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Sources close to the 10-storey project, close to Cannon Street Station, say the Swedish firm is on the verge of signing on as main contractor.

The Walbrook is a 42,000 m2 office and retail development designed by Foster and Partners and will be built speculatively. It will comprise about 38,500 m2 of offices and 3400 m2 of retail and restaurant space.

Insiders say a tenant for the scheme will be found by the end of the year. Work is expected to begin this summer, with completion set for summer 2009.

The news emerged as Minerva announced a £2.1m pre-tax loss in the six months to December 2005 and became embroiled in the Labour loans scandal.

Minerva's loss compares with a pre-tax profit of £1.9m in the same period a year earlier. Andrew Rosenfeld, the chairman, said the loss was "a consequence of the group's decision to sacrifice short-term investment income in the pursuit of development surpluses".

The news emerged as Minerva announced a £2.1m loss and became embroiled in the Labour loans scandal

The developer was linked to the Labour funding scandal after it emerged that planning permission was granted for two schemes shortly after Rosenfeld and his predecessor, Sir David Garrard, made loans and donations to the party.

Minerva Tower, the firm's proposed 50-storey tower in the City of London, and Park Place, the shopping centre scheme in Croydon, were given the go-ahead by the ODPM after a £200,000 donation from Garrard in 2003 and a £1m loan from Rosenfeld last year.

Salmaan Hasan, Minerva's chief executive, rejected claims of any link. He said: "What are we? A banana republic that we can get planning permission because you give the deputy prime minister a bung?"