Labour peer Lord Ahmed has been suspended by the party and has resigned from his role with an interfaith foundation after apparently claiming a Jewish conspiracy was responsible for his imprisonment for causing a fatal car crash.
The peer reportedly suggested a Jewish plot against him had followed his support for Palestinians in Gaza.
He was jailed for 12 weeks in 2009 after admitting sending text messages shortly before a motorway crash which killed another driver.
Labour is to hold a full investigation into Lord Ahmed’s comments. He stepped down as a founding trustee of the Joseph Interfaith Foundation, which promotes Muslim-Jewish relations, on Sunday, following last week’s reports of his alleged remarks.
Lord Ahmed said he supported the foundation’s work “in the very important and vital areas of fostering cordial Muslim-Jewish relations and confronting antisemitism and Islamophobia”.
He did not want the allegations against him “to have any negative effect on the foundation. “I strongly hope that the allegations made against me will in no way affect the good relations between the Muslim and Jewish communities in this country,” he added.
Nazir Ahmed was ennobled by Tony Blair in 1998. The comments he is being investigated over were made in a TV interview in Pakistan in April last year.
The Times obtained a recording of the interview — conducted in Urdu — and reported Lord Ahmed as claiming Jewish media owners pressured the courts to give him a severe punishment.
It is claimed that in the interview Lord Ahmed said Mr Justice Wilkie was appointed to sentence him at Sheffield Crown Court in order to help a “Jewish colleague” of Tony Blair.
The peer reportedly said: “My case became more critical because I went to Gaza to support Palestinians. My Jewish friends who own newspapers and TV channels opposed this.”
A Labour spokesman said the party “deplores and does not tolerate any sort of racism or antisemitism”.
Lord Ahmed said on Monday that his lawyers were waiting for The Times to forward a copy of the unedited interview, and that he could not comment further until the transcript had been obtained and considered.
Shortly before he was jailed, Lord Ahmed had claimed that university societies in this country had recruited young British Jews to join the Israeli army and fight in Operation Cast Lead. He said the Jewish students should be prosecuted for war crimes on their return to this country.
He was also suspended by Labour last year for allegedly offering a £10 million bounty for US President Barack Obama. The suspension was lifted following an investigation into comments he made in a Pakistani newspaper.
Labour MP Louise Ellman, chair of the Jewish Labour Movement and vice-chair of Labour Friends of Israel, said: “I’m appalled. If true, these comments reflect basic antisemitism and I welcome the party’s decision to suspend Lord Ahmed”.
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