A Midland MP is to spearhead an inquiry into the "cash for honours" controversy which prevented a Black Country businessman receiving a peerage.
Tony Wright (Lab Cannock Chase), chairman of the Commons Public Administration Committee, announced an investigation into claims businessmen had been nominated for seats in the House of Lords after giving donations and loans to political parties.
Robert Edmiston, who runs car importers IM Group in West Bromwich, is one of four businessmen whose nomination for the House of Lords has been blocked by the House of Lords Appointments Commission.
He has donated £250,000 to the Conservative Party and chairs the Midland Industrial Council, which has also donated six-figure sums to the Tories. He has also sponsored the Grace City Academy in Solihull.
The commission also blocked the appointment of three businessmen who made donations to Labour.
It emerged this week that the three had also lent money to the Labour Party, avoiding rules which state parties must publish details of donations they receive.
Dr Wright said his committee was launching the inquiry following allegations that loans have been used as a way of circumventing declarations of political donations.
It is the second time the committee has examined the way peerages are awarded in a year.
Dr Wright said: "With continuing speculation about whether the system of scrutiny is sufficiently robust and as part of our wider inquiry into current standards of probity in public life, we will be hearing from those charged with scrutinising nominations to ensure that there are robust safeguards against honours for sale."
Mr Edmiston, a committed Christian, has been at the centre of controversy because of his support for the Govern-ment's city academies scheme.
As well as the Solihull school, which already has Government backing, he plans to build a second Christian-based academy in Coventry.
Some Labour backbenchers, including Ken Purchase (Lab Wolverhampton North East), have accused the Government of allowing religious "extremism" into the state education system.
The other businessmen at the centre of the controversy include Chai Patel, the founder and chief executive of the Priory Group, who lent £1.5 million to Labour.
Property developer Sir David Garrard is believed to have lent Labour more than £1 million, and stockbroker Barry Townsley lent about £1 million.