Senior Israeli diplomats were led to believe that Adam Werritty was an official adviser to Britain's Defence Secretary Dr Liam Fox when the pair attended a top-level conference that discussed sanctions against Iran.
Werritty organised a dinner during the Herzliya conference in Israel last February for politicians and senior officials,which was attended by the Defence Secretary and Matthew Gould, Britain's ambassador. But he did it without any British diplomats in the country being involved in the arrangements, it is claimed.
Israeli officials said they were under the impression that Werritty was a senior adviser to Fox and took part extensively in political discussions at Herzliya advocating a tough stance against Iran, a view he had arrived at, he said, after visiting the country.
Fox, in his address to the conference, also raised the need for further sanctions against the Tehran regime. An interim report produced by Ursula Brennan, the most senior civil servant at the Ministry of Defence, revealed that Werritty's presence at a meeting between Fox and Gould, before the latter took up his post in Tel Aviv, was unauthorised.
An Israeli official present at the conference said: "No one had any reason to doubt that Adam Werritty was a senior adviser to Mr Fox. He was very much involved with Mr Fox's schedule, arranging things and it seemed like something he had done many times before."
It also emerged yesterday that Tetra Strategy, a lobbying firm that introduced a client to Werritty, also thought he was Fox's adviser. In a statement, it said: "Tetra introduced its client to Adam Werritty in March 2011, widely believed at the time to be an official adviser to Dr Liam Fox. The purpose of the introduction was to brief the MoD."
The new revelations come as Werritty was interviewed by officials looking into allegations surrounding the links between the two men. Sources close to the inquiry said a conversation between Werritty and Cabinet Office officials took place at an undisclosed location away from Whitehall.
Werritty has had to provide the inquiry with a full list of his business interests and has been asked to detail all his income from defence sources. The inquiry, led by the Cabinet Secretary Sir Gus O'Donnell, is expected to conclude by the end of the month.
Government sources said its conclusions would be published and suggested it would rule on whether or not Fox had breached the ministerial code. Fox's political career may depend on whether the inquiry finds that Werritty benefited financially.
The Prime Minister's spokesman said: "The objective [of the inquiry] is to establish the facts and get the full picture. That is what we will do."
