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The Observer
Sunday, 9 June 1985
Harrods: Pressure mounts
by MELVYN MARCKUS, City Editor
THE controversy surrounding the Egyptian Al-Fayed family's £615 million acquisition of House of Fraser -- the Harrods store combine -- is mounting. Ian Wrigglesworth MP, the SDP spokesman on Economic and Industrial affairs, has called on Norman Tebbit, Secretary of State for Trade & Industry, to clarify his decision not to refer the Al-Fayeds' take-over bid to the Monopolies & Mergers Commission.
At the same time, Wrigglesworth has also demanded clarification as to whether the Prime Minister 'was involved in any way.' Wrigglesworth will put down written questions to Tebbit this week.
A letter from Wrigglesworth to Tebbit -- detailing the MP's concern over the House of Fraser affair -- was posted yesterday. A copy has been made available to The Observer. It reads:
'The correspondence in last week's 'Observer' concerning the Al-Fayed Take-over of the House of Fraser and the article by Duncan Campbell-Smith in the 'Financial Times' of 31 May raise serious questions about your decision not to refer to the bid to the he Monopolies Commission.
In view of the previous controversies over bids for the group, I find it inconceivable that you took the decision without knowing who the true beneficial owners of the House of Fraser would be, and I should be grateful if you could assure me that, at the time you took the decision, you did know who the true beneficial owners were to be and you could shed any light on who they actually are.
I was disturbed to read the suggestion that the Prime Minister may have been involved in this matter during or following her visit to the Sultan of Brunei because of his relationship with the Al-Fayeds and would be grateful if you could clarify whether the PM was involved in any way and, in particular, whether she or her staff did discuss the matter with the Sultan or his staff or with you or your department.
I am sure many people in this country were sorry to see the ownership of such a large, powerful and prominent retailing group fall into overseas hands. The ownership has been fought over in a most damaging way in recent years and, in view of that, I should have thought that you, as Secretary of State, would want to go to great lengths to ensure that the new ownership was open and in the public interest.
It is very difficult to see how this can be so if the true beneficial owners of this important group are not publicly known, and I should be grateful if you could make an early statement clarifying the position and the background to your decision not to refer the £615 million bid to the Monopolies and Mergers Commission.'
Wrigglesworth's letter to Tebbit comes hard on the heels of The Observer's article last week which highlighted the refusal of Lonrho, the international conglomerate led by 'Tiny' Rowland, chairman of The Observer, to let the House of Fraser affair rest.
On the contrary Lonrho -- itself the subject of four Monopolies Commission reports --is clearly intent on discovering precisely to what lengths Tebbit went in order to ascertain the source of the funds used by the Al Fayeds to mount the bid for House of Fraser.
Rowland declared yesterday: 'We have taken legal advice and we intend to demand a judicial inquiry into the whole affair.'
Rowland added: 'It is a disgrace that Lonrho's shareholders have had to bear the costs of a series of Monopolies and Merger inquiries which a shelf company from Liechtenstein was not subjected to.'
As The Observer revealed last week, Lonrho is still waiting for replies from Tebbit to correspondence concerning the Al-Fayed take-over from Rowland and Lonrho's chairman Sir Edward du Cann.
The article in the Financial Times -- referred to by Wrigglesworth -- declared: 'No one can be certain of the true beneficial ownership of House of Fraser.'
The Observer last week revealed that the mandates and power of attorneys given to Mohamed Al-Fayed by the Sultan of Brunei have been terminated by mutual agreement.
Tebbit and Burton
Rowland carried his attack a stage further yesterday. With an eye to Burton Group's £480 million take-over bid for Debenhams he declared: 'Why should Burton's bid for Debenhams be allowed to take place without a Monopoly reference. If it was in the public interest to refer Lonrho's attempts to acquire a department store chain to the Monopolies Commission, then it must be the case in respect to Debenhams.
'Why should the rules be any different for Burton Group than for Lonrho? In this instance, there is clearly a far greater concentration of retail interests. Why not a referral?'
As Burton Group waits on Tebbit's decision, Debenhams share price ended the week at 401p for a 60p premium over Burton Group's terms...
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