The official inquiry into Liam Fox's conduct was dismissed as “superficial” last night after it failed to answer all the questions over the affair that cost him his job as Defence Secretary.
Mystery remained over whether the businessmen who funded Adam Werritty, his friend and self-styled adviser, had clients that might have benefited from Mr Fox's decisions as a minister.
Although Downing Street had promised that the investigation by Sir Gus O'Donnell, the Cabinet Secretary, would address “all the unanswered questions”, Labour claimed it had fallen badly short and called for a much wider inquiry.
In what appeared like a game of pass the parcel, No 10 suggested the remaining questions about funding were a matter for the Electoral Commission.
But the Commission said the evidence does not yet “warrant a formal assessment”.
Jim Murphy, the shadow defence secretary, said: “What we need is a much wider investigation into so many other issues that this report does not begin to scratch the surface of. This is a murky business and it has not yet been resolved.”
But Sir Gus concluded that Mr Fox's actions “clearly constitute a breach of the ministerial code” and “a failure of judgment”.
Downing Street backed five recommendations for ensuring the ministerial code works better. These include senior civil servants having regular discussions with ministers about ministers' friends and advisers to avoid any actual or perceived conflict of interest.
Mr Fox said: “I am pleased that the report makes clear that the two most serious allegations, namely of any financial gain sought, expected or received by myself and any breach of national security, have no basis.”