Sarwar: Insists he is innocent

Allegations "baseless, false and ludicrous"

Sarwar facing "Internal Exile"

Mohammed Sarwar, Britain's first Muslim MP, who represents Glasgow Govan, has denied the claims, but after an investigation by Labour officials he is facing a temporary suspension of his privileges. It doesn't amount to a withdrawal of the Labour whip and he won't be expelled from membership. But the move is being described as "internal exile" within the Labour party.

As the police enquiries continue it seems likely that Mr Sarwar will only be expelled from the Labour Party if the police find hard evidence against him.

Mr Sarwar says that the bribery allegation, and the claim that the Govan Labour Party tried to "rig" the election were "baseless, false and ludicrous".

Mr Sarwar's future was called into question when a Sunday newspaper claimed he had given election rival Badar Islam, the Independent Labour candidate, £5,000 to "ease off" his campaign.

Mr Sarwar says such loans were normal business practice. "There will be hundreds of people in Glasgow I've helped, and this has helped my business as well," he said.

But the multi-millionaire businessman added: "I intend to resign from the business and be a full-time MP, but I am sure my brother will continue the family tradition to help people in need."

Malik: Loan not bribe

Mr Sarwar also denied any wrongdoing in encouraging members of the Asian community to register to vote.

"In any democracy it should be a priority for those people who are not on the electoral roll to get them onto the electoral roll," he said. "The Labour Party encouraged this and I think we have done nothing wrong."

Newsnight said it had seen documentary evidence which Mr Sarwar would use to support his claim that the money given to Mr Islam was a secured personal loan.

Tariq Malik, who it is claimed was the only witness to the transaction, told the programme he believed the money to be a loan, not a bribe.

Michael Graham, who gave evidence to Labour's inquiry, told the programme: "Regardless of the police inquiry, I think there's been enough damage done as regards bringing the party into disrepute."

"For whatever reason, he admitted handing a sum of £5,000 to his political opponent. As soon as he admitted that, he should have stepped down," he added.

Alastair Sandford looks at the story's background Dur: 5.15