Joel Fitzgibbon has resigned as Defence Minister after coming under fire for not declaring gifts to Parliament.
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At a press conference today, Prime Minister Kevin Rudd said Mr Fitzgibbon offered his letter of resignation at 1pm today and he had accepted the decision.
"The minister's decision was to extend his letter of resignation at his initiative," Mr Rudd said.
"I accepted that resignation, it was the right thing to do."
Mr Rudd described Mr Fitzgibbon as a "first-class Defence Minister".
"The Government expects high standards of accountability on the part of ministers,'' he said.
Mr Rudd said it was on that basis that the minister had resigned today.
But the allegations that initially prompted interest in Mr Fitzgibbon's register were yesterday dismissed by the intelligence watchdog, which found no evidence that Defence officials secretly spied on their minister or investigated his relationship with a Chinese businesswoman, Helen Liu.
The inquiry, by the Inspector General of Intelligence and Security, Ian Carnell, concluded the allegations could have been leaked by someone outside Defence. Mr Fitzgibbon would not say yesterday whether he suspected present or former ministerial staff.
After the allegations were reported in Fairfax newspapers in March, Mr Fitzgibbon said he had failed to declare gifts - two trips to China and a suit - paid for by Ms Liu.
Liberal Party sources claimed yesterday there were more cases of Mr Fitzgibbon failing to disclose gifts and they would continue to pursue him.
Late on Tuesday night Mr Fitzgibbon told Parliament he had failed to disclose a night in a hotel room, worth $450. It was provided by the health fund NIB, headed by his brother Mark, as part of attending the State of Origin rugby league match in Brisbane on June 11 last year.
Mr Fitzgibbon's staff found the undeclared hotel room while trawling through records after the Opposition asked a question in Parliament on Monday. Mr Fitzgibbon returned to Canberra from Singapore on Tuesday and was called straight to the Prime Minister's office.
It is understood Mr Rudd gave him a dressing down before telling him to admit the failed declaration in Parliament.
Mr Carnell's inquiry backed the findings of an internal Defence inquiry, made public last week, and found no evidence that the Defence Signals Directorate - or any Defence official - secretly accessed Mr Fitzgibbon's office computer to investigate alleged concerns that Ms Liu was a security risk.
"I found no evidence or indication which might raise suspicion that the allegations concerning DSD personnel are correct," Mr Carnell said.
with Nadia Jamal and Georgina Robinson