Defence secretary apologises for ties to businessman

LONDON (Reuters) - Defence Secretary Liam Fox apologised on Sunday for giving "the impression of wrongdoing" by having frequent private meetings with a personal friend in the defence business, but said he would not quit.

Newspaper reports have said Adam Werritty, a former flatmate of Fox and best man at his wedding, had passed himself off as an adviser to the defence secretary despite holding no official post.

In a statement, Fox denied helping Werritty's commercial work, giving him access to classified information or personally profiting from the relationship, but said he accepted that he had mishandled his dealings with him.

"I do accept that given Mr Werritty's defence related business interests, my frequent contacts with him may have given the impression of wrongdoing, and may also have given third parties the misleading impression that Mr Werritty was an official adviser rather than simply a friend," Fox said.

Fox's fate still hangs in the balance as the initial findings of an inquiry into whether national security had been breached will land on the desk of Prime Minister David Cameron on Monday. Cameron stepped into the media row on Saturday after the story showed no signs of abating.

Despite the impression created by his ties to Werritty, Fox said he did "not believe that wrongdoing did occur".

"I accept that it was a mistake to allow distinctions to be blurred between my professional responsibilities and my personal loyalties to a friend. I am sorry for this."

As defence secretary, Fox is responsible for the 10,000 British troops in Afghanistan and its leading role in the NATO air campaign against Muammar Gaddafi's supporters in Libya.

The opposition, which is calling for a wider inquiry, said Fox's statement was "incredible".

"This is a remarkable admission," Labour's defence spokesman Kevan Jones said in a statement. "Just 24 hours ago Liam Fox called these allegations 'baseless' and now he has apologised, but yet is denying any wrongdoing took place."

Fox, who lost to Cameron in a bid for the Conservative Party leadership in 2005, belongs to the party's right, which is sceptical of ties with the EU and favours a strong defence alliance with the United States.

His departure would leave Cameron searching for someone of similar political leanings to avoid accusations that his coalition with the Liberal Democrats was getting dragged too far into the centre ground of British politics.

Media coverage has focussed on Werritty's presence on official overseas trips and suggested Werritty may have set up a meeting between Fox and another businessman in Dubai in June, which took place when ministry officials were not present.

Fox acknowledged in his statement that ministry officials should have been present to record meetings with Werritty when defence and security issues were discussed, and at the meeting with the other businessman in Dubai.

Although Werritty is not part of Fox's team of officials, he was reported to have handed out embossed cards describing himself as "adviser" to the minister.

Fox came into conflict with Cameron and finance minister George Osborne last year when leaks emerged showing that he was opposed to plans for deep cuts to defence spending, some of which he successfully blocked.

(Additional reporting by Mohammed Abbas and Keith Weir; Editing by Peter Graff)