Paper trail left by Werritty led journalists to defence secretary’s door

DRINKING in Westminster on Wednesday evening, the BlackBerrys of Conservative MPs went into overdrive.

Rumours had been swirling about Liam Fox all week. But now, so the bush telegraph went, his time was up. An avalanche of personal misjudgements and financial irregularities was about to break. It took until Friday for the tenacious Fox finally to confirm he was away.

For a week, Fox had managed to keep his head above water over the revelations of the extraordinary access he had given to his close friend and best man Adam Werritty. In just 18 months in the job, they had met up 40 times, 18 of them on foreign trips. Fox had even tagged holidays with Werritty on to the end of official visits – twice in Hong Kong and twice in Dubai.

Yes, this was irregular, Fox had conceded as he apologised on Monday for “blurring the boundaries” between his professional and private life. But, he added, in suspiciously contorted language, Werritty “had not been dependent on any transactional behaviour to maintain his income”. So long as that position could be maintained, loyal Tory friends who have long admired the party’s Thatcherite standard-bearer insisted he would get away with it.

But journalists weresearching through the paper trail that Werritty’s tangled web of ex-charities, not-for-profit companies and consultancies had left behind. One was called Pargav. It was backed by an assorted cast of venture capitalists, hedge funds managers, corporate investment companies and private intelligence firms.

The crucial meeting which led to Fox’s demise appears to be one arranged by Lady Thatcher’s former press adviser, Lord Bell, now head of PR firm Pottinger Bell. It set up talks between one of the donors, Michael Hintze – who also donates to the Conservatives – and the Times newspaper. The pressure on donors to come clean was intense.

On Thursday, the paper’s story broke the dam. It provided intimate details of Werritty’s spending and also showed cash had come from an array of people connected to the defence industry.

In total, £147,000 had been given to Pargav, allowing Werritty to lead a life of luxury. The jet-setting included trips to luxury hotels and plush restaurants in Dubai and Hong Kong and even the purchase of crocodile shoes.

Werritty – who used business cards claiming to be an adviser to Fox – appears to have been a persuasive character. Using his impeccable contacts, he befriended Oliver Hylton, a charity adviser to hedge fund CQS and an admirer of Fox’s work. He persuaded him to be the sole director of Pargav.

“I saw Adam as an adviser [to Fox]. Anything that he did was for the good of Liam Fox and supporting his office,” said Hylton.

The final straw came in a statement from another of Pargav’s donors on Thursday night. Venture capitalist Jon Moulton revealed that Fox himself had asked him to provide funds to Pargav. He was told it did work in “security policy analysis and research”. In a statement issued following Fox’s resignation, Moulton said: “After the election, I was asked by Dr Fox to provide funds to a non-profit group called Pargav … and, after obtaining written assurances as to its activities, I provided personal funding to Pargav.”

Moulton claimed that he had not received any benefit from giving any money to Pargav. But the circumstantial evidence was far too much to prevent Fox’s resignation.

Yesterday, it was reported that in February last year Moulton had bought a British firm with extensive defence contracts called Gardner. The RAF jets which used Gardner components, including the Typhoon, were subsequently spared the axe in Fox’s strategic spending review a few months later. It was also reported that a another donor to Pargav, private intelligence firm G3, also had significant interests in the defence trade.

In summary, a company set up by Fox’s best man and closest friend, for which Fox had solicited funding, owed its funding stream to major players in the defence industry.