Inquiry 'fails to answer Werritty questions'

The official inquiry into Liam Fox's conduct was dismissed as "superficial" last night after it failed to answer all the questions over the affair that cost him his job as Defence Secretary.

Mystery remained over whether the businessmen who funded Adam Werritty, his friend and self-styled adviser, had clients that might have benefited from Mr Fox's decisions as a minister. Although Downing Street had promised that the investigation by Sir Gus O'Donnell, the Cabinet Secretary, would address "all the unanswered questions", Labour claimed it had fallen short and called for a wider inquiry.

No 10 suggested the remaining questions about funding were a matter for the Electoral Commission. But the Commission said the evidence does not yet "warrant a formal assessment" and suggested that any failure by Mr Fox, right, to report donations was a matter for Parliamentary Commissioner for Standards.

Jim Murphy, the shadow Defence Secretary, said: "This is a murky business and it has not yet been resolved." He said the Cabinet Secretary's remit was far too narrow. "The report didn't look at the web of influence, it didn't look at the money."

Sir Gus concluded that Mr Fox's actions "clearly constitute a breach of the ministerial code" and "a failure of judgement". He said Mr Fox should have told his top civil servant that Mr Werritty was a friend who had a company financed by donors, some of whom had funded Mr Fox when he was in opposition.

He also concluded that in giving his friend details of the overseas trips in his diary, Mr Fox "posed a degree of security risk", but said Mr Werritty was not briefed on classified matters.