I know it looks bad, admits Liam Fox as career hangs in the balance

Report due today on Defence Secretary's conduct

Adam Werritty, whose relationship with Liam Fox is at the centre of a political storm and the subject of a government inquiry to be presented to the Prime Minister today, personally helped to organise a controversial visit to Sri Lanka by the Defence Secretary, The Independent has been told.

During a trip in December 2010, Mr Werritty, the best man at Mr Fox's wedding and a former flatmate who holds no official post, met Sri Lankan leaders while describing himself, it is claimed, as an aide and adviser to the UK minister.

Mr Fox had been due to join him but cancelled his trip after protests from the Foreign Secretary, William Hague, and pressure from Downing Street. At the time, the Sri Lankan government was being accused of committing war crimes during the civil war against Tamil separatists.

But the arrangements made by Mr Werritty, and subsequent work by him, are said to have paved the way for the Defence Secretary's official visit to the island three months ago.

In a statement last night, Mr Fox appeared to admit for the first time that Mr Werritty gained financially from defence industry business. Apologising for allowing "distinctions to be blurred between my professional responsibilities and my personal loyalties," Mr Fox said: "I accept that, given Mr Werritty's defence-related business interests, my frequent contacts with him may have given an 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."

Today, Gus O'Donnell, the Cabinet Secretary, will present the Prime Minister with the interim findings of the Ministry of Defence's inquiry into the affair. Downing Street insisted it would be "wide-ranging", but Labour called yesterday for an independent investigation, claiming there were "significant shortcomings" in the inquiry's remit.

The shadow Defence Secretary, Jim Murphy, has written to the Prime Minister asking him to broaden the scope of the investigation and referring the issue to the independent adviser on ministers' interests, Sir Philip Mawer.

As well as meeting the Sri Lankan President, Mahinda Rajapaksa, alongside the Defence Secretary during the President's visit to the UK, it has also been revealed that Mr Werritty accompanied Mr Fox to a meeting in Dubai in which security contracts were discussed. Mr Werritty met Mr Fox 14 times in little over a year and ran a charity from the minister's office in Parliament.

It emerged last night that political lobbyists were paid thousands of pounds to help a Dubai-based businessman arrange a meeting with Mr Fox, which the Defence Secretary claimed over the weekend came about only after a chance meeting in a restaurant.

Invoices appear to show that Harvey Boulter, the private equity boss at the heart of the growing controversy, was paying £10,000 a month to lobbyists for help that included brokering the meeting with Mr Fox through Adam Werritty.

Emails show the boss of Tetra, Lee Petar, had been working to arrange a meeting between Mr Boulter and Mr Fox or Mr Werritty since 25 March.

One email from Mr Petar to Mr Boulter states: "I would be keen to introduce you to the special adviser to the secretary of state for defence Liam Fox. Clearly he [Werritty] could be a useful ally for us all on a number of different fronts. I am trying to see if we can get a slot in Liam's diary too."

Later that day Mr Petar emailed both men: "I do believe it would be a worthwhile introduction for you both..." Mr Werritty had been distributing business cards describing himself as "an adviser to the Rt Hon Dr Fox MP" and, according to Sri Lankan officials, it was in this capacity that he held meetings with government ministers in Colombo last year.

During his stay, Mr Werritty held talks with the Sri Lankan Foreign Minister, GL Peiris, and Sachin Waas Gunawardene, the country's parliamentary monitor for external affairs. He also met the widow of Lakshman Kadirgamar, a former Foreign Minister who was to be commemorated in a speech by Mr Fox. According to Sri Lankan and British officials, Mr Werritty had to convey to Mr Peiris and Mr Gunawardene the message that Mr Fox had been forced to abandon his trip. The Colombo government requested that the cancellation be described as a postponement and blamed on a visit Mr Fox was making to the Gulf running over schedule, rather than making any reference to human rights.

Mr Fox's visit was rescheduled for July this year, while William Hague announced that he would send an envoy to the island, one of whose tasks would be to observe what has happened in the aftermath of the civil war.

Yesterday, a senior Sri Lankan official said: "Adam Werritty was definitely the adviser of Liam Fox. He [Mr Werritty] had full authority to make arrangements on his behalf; that is what he told us when he arrived here in December."

* Did Liam Fox authorise Adam Werritty's "adviser" business cards?

Mr Fox has issued a statement saying he has now told Mr Werritty to stop handing out cards with the parliamentary crest but he does not make it clear whether he was aware that he was doing so in the past. If he was, the inquiry should want to know what kind of advice he was providing, with whom he had contact on behalf of the Secretary of State and whether Mr Werritty benefited financially in any way from the arrangement.

Questions Fox must answer

* Did Adam Werritty accompany Mr Fox on any other overseas trips?

We know Mr Werritty "happened" to be in the same country as Mr Fox on at least two of his overseas trips – but it is unclear whether Mr Werritty was present at any others, whom he met while there and what his role was.

* How did Tetra Strategy, a UK lobbying firm, know to put a client in touch with Werritty as the person to discuss a legal dispute concerning the Ministry of Defence?

Mr Fox has maintained that Mr Werritty was not an adviser but Mr Werritty set up a meeting in Dubai with a defence contractor, on behalf of Mr Fox, to discuss a legal dispute involving the MoD and, later, a product that company was interested in supplying to the MoD. Furthermore that contractor, the Porton Group, was first put in touch with Mr Werritty by a lobbying firm whose services it had retained. An inquiry should establish why Tetra thought Mr Werritty was best person to get access to Mr Fox rather than one of his official advisers.

* Why did Mr Fox give a misleading answer about his meeting with the Porton Group in Dubai?

Asked by the BBC about his meeting with Harvey Boulter, of the Porton Group, in Dubai, Mr Fox said Mr Boulter had asked for the meeting "when they happened to be sitting at a nearby table in a restaurant". But within hours emails emerged that revealed that Mr Werritty had been involved in setting the meeting up since April. Did Mr Fox know this, or was he misled by Mr Werritty?

* Why did Werritty visit Mr Fox at the MoD's Whitehall offices 14 times?

Mr Werritty and Mr Fox are clearly friends who have known one another for years. But the number of visits Mr Werritty made to the MoD still seems surprising. Mr Fox has said these visits were made in a personal capacity – but what were they talking about, how long did the meetings go on, were officials present for any or part of them and did any relate to government business?

* Has Werritty profited financially from his relationship with Mr Fox since he became Defence Secretary?

Mr Werritty is listed as a director of a number of companies. Exactly what any of these firms did and do is unclear and any inquiry should establish what business they conducted and whether that business was in way connected with defence procurement at the MoD.