The Loans Affair is the name given to the political scandal involving the Whitlam Government of Australia, in its second term after being re-elected (with a reduced majority) after the double dissolution in May 1974, in which, it was accused of attempting to illegally borrow money from Middle-Eastern countries by by-passing standard procedure as dictated by the Australian Treasury.
Overview of the "Loan"
During 1975, the Whitlam Government of Australia was accused of attempting to raise a loan of approximately $4 billion illegally. The money was supposedly going to be used to fund a number of natural resource and energy projects, including construction of a natural gas pipelin, the electrification of interstate railways and a uranium enrichment plant.
The Minister for Mineral and Energy, Rex Connor, Treasurer Dr. Jim Cairns, and others, were prime identities in the scandal.
Why the loan was sought from the Middle-East and not European or American sources was because during that time, the Middle-East was awash with "petrol-dollars", as the price of oil quadrupled between 1973 and 1974. A Pakistani broker, Tirath Khemlani, was used by Connor to secure the loan. In the end however, no loan was ever obtained, and the scandal did much to raze the Whitlam's Government reputation to the ground.
Progression after its leak
A special one-day sitting of the Australian House of Representatives was held on 9 July 1975, during which the-then Prime Minister of Australia, Gough Whitlam tabled the documents containing evidence about the loan and sought to defend his government's position.