Fox bows to pressure and resigns

[Tony Gosling]

Fox bows to pressure and resigns

http://www.ft.com/cms/s/0/83e75bae-f675-11e0-86dc-00144feab49a.html#axzz1altENlLm


By Jim Pickard, Political Correspondent
Liam Fox resigned as UK defence secretary on Friday afternoon after a
week of allegations about how he secretly retained an informal adviser
who was funded by several business groups.

The decision marks the fall of an experienced Tory minister who first
served in government in the 1990s and is a flag-bearer for the
rightwing of his Conservative party, having stood unsuccessfully for
the leadership in 2005.

Pressure on the defence secretary to resign reached a critical mass on
Friday after it emerged that his controversial associate Adam Werritty
had his flights and hotels paid for by a network of donors including a
corporate intelligence group and a billionaire who funds a pro-Israel
lobbying group.

The revelations were fatal given the extensive access that Mr Werritty
enjoyed to the defence secretary, with no fewer than 40 meetings since
last year’s general election – 18 of them overseas.

In his resignation letter Mr Fox trumpeted the success of British
forces in Afghanistan and Libya and the ongoing efforts to restructure
the UK’s army, navy and air force.

“I am particularly proud to have overseen the long overdue reforms to
the Ministry of Defence and to our Armed Forces, which will shape them
to meet the challenges of the future and keep this country safe.

I am proud also to have played a part in helping to liberate the
people of Libya, and I regret that I will not see through to its
conclusion Britain’s role in Afghanistan, where so much progress has
been made.”

Mr Fox’s departure is likely to be mourned by many rightwing MPs and
commentators as he was seen to have performed competently in the
Ministry of Defence, which has struggled manage the cost of long-term
defence projects.

The final straw was when it emerged that Mr Werritty’s activities were
funded by a not-for-profit company linked to an employee of Michael
Hintze, the hedge fund millionaire. Oliver Hylton, who works for Mr
Hintze’s CQS hedge fund, is the sole director of Pargav Ltd, although
he has insisted he had no role in running the company.

Pargav has paid for flights and luxury hotels for Mr Werritty’s
extensive international travels, according to financial records
obtained by the Times. The newspaper reported that six groups had each
paid up to £35,000 into the fund since October 2010.

These donors include Jon Moulton, the venture capitalist best known
for trying to buy MG Rover, and Michael Lewis of Oceana Investments, a
Tory donor who until two years ago was deputy chairman of Bicom, the
pro-Israel lobbying group.

Another donor was Tamares Real Estate, a Liechtenstein-registered
investment group owned by Poju Zabludowicz, the billionaire chairman
of Bicom.

Mr Zabludowicz, son of an Israeli arms tycoon, was born in Finland but
lives in London. He hosted secret talks in March between Israel’s
president Shimon Peres and Palestinian president Mahmoud Abbas, it has
been reported.

The last reported donor is G3 Good Governance Group, a strategic
advisory company which carries out investigative work.

The FT revealed on Thursday that G3 until recently shared a London
address with the Sri Lankan Development Trust, a mysterious vehicle
set up by Liam Fox to carry out aid work. The trust has so far done
little other than pay thousands of pounds to finance the MP’s trips to
Sri Lanka while he was in the parliamentary opposition.

Its chairman is Chester Crocker, a former assistant secretary of state
under Ronald Reagan, who sits on the board of Bell Pottinger
Communications.

Pargav is registered at 60 Goswell Road, in Islington, north London,
and has yet to file any accounts. Mr Hylton, its director, is already
linked to Mr Werritty through their directorships of Security Futures,
a consultancy which was dissolved last year. He is also manager of the
Hintze charitable foundation, which has in the past donated £51,000 to
the Atlantic Bridge, a charity set up by Mr Fox and run by Mr
Werritty.

The revelations will add to pressure on Mr Fox, who has angered
colleagues and Whitehall officials by appearing to run a “maverick”
shadow foreign policy operation.

Mr Werritty, who was best man at the defence secretary’s wedding, is
due to be questioned again later on Friday as part of a Whitehall
probe into his relationship with the minister.

Mr Fox has repeatedly insisted that his friend does not work for him
officially or unofficially. However, it emerged this week that the 34-
year old had checked into a Dubai hotel earlier this year claiming to
be part of the minister’s entourage. He has also handed out business
cards which describe him as an “adviser” to the defence secretary.

The FT revealed on Friday that Mr Hintze has tens of millions of
dollars invested in defence companies through his hedge fund, CQS. One
of the companies in which CQS invested benefited from a strategic
announcement made by Mr Fox in July this year in his role as defence
secretary, the Financial Times has found.

CQS, which until last month had provided Mr Werritty with a desk in
its London office, only has a small portion of its total assets
invested in defence-related positions and there is no evidence or
suggestion that CQS’s funds profited in any way from the association
of Mr Hintze with Mr Werritty or Mr Fox.

Mr Hintze also paid for a private jet to fly Mr Fox and Mr Werritty
from Washington to London in May.

US regulatory filings analysed by the Financial Times show that at the
end of June, CQS had $34m (£21.5m) invested in L-3, a high-tech US
communications firm.

In July this year, Mr Fox told parliament that the Ministry of Defence
would go ahead with plans to award a contract to L-3 to provide the
MoD with new “Rivet Joint” aircraft.

The MoD said on Thursday that the decision to select the programme was
taken under the previous government and the contractor was chosen by
the US government. L-3’s contract had not previously been publicly
disclosed, however.

Meanwhile, it has emerged that Mr Fox and Mr Werritty attended a $500-
a-head dinner in Washington with senior defence industry figures which
had not been declared by the MoD.

The Daily Telegraph reported that both were guests at the September
2010 dinner at the Mandarin Oriental hotel. This did not appear in a
list of official meetings between the two men produced by the MoD on
Monday. The dinner was attended by some of the US’s leading generals,
including General James Mattis, commander of US Central Command.

The MoD said the meeting at the Mandarin Oriental hotel took place
during Fox’s annual leave and was not included in the original list
released last week due to a “clerical error”.

Mr Fox’s spokesman had said on Friday morning that the defence
secretary would not resign and was instead getting on with his job.
“Adam Werritty does not work as an official or unofficial adviser to
Liam Fox,” he said.