Three inquiries look into who profited from 'Fox franchise'

The Electoral Commission is expected to launch an investigation this week into Liam Fox's alleged failure to declare political donations, while David Cameron comes under increasing pressure to explain "the whole truth" of the affair.

The Tory MP, forced to quit as Defence Secretary on Friday, faces at least three inquiries into his relationship with Adam Werritty and the funding of the self-styled adviser's travel expenses.

The Prime Minister is facing calls to expand Sir Gus O'Donnell's inquiry to take account of who profited from the relationship between Mr Fox and Mr Werritty, and whether national security was compromised at any time.

Jim Murphy, the shadow Defence Secretary, told the BBC: "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. Only Liam Fox knows the truth – the whole country is entitled to know the truth."

Sir Gus is expected to complete his inquiry into Mr Fox's conduct in office, though it is not clear whether his findings will now be published.

Separately, the Parliamentary Commissioner for Standards is examining claims that Mr Fox broke Commons rules by allowing Mr Werritty to live rent-free and possibly run a business from his taxpayer-funded flat. His ministerial declaration of interests is also expected to be investigated. Any ruling against him could lead to him being disciplined by the Standards and Privileges Committee.

Under the law, donations worth more than £500 should be declared to the Electoral Commission, including "property, services or facilities" offered on anything "other than on commercial terms". This would cover the "provision by an employer of an individual to work" for free. This means that as well as the financial backers, Mr Werritty's presence at Mr Fox's side at 22 meetings at the MoD and 18 abroad could be considered a donation-in-kind itself.

Mr Fox had been due in Wootton Bassett today as the town receives its royal charter in recognition of its tributes to British troops killed overseas. Instead, it will be the first public engagement of Philip Hammond, the new Defence Secretary .

Speaking outside the MoD yesterday, Mr Hammond said he was sad about Mr Fox's departure, but honoured to have been given the job. "My first priority is going to be the successful completion of the missions that the armed forces are currently engaged in and then the completion of the implementation of the Strategic Defence and Security Review to make sure that our armed forces are sustainable," he said.

It emerged on Friday that Mr Werritty's lifestyle was funded by Pargav, a company bankrolled by wealthy Conservative backers. Jon Moulton, a venture capitalist, said Mr Fox approached him after last year's general election to provide funds for the company set up by Mr Werritty.

In February 2010, Mr Moulton paid £60m for defence firm Gardner UK, raising questions about a potential conflict of interest. Eight months after acquiring the company, which makes aircraft components including RAF fighter jets, he reportedly gave £35,000 to Pargav.

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