Report: Liam Fox Breached Ministerial Code

A damning report into Liam Fox's links with his friend Adam Werritty will confirm he breached the Government's Ministerial Code of Conduct.

The report by Cabinet Secretary Sir Gus O'Donnell, handed to David Cameron on Monday night and due to be published later on Tuesday, will conclude Dr Fox allowed a potential conflict of interest to arise.

Sir Gus will say the former Defence Secretary should have distanced himself from Mr Werritty after a warning from the MoD's permanent secretary Ursula Brennan about his use of unofficial business cards.

It will also criticise Dr Fox for gaps in his diary when he was on overseas trips with Mr Werritty and criticise the funding of those trips by wealthy Tory donors.

Sir Gus will also rule that Dr Fox, aided by Mr Werritty, was pursuing what appeared to be an independent foreign policy, promoted by the right-wing think tank Atlantic Bridge, which may have been at odds with official Foreign Office policy.

The only relief for Dr Fox, who quit last Friday after the revelations about the funding of his trips with Mr Werritty, is that Sir Gus concludes he had not personally gained financially from his relationship with his friend and best man at his wedding.

The Ministry of Defence revealed last week that Dr Fox had met Mr Werritty - who handed out business cards describing himself as Dr Fox's adviser even though he had no official role - 40 times since becoming Defence Secretary.

Their contacts included trips abroad and meetings at the MoD - including talks with the Israeli ambassador, dinner with the new US commander of international forces in Afghanistan, and a meeting in Dubai with a defence supplier without MoD officials present.

Tuesday's Guardian reports that Dr Fox also introduced Mr Werritty to the US Defence Secretary Robert Gates in the US in March in what was described as a "courtesy call".

Coinciding with Sir Gus's report, two opinion polls suggest the Conservatives have been badly damaged by the Liam Fox scandal.

A Populus poll in The Times gives Labour a massive eight-point lead, the biggest since the general election and Ed Miliband became leader.

It puts Labour on 41%, up three, the Tories on 33%, down one and the Lib Dems on a dismal 8%, down four.

A YouGov poll in the Sun is more in line with recent polls, with Labour on 40%, the Conservatives on 37% and the LibDems on 9%.

After more than a week of damaging revelations, Dr Fox finally stood down after it was disclosed how Mr Werritty's globe-trotting lifestyle was bankrolled by a not-for-profit company funded by wealthy right wing supporters of Dr Fox, some with links to the defence industry.

One of the backers, venture capitalist Jon Moulton, later disclosed that Dr Fox had approached him personally for a donation saying the company, Pargav, was involved in "security policy analysis and research".

Downing Street has not said whether the report will be published in full or whether some details will have to be redacted, although officials have indicated that they intend to be as open as possible.

"We will be transparent about this," the Prime Minister's official spokesman said. "We have asked Gus O'Donnell to establish the facts and we will be clear about what those facts are.

"Gus has not been asked to make recommendations. He has been asked to establish the facts and that's what he will do."

Despite publication of Sir Gus's report, Dr Fox is not out of trouble yet.

The Electoral Commission is considering a complaint that he breached the law on political donations while the Parliamentary Standards Commissioner has been asked to look into claims he let Mr Werritty live rent-free in, and run a business from, a taxpayer-funded property.

On top of this Labour MP John Mann has asked the City of London Police to investigate whether Mr Werritty committed fraud by representing himself as Dr Fox's adviser.