Bloomberg News

Cameron Names Hammond as U.K. Defense Secretary After Fox Quits

October 14, 2011

Oct. 15 (Bloomberg) -- U.K. Prime Minister David Cameron named Transport Secretary Philip Hammond to head the Defense Ministry after Liam Fox quit. The premier also promoted Justine Greening to become the fifth woman Cabinet member.

Fox stepped down yesterday, saying in his resignation letter to Cameron he’d let the line between his personal and public life become blurred in his relationship with a friend, Adam Werritty. Stories about Werritty, who’d described himself as an adviser to Fox without being on the government payroll or having security clearance, dominated the British press all week.

“I am obviously saddened by the circumstances in which this opportunity arises,” Hammond said in an e-mailed statement last night. “I think Liam Fox did a brilliant job.”

Fox, 50, who oversaw the British military operation backing the Libyan opposition to Muammar Qaddafi, is the highest-profile departure from Cameron’s government since it was formed after the prime minister’s Conservatives and the Liberal Democrats agreed to go into coalition in May 2010.

Fox told lawmakers at the start of the week he’d had 40 meetings since May 2010 in his offices or abroad with Werritty. Cameron ordered Gus O’Donnell, the U.K.’s most senior civil servant, to investigate whether ministerial rules had been broken, and he was due to report next week.

High-Speed Rail

Hammond, 55, had been transport secretary since May 2010 and was responsible for driving through the government’s plans for a high-speed rail line from London to northern England that’s opposed by some other ministers.

That task will now fall to Greening, who was born in 1969 and was previously a Treasury minister under Chancellor of the Exchequer George Osborne.

“I mistakenly allowed the distinction between my personal interest and my government activities to become blurred,” Fox said in his letter of resignation to Cameron published by the Defense Ministry in London. “The consequences of this have become clearer in recent days. I am very sorry for this.”

“I understand your reasons for deciding to resign as defense secretary, although I am very sorry to see you go,” Cameron said in his reply. “You can be proud of the difference you have made in your time in office, and in helping our party to return to government” last year.

‘Broke the Rules’

“Ministers must have standards, Liam Fox fell foul of the standards and he broke the rules,” Jim Murphy, defense spokesman for the main opposition Labour Party, said in an e- mailed statement. “This issue has centered solely on his judgment and his conduct in one of the most serious jobs in the country. With so much at stake for our forces, the defense secretary must be focused solely on his public duties.”

Jon Moulton, founder and chairman of Better Capital LLP, said in a statement that Fox had asked him since taking office to donate money to Pargav, a non-profit group involved in security policy analysis. The Times newspaper reported yesterday that Pargav had been set up by Werritty and it had funded his trips abroad.

Fox has long been the leading standard-bearer within the Conservatives for former Prime Minister Margaret Thatcher, who made a rare public appearance at his birthday party in September. Like her, he is hostile to the European Union and keen to further ties with the U.S. Fox stood for the leadership of the party against Cameron in 2005, coming third.

Shared an Apartment

During his appearance in Parliament this week, Fox said he met with Werritty, with whom he once shared an apartment and who acted as best man at the minister’s wedding, in the course of 18 different foreign trips. On Sept. 15, Fox told lawmakers in a written answer that Werritty had not traveled with him on any official overseas visits.

“Some were overseas visits, some were at conferences, some were long weekends where my wife and I were abroad, some were family holidays, one was a skiing holiday,” Fox said this week. “As for the pecuniary interests of Mr. Werritty in those particular conferences, I am confident that he was not dependent on any transactional behavior to maintain his income.”

According to a list of trips released by the Ministry of Defense, Fox made 48 overseas visits in 18 months, so Werritty was present on more than a third. He met Fox in places including Singapore, Bahrain, Dubai, Hong Kong, Switzerland, Washington, Spain and Sri Lanka. During a July 2010 visit to Tampa, Florida, Werritty was present at an informal dinner with Gen. John R. Allen, now the commander of NATO forces in Afghanistan.

A medical doctor born in Scotland, Fox was elected to Parliament in 1992, rising to the post of Foreign Office minister before the Conservatives lost power in 1997. At the time, Prime Minister John Major’s parliamentary majority was in single figures, and Fox was asked to use his professional expertise to gauge which lawmakers on his own side were at risking of dying and forcing a special election.

He married a fellow doctor, Jesme Baird, in 2005.

Hammond was a spokesman on economic affairs when the Conservative Party was in opposition. He ran a medical distribution business and was a director of a housing company and a North Sea gas production company before he was elected to Parliament in 1997. He also worked for the World Bank and as a consultant to the government of Malawi.

--Editors: Eddie Buckle, Leon Mangasarian

To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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