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The Observer
Sunday, 28 July 1985
Al-Fayed and 'the work'
by MELVYN MARCKUS, City Editor
A POWER of attorney has come to light which gives Mohamed Al-Fayed the authority to act on behalf of the Sultan of Brunei with a major Swiss bank, Credit Suisse in Zurich.
The document was signed on 24 August 1984, and addressed to Mohamed Al-Fayed at his London home, 60 Park Lane.
It reads:
'We hereby authorise you to operate on our behalf with Credit Suisse, Zurich with
immediate effect.'
'This is further to empower you to act and to authorise other concerns in whom you
have complete confidence to assist you in carrying out the work.'
Just what is or was 'the work' referred to is not certain.
It has been known for some weeks that there were a number of powers of attorney or mandates given by the Sultan, one of the world's richest men, to the Egyptian-born Mohamed Al-Fayed who, with his two brothers, in March made a successful £615 million take-over bid for House of Fraser, the Harrods stores group.
This became clear when it was disclosed by a document dated 25 April this year, that the Sultan and Mohamed Al-Fayed had terminated, by mutual agreement, 'the various Mandates and Powers of Attorney given to you by us since August 1984.'
The only other similar document, a power of attorney dated 23 August 1984, referred to a Boeing 747 acquired by Jet Aviation.
This referred to Mohamed Al-Fayed as 'our personal and official financial advisor.'
Revelations of the existence of this second power of attorney came last week, in the 'new information' with which Lonrho chief executive, 'Tiny' Rowland fired his latest salvo in the war of words over the Government's failure to refer to the Monopolies Commission the Al-Fayed bid for House of Fraser, having held up Lonrho's own take-over intentions for several years.'
Rowland refers to the power of attorney in his letter to Michael Hawkes, chairman of Kleinwort Benson, merchant bankers to the Al-Fayeds. Lonrho, which owns The Observer, has been pressing Trade Secretary Norman Tebbit to demand evidence of the source of the £570 million used to buy Fraser.
The Lonrho chief executive has constantly alleged that the Al-Fayeds had relied on funds provided in whole or part by the Sultan. Kleinwort Benson director John MacArthur has admitted that Mohamed Al-Fayed has 'long-standing connections with Brunei' and 'knows the Sultan's father very well.'
But Kleinworts have equally persistently denied that the funds for the Fraser bid came from anywhere but the Al-Fayed's own resources.
On Channel 4's 'Business Programme' on 10 March, MacArthur said of the Al-Fayeds: 'I know that they are worth several billion dollars… their net worth, from what I know, is several billion dollars… this money is free capital which has been put at my disposal through a major international Swiss bank… it is at their sole discretion.'
In his latest letter, Rowland also reveals the existence of a Liechtenstein company 'Hyde Park SA, which it is his belief, 'was used as a vehicle for the transfer of funds from the Sultan's accounts.' These, he believes, included 'the transfer to Kleinwort Benson of 28 September 1984.'
Hyde Park SA has maintained a bank account at Compagnie de Gestion et de Banque Gonet (COGEBA) in Geneva. This was opened three days after the power of attorney of 24 August was signed. Mohamed Al-Fayed has also been a client of COGEBA.
An official of Hyde Park SA is Martin Muller, who is also connected with Alfayed Investment Trust SA, also a Liechtenstein company and now the parent company to House of Fraser. Considerable transfers of funds were made into the Hyde Park account at COGEBA, the largest being for $127 million from the Sultan's account at Credit Suisse Zurich.
On the Channel 4 programme, MacArthur said of the way the bid for Fraser was financed: 'We have instructions from a major Swiss bank, which in turn has received funds from another Swiss bank through the instructions of the ultimate holding company of the Al-Fayed brothers.'
The disclosure of these matters would seem to call for much more detailed explanation than so far given by MacArthur.
In his letter, Rowland calls on Kleinworts to clarify the statements made during the Fraser bid that the £570 million came from the Egyptian brothers own resources. He dispatched copies of his latest letter to the Prime Minister, who visited the Sultan on her Far Eastern tour in April. The Sultan met Mrs Thatcher at Downing Street in January. The letter also went to the Trade Secretary.
Kleinworts would make no comment on the letter.
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