The tycoon and the conversation that did for Liam Fox

Kim Sengupta reveals the fateful intervention by a wealthy donor who lifted the lid on the Defence Secretary and Adam Werritty

Liam Fox resigned on the day John Moulton told Sir Gus O'Donnell that the Defence Secretary had asked him to donate money to a company that was used to fund Adam Werritty's first-class travel and stays in luxury hotels.

The information provided by Mr Moulton, a venture capitalist, fatally undermined Mr Fox's stance that he had not used his official position for the benefit of his close friend. And it was expected to lead to criticism of the former minister's conduct in the Cabinet Secretary's report, due to be delivered to David Cameron today.

Yesterday Mr Moulton, 62, told The Independent that as well as handing over documents to Sir Gus's team there had been a "conversation" in which he gave his account of how Mr Fox had requested money for the not-for-profit company Pargav, which, he claimed, was dedicated to "security policy analysis and research".

It later transpired that the donations had been used instead to fund Mr Werritty's travels, often in the company of the Defence Secretary. It is believed that Mr Fox was informed of Mr Moulton's account of what had led him to make the donation of £35,000 to Pargav before he submitted his resignation to the Prime Minister.

Mr Moulton yesterday refused to go into further detail of his talk with Sir Gus, but stressed that his concerns had been taken extremely seriously. He added that police had said they may launch a fraud investigation into the activities of Mr Werritty, in which he would "of course help in any way" that he could.

City of London Police said it was considering a request by John Mann, the Labour MP for Bassetlaw, for an investigation into the activities of Mr Werritty, who gave contacts business cards emblazoned with the House of Commons Portcullis symbol and told them that he was an adviser to Mr Fox.

The MP said: "If that is not the case and he was getting money – for whatever purpose – by misrepresenting his relationship with the Defence Secretary, that cannot be right."

Another strand of any inquiry would be whether the self-styled adviser was using money donated to Pargav to pay for his travels and lavish lifestyle and entertainment, which included a trip to Larry Flint's Hustler Club, a topless bar in New York.

Mr Moulton had sought and obtained written assurances that the donations he gave to Pargav would be used for analysis and research as Mr Fox had told him. The document has been passed to the O'Donnell inquiry and will be made available to the police if necessary.

In February 2010 Mr Moulton's private equity firm, Better Capital, paid £60m for Gardner UK, which makes components for aircraft, including RAF fighter jets and troop transporters. But he stressed that he had not benefited in any way from Pargav and had no involvement with the company apart from providing money. He has not been sent Pargav's accounts to prove how the donations were spent.

In addition to funding Pargav, Mr Moulton twice gave £50,000 to Mr Fox's office when he was shadow Defence Secretary and contributed £125,000 to the Conservative Party. All of the donations have been declared and they do not form any part of the complaint he has made to the Cabinet Secretary.

Six questions O'Donnell must answer

1) Was Adam Werritty a lone wolf or is there any evidence that other ministers have informal advisers operating in the shadows?

2) Did Mr Werritty have any meetings or contact with any other ministers since last year's general election?

3) Are any advisers to other ministers funded by organisations or businessmen who might benefit from special access to them, or who might want to influence government policy?

4) Should the ministerial code be tightened so the rules on avoiding a conflict of interest between a minister's public duties and private interests cover the activities of friends, as well as a spouse or partner and close family?

5) Should there be new provisions to make it easier for civil servants to blow the whistle when they are concerned that a minister might be breaching the ministerial code?

6) Should Sir Philip Mawer, the independent adviser on ministers' interests, conduct a wider inquiry into the lessons to be learned from the Liam Fox affair?

Andrew Grice

More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Life and Style
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
people'I’d rather have Fred and Rose West quote my characters on childcare'
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
footballBut the Newcastle United midfielder's news has 'left his mistress furious'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Senior Marketing Manager - Central London - £50,000

£40000 - £50000 per annum: Ashdown Group: Marketing Manager (Campaigns, Offlin...

Head of Marketing - Acquisition & Direct Reponse Marketing

£90000 - £135000 per annum: Ashdown Group: Head of Marketing (B2C, Acquisition...

1st Line Service Desk Analyst

£27000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client who are...

Trainee Recruitment Consultant - Birmingham - Huxley Associates

£18000 - £23000 per annum + Commission: SThree: Huxley Associates are currentl...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style