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The Observer
Sunday, 27 October 1985
OFT: The Harrods file is open
by MELVYN MARCKUS, City Editor
THE BATTLE, increasingly being waged in public, between Tiny Rowland, Lonrho's chief executive, and Mohamed Al-Fayed, whose family recently acquired control of House of Fraser, may yet be decided by Sir Gordon Borrie, Director General of the Office of Fair Trading.
The Office of Fair Trading publicly confirmed last week that its file on the Al-Fayeds' controversial acquisition of the House of Fraser is still open.
The OFT stated on Friday : 'We are still looking into the question of the source of finance for the acquisition of the House of Fraser. Our inquiries were prompted by information supplied to quite recently by Mr Tiny Rowland.'
Mr Rowland has consistently alleged that the £615 million take-over bid for House of Fraser last March was not wholly financed by the Al-Fayeds' personal resources but involved the funds of the Sultan of Brunei.
This allegation has been strongly denied by the Al-Fayeds, who have instigated legal action against The Observer, which is owned by Lonrho. The Observer is contesting the action.
But the news that the OFT's file on the Harrods affair is still open marks something of an achievement for Lonrho whose relationship with Whitehall has become distinctly strained in the wake of three Monopoly Commission references and one share dealing investigation in respect of its unsuccessful attempt to take over House of Fraser.
The irony is that Rowland has indicated in detail to the Office of Fair Trading that Lonrho is in possession of documents which throw new light on the Al-Fayeds' links with the Sultan of Brunei. But the documentation has not, as yet, been made available to Whitehall.
In a letter to Miss Elizabeth Llewellyn-Smith, deputy director-general of the Office of Fair Trading, dated last Wednesday, Rowland declares : 'There are some practical difficulties for Lonrho in doing as you would wish -- that is, giving the Office of Fair Trading sight of, or copies of, any papers surrounding the offer for House of Fraser by Mohamed Al-Fayed.'
Rowland adds : 'It is not particularly cheerful to realise that no company in England has ever suffered commercial damage from the Office of Fair Trading and the Department of Trade compared to that sustained by Lonrho…'
The letter continues : 'We are concerned that your Office is not able to formulate relevant questions without assistance, when you wish to know more about the background and accounts of Mohamed Fayed.'
The tone of Rowland's letter is unlikely to be well received by the OFT but it is becoming increasingly clear that Rowland is in possession of a significant amount of new information to support his claims concerning Mohamed Al-Fayed's former Power of Attorney in respect of substantial funds emanating from the Sultan of Brunei.
In his letter of October 23, Rowland asked the OFT 'to produce the detailed accounts, questionnaires, and assurances on the basis of which you allowed the decision to go forward in March…'
He concludes : 'What we ask and expect you to do, after your inquiries are completed, is to cancel the entire approval on the basis that you were not truthfully informed at the time the decision was made.'
Rowland has also raised the matter, in a letter sent by hand last Monday, with the Prime Minister, Margaret Thatcher.
Few City observers expect Rowland to let the matter rest. The fact that the OFT file is officially open will inevitability lead to further pressure from Lonrho.
And, presumably, further disclosures.
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