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Index to British press articles on the Fayeds' purchase of Harrods

A specialist in Arab affairs, Duncan Campbell-Smith, discusses the Fayed brothers' claimed background and assets.  In this most detailed article about the Egyptians to date, Campbell-Smith provides a wealth of information countermanding their various stories.  Being undeniably independent of the Observer, his article did much to fuel the growing realisation that the Fayeds' purchase of House of Fraser was facilitated not by their own funds, but rather by funds Mohamed Al Fayed acquired via his association with the Sultan of Brunei.
    Note: When this article was published the Fayeds threatened The Financial Times with legal action, following which the paper apologised for implying that the Fayeds had not bought House of Fraser with their own resources.  The FT would remain silent for three years before it voiced doubts again, on 2 August 1988.

The Financial Times
Friday, 31 May 1985

Mohamed Al-Fayed and his two half-brothers, Ali and Salah, clinched their dramatic purchase of the House of Fraser (HoF) stores group in March within the space of just ten days.
    It could be some time yet, though, before the Egyptian-born brothers or their advisers -- who include merchant bankers Kleinwort Benson -- manage to scotch the rumours and speculation prompted by their audacious £615 million takeover of the group and its flagship, Harrods of Knightsbridge. 
    From the City of London to the banking parlours of the Arabian Gulf where they have made millions since the 1960s, the Al-Fayeds' sudden disclosure of quite such a massive, personal wealth has met with some disbelief. 
    "There is no hidden hand behind them," said Kleinworts of its clients in March.  But the leap from comparative obscurity to ownership of one of Britain's most internationally renowned institutions has left both Kleinworts and the Al-Fayeds with a problem: no one seems yet to believe them. 
    In the City, it is known that Mohamed privately represented the interests of the fabulously rich Sultan of Brunei Sir Muda Hassanal Bolkiah, when he purchased the Dorchester Hotel in January.  (The Sultan is thought to have paid about twice the £40 million or so which the Dorchester cost its previous owner only last July.)  On at least one occasion, corresponding with U.S. lawyers in August last year, the 38-year old Sultan also referred to writing to Mohamed as "Our personal and financial Adviser."
    However, before the Al-Fayeds' purchase of HoF was cleared by the Department of Trade and Industry, Mr Norman Tebbit, Secretary of State at the DTI, and his advisers are understood to have been confidentially assured by the Foreign Office that, to the best of its knowledge, no evidence linked the £615m cash bid with the Sultan's own coffers. 
    No one can be certain of the beneficial ownership of HoF because its new parent company is a Liechtenstein trust with anonymous, bearer shares.  But the Sultan is very sensitive to loose gossip about his investments and has traditionally been forthright about his activities. 
    There are others who suggest that the Al-Fayeds' money may have come from one or other of the ruling families of the Gulf.  Mohamed is thought in Dubai to be close, for example, to the brother-in-law of Sheikh Maktoum bin Rashid, son and ruler of the emirate.  A shyer and more private man than his three brothers, Sheikh Maktoum undoubtedly has access to great private wealth. 
    Nowhere, however, does any suggestion that he has a link with HoF deal cause more astonishment than in Dubai itself. 
    One of the United Arab Emirates on the Eastern seaboard of the Arabian Peninsula, Dubai has already begun to shimmer and steam with the heat of the Gulf summer.  It is also now the Holy Moslem month of Ramadan, a period of fasting, little work and plenty of time to talk -- and the Al-Fayeds' new celebrity has attracted more than its share of attention. 
    The UAE has been the owner of Mohammed's current passport for 21 years.  Some of its most prominent merchants say they know as much as most others about his past successes and recent business dealings.  None of them see any evidence to link Sheikh Maktoum or any of his relatives with HoF; nor does the local British Consulate.
    These merchants, on the other hand, appear surprised that the Al-Fayeds can now lay claim to the kind of mega-wealth associated, say, with men like Mr Adnan Khashoggi, the Saudi entrepreneur, or even Mr Mahdi Al-Tajir, the UAE's own ambassador to London and a fabled billionaire. 
    So the speculation continues.  None of the Al-Fayed brothers were able, in the time available, to accept the Financial Times' invitation to them to give a formal interview. 
    "They are collectors of centres of excellence," replied Kleinworts on March 4 when asked, following the Al-Fayeds' bid for HoF, about the family's other financial interests.  But extensive investigations have failed to uncover assets with a combined value of anything remotely comparable to the £615 million bid for HoF. 
    Take, for example, International Marine Services (IMS), a marine repair yard acquired by the brothers in Dubai last October.  IMS exhausted its entire equity capital in 1981 having lost well over DM 100m (£32m) in 1978-81 for its last owner, Salzgitter, the German state-owned steel group. 
    Reviewing IMS in detail in July 1983, the local office of accountants Price Waterhouse noted the company's "substantial losses" since 1978 and warned, "no significant overall improvement is anticipated before 1985."  (Under its new ownership, the management does indeed now claim to have returned IMS to profitability.)
    The Paris Ritz, acquired by the brothers in 1979, has certainly retained its reputation for excellence.  But in the four years 1980-83, it incurred net losses after tax but before extraordinary items of FFr 77.7m (£6.5m) against a purchase price thought to be around FFr 90m.
    Moreover, fixed and floating charges were last August attached by the Royal Bank of Scotland to all the interests of the Ritz to cover credit facilities of just FFr 100m (£8.4m).
    A 12-line summary of the Al-Fayeds' background was included in March's formal offer document to HoF's shareholders.  "The Al-Fayed family is an old-established Egyptian family," says that prospectus, "which has interests in the U.S., Europe and the Middle East, which include, in particular, shipping, construction, oil, banking, and property."

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