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The Observer
Sunday, 2 June 1985
Harrods: Tiny taunts Tebbit
by MELVYN MARCKUS, City Editor
PRESSURE is mounting for Norman Tebbit, Secretary of State for Trade and Industry, to clarify his controversial decision not to refer the £615 million take-over of House of Fraser by the Egyptian Al-Fayed family to the Monopolies Commission.
In an article entitled 'The mystery of the Al-Fayeds' -- published on Friday -- the Financial Times declared : 'No one can be certain of the true beneficial ownership of House of Fraser.'
Such an allegation -- coming only a matter of weeks after the Al-Fayeds' acquisition of House of Fraser' -- clearly challenges Tebbit who surprised the City in March by his readiness to allow a Liechtenstein-based company the freedom of manoeuvre which had constantly been denied to Lonrho, the international conglomerate which owns The Observer and is led by Tiny Rowland.
The allegation by the Financial Times coincides with a renewed attack on Tebbit's action (or rather lack of it) by Rowland.
Rowland, who has persistently demanded evidence of the source of the funds used by the Al-Fayeds to mount the House of Fraser take-over, has written a letter to Tebbit, strongly demanding a full explanation of the Government's conduct of the affair.
Rowland's letter, addressed to Tebbit and dated 31 May, reads as follows:
Dear Secretary of State,
Before my chairman, Sir Edward du Cann, left for Africa yesterday, I discussed the
implications of the enclosed document with him.
Sir Edward has not received a reply from the Ministry, nor from you, to his letter detailing the
circumstances which the Department of Trade permitted to occur when House of Fraser was
sold to the Fayed brothers.
After four Monopolies Inquiries and legal expenses of several millions of pounds, it will never
be possible for our company to forgive and forget. A shelf company from Liechtenstein was
allowed by you to purchase a major British public company, House of Fraser, without Inquiry
Your Ministry has repeatedly obstructed our company from bidding for House of Fraser for a
number of years.
Lonrho and its sixty thousand United Kingdom taxpaying shareholders are entitled to know
what long-standing assurances were given on behalf of the Fayed brothers by Kleinwort
Benson, and why these assurances were acceptable when those of Lonrho were not.
I am told from reliable sources that this document was negotiated with the knowledge of the
British Government and was concluded very shortly after Mrs Thatcher's visit to the Sultan
of Brunei. The House of Fraser shares are said to be held as collateral by a Swiss Bank.
Only the frankest explanation of the whole circumstances can satisfy us, and it is no hardship for
the same Civil Servants, who caused us months and years of delay, research and expenses, to
now spend some time explaining why a shelf bid from the Fayed brothers was so rapidly
acceptable.
Yours sincerely,
Tiny Rowland
The enclosure which Rowland refers to is a copy of a document which reveals that the various mandates and 'power of attorneys' given to Mohammed Al-Fayed by the Sultan of Brunei have been terminated.
The document -- dated 25 April -- is addressed to Mohamed Al-Fayed's London residence at 60 Park Lane and is signed by the Sultan and Mohamed Al-Fayed. It reads as follows:
We refer to the various Mandates and Power of Attorneys given to you by us since August 1984.
We agree, confirm, approve and ratify the present state of Our affairs and interest resulting
from your activities and decisions under the Mandates and We hereby give you, your
delegates, substitutes, attorneys, subsidiaries and companies full discharge and indemnity
for any decision or activity undertaken since August 1984.
The Mandates are terminated by mutual agreement as from this date and as both parties are
entirely satisfied irrevocably announce any claim against the other, whether directly of
through a mandatory.
We take this opportunity to express our thanks and gratitude for the efforts and time spent on
Our Behalf.
His Majesty The Sultan and Yang Di-Pertuan Negara Brunei Darussalam.
M. Al-Fayed
The reaction from Mohamed Al-Fayed yesterday was : 'In view of my additional responsibilities following the House of Fraser acquisition, I asked to be relieved of my powers of attorney. The Sultan kindly acceded to my request.'
The correspondence referred to by Rowland relates to a letter from du Cann to Tebbit -- dated 17 May -- which called for clarification as to why the Department of Trade 'treated Lonrho so unfavourably' and whether the department 'has satisfied itself, and if so how, that the Al-Fayeds are acting independently and are self-financed…'
An earlier letter -- dated 19 April -- called for 'full disclosures of all material information.'
On 26 April Tebbit replied : 'I have considered whether the material accompanying your letters justifies my changing my decision not to make a reference [of the Al Fayed bid](sic) which was announced on 14 March.
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