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The House of Commons approved the penalty without a vote following a recommendation by the committee on standards and privileges after it observed that Vaz had shown contempt for the House by not giving complete details of his family's financial ties with the UK-based Hinduja brothers.
The penalty was confirmed after Vaz, who was a minister in the foreign office of the previous Blair cabinet, apologised to the House.
Vaz said he 'completely accepted' the committee report.
"I apologise to the committee and the House and in doing so I underline my unreserved support for the integrity of the House and its procedures," he said.
Forty-seven-year old Vaz, an ethnic Goan, was under investigation following complaints by Elizabeth Filkins, parliamentary standards commissioner, that he did not fully disclose his financial links with the Hinduja brothers.
The standards committee said he had given 'misleading' information to the committee and to Filkins about the financial relationship between his family and the Hindujas.
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