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The Observer
Sunday, 17 March 1985
Harrods and the sphinx
by MELVYN MARCKUS, City Editor
ON Wednesday, Norman Tebbit, Secretary of State for Trade and Industry, introduced his own special style of privatisation: Harrods was sold to the Egyptian Al-Fayed family.
As I concluded last week in my article 'The bloody Harrods battle', 'To refer or not to refer'... that, for Tebbit, was the question and, in my opinion, the Al-Fayeds' £615 million cash take-over bid should have been referred -- or investigated by Department of Trade inspectors.
Lonrho, which as a publicly quoted company is inevitably subject to the Companies Act and Stock Exchange regulations, was referred thrice to the Monopolies Commission in respect of its House of Fraser quest and was also subjected to a concert party search by DTI Inspector John Griffiths QC. If a public company, sporting public records, needs be subjected to such red tape in the name of 'public interest' I fail utterly to understand how three Egyptian brothers, with a penchant for secrecy, can be permitted to acquire what they quaintly describe as a 'centre of excellence' (this refers to Harrods, not to Professor Roland Smith) after little more than a Tebbit tête-à-tête.
In waving through the Al-Fayeds' take-over, Tebbit went to great pains to stress, that his decision was based on the advice of Sir Gordon Borrie, director general of the Office of Fair Trading, and assurances from the Al-Fayeds' merchant bankers, Kleinwort Benson.
So be it. But the onus was on Tebbit and he must now take responsibility for whatever pattern of events transpires at House of Fraser.
Certainly I was not alone in my surprise at Tebbit's decision. Emotion may have spilled over from Lonrho's Cheapside HQ but, by and large, the City is not an over-emotional place and a fall in House of Fraser's share price from 402p on Monday morning to 390p by Wednesday evening indicated the way the experts believed the wind would blow down Victoria Street.
Kenneth Fleet, executive editor of The Times's City pages, was quick to read the signals. On Thursday morning The Times declared: 'The apparent delay in Mr Tebbit's public statement on the matter, possibly until tomorrow, does not bode well for the Fraser camp.'
But Tebbit's dash for a deal defied even the percipience of Fleet. The Al-Fayeds, with 51.03 per cent of House of Fraser's equity under their belt, had won control of House of Fraser.
With matters already a fait accompli, Tebbit added insult to injury by lifting the DTI's restrictions against Lonrho mounting a House of Fraser take-over bid.
Last Sunday's 'Business Programme' on attempted to throw light but found the task far from easy. As presenter John Plender declared: 'We made inquiries last week in Genoa, reputedly the heart of their (the Al-Fayeds') shipping empire. However, though we talked to some of the most prominent financiers in the Italian Port, we failed to find anyone who considered the Al-Fayeds a major force in the shipping business there.'
John MacArthur, of Kleinwort Benson, adopted much the same line on the 'Business Programme' as he had already taken with The Observer. 'The funds are available. They reside in a Swiss bank.' But, on the question of the source of the funds, MacArthur is reticent to say the least.
The message, which emanates unofficially from Kleinwort's camp, is that the funds are the Ai-Fayeds' personal liquid deposits. As to allegations that the funds could emanate from the Sultan of Brunei, MacArthur declares: 'This is absolute nonsense.'
But why, one wonders, will the Kleinwort document not tell all. Why such secrecy on behalf of the Al-Fayeds, who appear strangely readier to have broadcast the delights of champagne and caviar (served by a butler called Sydney) than to spell out the details of a financial empire which is poised to acquire something of a national institution.
The let out for the Al-Fayeds is, of course, the fact that a cash offer -- on both sides of the Atlantic -- requires substantially less information to be filed than a share deal. Understandably from the point of view of shareholders -- with no further commitment after they have accepted the cash -- but distinctly unappealing from the point of view of employees.
But what I find perturbing is the fact that a £615 million take-over deal can be completed (which, it is) with less information available concerning the offer than the Stock Exchange requires for an entrance to the Unlisted Securities Market.
I have read tales about the Al-Fayeds' English nanny, but would be more interested to know about Mohamed's and Ali's previous employment under the auspices of Saudi Arabian arms dealer Adnan Khashoggi, Mohamed Al-Fayed's former brother-in-law.
What of Mohamed's former links with the Mahdi Al-Tajir, who wielded considerable influence with the ruling family of Dubai?
What of the extent of the Al-Fayeds' shipping interests, whose foundation is rumoured to lie in the acquisition of a small shipping line from Jewish ship owners in Egypt which catered for the pilgrim trade?
What, too, of Mohamed's business dealings in Haiti? There are several references in 'Papa Doc,' written by journalists Bernard Diederich and published by Penguin, to one Mohamed Fayed. Are they the same and one?
What I mean is that it seems so silly to have to thumb through a Penguin to attempt to discover something about the person who has just been allowed to acquire Harrods.
Incidentally, The Observer received a writ last Friday from the Al-Fayeds in response to last Sunday's article. It is nice to have struck up some form of communication.
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