary, said Mr Ralph's move underlined the urgent need for a full and frank inquiry into the Foreign Office's links to Mr Mittal. "This is yet another unanswered question in this whole sorry Mittal saga. We have never had satisfactory answers from the Foreign Office to my questions about the way they operate in relation to helping companies, whether British or otherwise," he said.

A spokesman for the Foreign Office denied Mr Ralph's removal from Bucharest had any connection to the Mittal controversy. "He is leaving at the end of his three-year tour. That is a standard length of duty," the spokesman said.