Andrew Grice: Curious case of the silent watchdog

The Liam Fox affair has highlighted a flaw in the rules governing the conduct of ministers which means that allegations against them can be investigated by the civil servants who serve them.

The Defence Secretary asked Ursula Brennan, his own permanent secretary, to look into the role of his friend and self-styled "adviser" Adam Werritty. When that looked a bit too close to home, David Cameron called in Sir Gus O'Donnell, the Cabinet Secretary, to oversee the process. But critics point out that Sir Gus reports directly to the Prime Minister, and that anyone in his shoes might be tempted to tell his political master what he wanted to hear.

It doesn't have to be like this. Mr Cameron has an independent adviser on ministers' interests whose job description includes investigating "allegations that individual ministers may have breached the ministerial code of conduct." Given the complexity of the Fox controversy, it would look like a tailor-made task for the adviser, Sir Philip Mawer, who was previously the standards watchdog for MPs.

Bizarrely, Mr Cameron has not referred the case of Mr Fox to the ministerial watchdog. Although he could decide to do so after receiving Sir Gus's verdict, the smoke-signals in Whitehall suggest that the Cabinet Secretary's conclusion will be the one that matters.

So what does Sir Philip actually do for his £30,000 a year? At first glance, not a lot. Under the revised code issued after the Coalition was formed last year, he issues a public statement about ministers' interests twice a year. He was appointed by Gordon Brown in 2007, as part of a series of constitutional reforms announced with a fanfare by the incoming Prime Minister. (The post was created by Tony Blair in 2006 but its first holder, Sir John Bourn, was not asked to inquire into the conduct of any ministers).

Sir Philip has produced only one annual report, in March 2009. He has been asked to investigate only one minister, clearing Labour's Shahid Malik of any conflict of interest in 2009 after allegations about the low rent paid on his constituency offices and house.

Officials stress that Sir Philip does not sit on his hands for his £30,000 salary. Investigating ministers is only one of his two functions; he also regularly advises ministers about their private interests to avoid any conflict with their public role. Insiders dismiss Sir Philip's absence from the Fox inquiries as a "red herring." They insist the highly respected Sir Gus will do a proper job – what matters most – and that he would not put his name to a cover-up or whitewash. Critics are not impressed. Sir Alistair Graham, former chairman of the Committee for Standards in Public Life, said an "independent person" should conduct the investigation into Mr Fox, which would enjoy "much more public confidence". The problem is that all prime ministers want to retain as much control as possible over who serves in their government. Whatever their good intentions when they come into office, when a storm engulfs a minister they do not want to sub-contract the verdict to someone else.