Boris Johnson faces a cronyism argument after appointing a controversial ex-Tory treasurer as a significant other Objections from an independent committee.
Valued at £ 860 million, banker Peter Cruddas is a longtime Conservative donor who has given the party more than £ 3.5 million.
The so-called "richest man in the city of London" has now been appointed to the House of Lords by Mr Johnson, although the Appeals Committee had advised against this step.
In a letter to the chairman of the commission, Lord Bew, the prime minister denied the "historical concerns" against Mr Cruddas.
They relate to allegations he offered to then Prime Minister David Cameron in return for donations of more than £ 200,000.
Peter Cruddas, who is valued at £ 860 million and is a former Conservative treasurer, has been named life companion
Mr. Cruddas resigned as treasurer in 2012 after nine months of an undercover newspaper investigation into "Cash for Access" claims.
It was apparently recorded as offering access to personalities like Cameron and George Osborne in exchange for "Premier League" donations.
The city tycoon denied wrongdoing, claiming his comments were just "raging".
He lost part of a libel suit on the appeal issue despite the judges backing him on a separate claim that he advocated violations of electoral law regarding foreign donors, and he ultimately won £ 50,000 in damages on the issue.
Explain his decision Mr Johnson said "the most serious allegations made at the time have been shown to be untrue and defamatory" and an internal Conservative Party investigation "found that there was no willful misconduct."
"Mr. Cruddas has made outstanding contributions to the non-profit sector and business and continued his longstanding experience in dedicated political service," said the Prime Minister.
"His non-profit foundation, which supports disadvantaged young people, has committed over £ 16 million over £ 16 million to charity. He is a longstanding support from both the Princes Trust and the Duke of Edinburgh Awards."
Meanwhile, Lord Speaker Lord Fowler also raised concerns about the number of colleagues appointed by the Prime Minister.
In defending the appointment, Mr Johnson said: "The most serious allegations made at the time have been proven to be untrue and defamatory."
He said: & # 39; Mr Johnson added 16 to his list of appointments, bringing the total for the year to 52 new colleagues across two lists.
"That list will bring the total in the House of Lords to over 830 – nearly 200 more than the House of Commons."
Regarding the appointment of Mr Cruddas, a statement posted on the gov.uk website said: “The House of Lords Appointment Commission has been asked by the Prime Minister to review all party-political and cross-bank nominations.
& # 39; The Commission is an independent non-statutory body. Advice is given, but appointments are the prime minister's responsibility.
& # 39; The commission has completed its examination on all candidates.
The commission informed the Prime Minister that it could not support a candidate – Peter Cruddas.
"Taking into account the advice of the Commission and other factors, the Prime Minister has come to the conclusion that the nomination should exceptionally continue."
Mr. Johnson also appointed QC David Wolfson as a Life Peer and Junior Justice Minister.
The Lord Speaker said he would not comment on the appointed persons – apart from greeting former Archbishop of York John Sentamu – but added: "It may be time now to change the role and powers of the House of Lords Appointments Commission. "
Mr Cruddas also co-founded the election campaign led by Mr Johnson and Michael Gove, donating £ 1.5 million.
Last year he supported Mr Johnson's leadership and said, "We need a Brexiteer as our next Prime Minister."
In response to the appointment, Labor Vice Leader Angela Rayner said: “After months of revelations about the cronyism at the heart of this administration, it is somehow appropriate that the Prime Minister end the year by peerating Peter Cruddas.
"It has never been so clear: there is one rule for the Conservatives and their friends, another for the rest of the country."