'Sorry' Liam Fox Quits As Defence Secretary

Liam Fox has resigned as Defence Secretary and been replaced by Philip Hammond after a string of revelations about his friendship with Adam Werritty.

Dr Fox quit his post amid mounting claims that his relationship with the lobbyist and businessman had broken the ministerial code.

The move brings to an end a 20-year career at the frontline of politics for the MP, who had been seen as a potential future party leader.

Prime Minister David Cameron said he understood the decision but was "sad to see him go".

Economic Secretary to the Treasury Justine Greening , the MP for Putney, has been promoted to the Cabinet and takes over at the Department of Transport.

In his resignation letter to Mr Cameron, Dr Fox said he had "mistakenly allowed the distinction between my personal interest and my Government activities to become blurred".

He continued: "The consequences of this have become clearer in recent days. I am very sorry for this.

"I have also repeatedly said that the national interest must always come before personal interest. I now have to hold myself to my own standard.

"I have therefore decided, with great sadness, to resign from my post as Secretary of State for Defence - a position which I have been immensely proud and honoured to have held."

He also paid tribute to the Armed Forces and said he was "honoured and humbled" to have worked with them.

Dr Fox added that he would not be quitting politics altogether and would continue to serve his constituents in North Somerset from the backbenches.

The minister had telephoned Mr Cameron in his Oxfordshire constituency to inform him of his decision.

The resignation came amid claims Dr Fox approached a venture capitalist to ask him to help bankroll a company run by Mr Werritty .

Jon Moulton said he was asked after the general election to give money to the firm called Pargav which he was told worked in "security policy analysis and research".

According to claims on Friday, the firm was a not-for-profit company used to fund Mr Werritty's jet-set lifestyle following Mr Fox around the globe.

In a statement after Dr Fox resigned, Mr Moulton said: "Before the last election I had made several, on the record, donations to support Dr Fox following a request to do so from a Conservative Party fundraiser.

"After the election I was asked by Dr Fox to provide funds to a non-profit group called Pargav involved in security policy analysis and research and after obtaining written assurances as to its activities I provided personal funding to Pargav.

"Neither I, nor any of my associates, have sought or received a benefit of any form from Pargav. I have not received an account of Pargav's activities, nor have I been involved at all with Pargav, since funding. I will not be doing this again."

It is not clear whether the prospect that the claims Dr Fox sought funds for Mr Werritty's company were about to surface played a part in his decision to stand down.

The Prime Minister hailed Dr Fox's work at the MoD, where he oversaw controversial spending cuts and the Libyan conflict.

"He did a good job at the Ministry of Defence, clearing up the mess left behind by the last government and giving good leadership to that department, particularly while in action in Libya and Afghanistan as well," he said. "I wish him well for the future."

In his letter to Dr Fox, accepting his resignation, Mr Cameron added that his former leadership rival should be "proud of the difference you have made".

In a signal of warmth, he added: "You and Jesme [Dr Fox's wife] have always been good friends, and I have truly valued your support over the years. I will continue to do so in the future."

Labour's shadow Jim Murphy said the senior Tory's resignation was "unavoidable and inevitable".

"Throughout these events I haven't called for Liam Fox's resignation but just the full truth."

He said it was clear Dr Fox had breached the ministerial code of conduct.

Sky understands the Prime Minister had been happy to wait for the conclusions of an investigation into Dr Fox's conduct by the most senior civil servant Sir Gus O'Donnell before making a decision about his future.

Sir Gus' report seeks to clarify whether Mr Werritty profited from his links to Dr Fox and how he funded attending 22 of the then-Defence Secretary's foreign trips.

Dr Fox had tried to front out the scandal but as the week progressed, more allegations about his friendship with Mr Werritty emerged.

Some reports claimed Mr Werritty was paid to act as an unofficial adviser by private wealthy donors sympathetic to Dr Fox's political views.

Mr Werritty, a long-term friend of Dr Fox who was best man at his wedding, was also found to have handed out business cards claiming to be an adviser.

The Conservative MP admitted he discovered this in June and told his friend to stop using them.

The latest revelations about Mr Werritty's financial backers appeared to convince him he had to go.

It has been suggested Sir Gus' report, due early next week, was set to find the politician in serious breach of the conduct rules.

His successor, Mr Hammond , said on Friday night that it was a "real honour and privilege" to be asked to be Defence Secretary.

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.

"I look forward to picking up the baton from Liam and working closely with the Prime Minister, Foreign Secretary and International Development Secretary to ensure that our defences are robust and that the finances that lie behind them are equally robust."