Questions remain over Fox funding

15 October 2011 Last updated at 02:40 ET

Adam Werritty joined Liam Fox (pictured) on 18 trips abroad after Mr Fox became defence secretary

The inquiry into Liam Fox’s conduct should continue despite him stepping down as defence secretary, Labour says.

Mr Fox resigned after a week of pressure over his working relationship with his friend, Adam Werritty. He has been replaced by Philip Hammond.

Labour says it is unclear who paid for Mr Werritty’s trips abroad with Mr Fox.

Venture capitalist Jon Moulton on Friday said Mr Fox approached him after the election seeking funds for a company set up by Mr Werritty.

Mr Fox’s conduct is being investigated by Cabinet Secretary Sir Gus O’Donnell and a report is due to be published early next week.

It is expected to be “very critical” of his actions.

The defence secretary had been under intense pressure this week after it emerged that Mr Werritty had met him 22 times at the MoD and joined him on 18 overseas trips since he came to office last year – despite having no official role.

Labour has called for a broader investigation into the rules governing ministerial conduct.

Shadow defence secretary Jim Murphy also said there were still many unanswered questions, such as who was funding Mr Werritty’s global travels, why were they doing it and why was it allowed to continue for so long.

Mr Werritty, a former flatmate of Mr Fox and the best man at his wedding, handed out business cards suggesting he was his adviser and was present at meetings Mr Fox had with military figures, diplomats and defence contractors.

Questions have been raised about who paid for Mr Werritty’s business activities and whether he had personally benefited from his frequent access to the defence secretary.

Philip Hammond said it was a “real honour and privilege” to take over from Mr Fox

“What is the flow of money?” asked Mr Murphy.

“Liam treated Adam Werritty as a good friend. Adam Werritty seems to have treated Liam Fox like some sort of franchise to make money from.

“So we need to know as part of the inquiry just where’s the money? Why has Liam resigned? Let’s continue to carry out the investigation and if need be, broaden the investigation further.”

The BBC understands officials at the Department for International Development had raised concerns about Mr Werritty’s involvement in Sri Lanka where, it is claimed, defence contracts were being touted.

In a resignation letter to David Cameron on Friday, Mr Fox said he had “mistakenly allowed” personal and professional responsibilities to be “blurred”.

“The consequences of this have become clearer in recent days,” he added. “I am very sorry for this.”

Mr Cameron responded that he was “very sorry” to see Mr Fox go.

In a swift reshuffle by the prime minister, the defence secretary was replaced by Transport Secretary Mr Hammond. Treasury minister Justine Greening was handed Mr Hammond’s post – becoming the fifth woman in the Cabinet.

‘Sad circumstances’

Mr Hammond said it was a “real honour and privilege” to take over from Mr Fox, who he said had done a “brilliant job”.

In a statement issued by the Ministry of Defence, he said he would “ensure that our defences are robust and that the finances that lie behind them are equally robust”.

“This is a particularly important time for defence. The priorities are the continuing operations overseas and the transformation of the way defence is organised,” he said.

“I am obviously saddened by the circumstances in which this opportunity arises. I think Liam Fox did a brilliant job in turning round the chaos that Labour left behind and in starting to build a sustainable future for our armed forces.”

Mr Hammond also paid tribute to the “dedication, professionalism and heroism” of British troops.

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