Main Index

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

In this article "Rowland's $1.5 billion allegation" (and its trail "Rowland tells of Al-Fayed's power of attorney") Observer City editor Melvyn Marckus reports a letter from Tiny Rowland to the Office of Fair Trading referring to a 'promissory note' that Mohamed Al-Fayed had given the Sultan of Brunei; and also referring to transcripts of taped conversations between Fayed and the Sultan's associates, all of which, Rowland contended, proved further that the Fayeds had bought Harrods with the Sultan's cash.  Marckus also reports on a document about the Fayeds' assets, which Fayeds' bankers Kleinwort Benson had sent the OFT.

The Observer 
Sunday, 3 November 1985

THE UNPRECEDENTED battle between Tiny Rowland, Lonrho's chief executive, and Mohamed Al-Fayed, the Egyptian Proprietor of House of Fraser, appears to be approaching a climax.
    Rowland has informed Sir Gordon Borrie, Director General of the office of Fair Trading, that he believes Mohamed Al-Fayed held a $1½ billion general power of attorney for the oil rich Sultan of Brunei between August 1984 and 25 April 1985. 
    The Al-Fayeds acquired a key 30 per cent block of House of Fraser in November 1984 and launched a full-scale takeover bid -- valuing House of Fraser at £615 million -- last March. 
    Rowland has consistently alleged that the Sultan of Brunei's funds were involved in the House of Fraser take-over.  He continues to do so.
    The Al-Fayeds, supported by City merchant bankers Kleinwort Benson, insist that the £615 million Harrods coup was financed entirely out of their own liquid funds.
    But, in a recent letter to the Office of Fair Trading, Rowland also alleged that Mohamed Fayed is in debt to the Sultan of Brunei.  Rowland has informed the OFT of the existence of a promissory note bearing 9 per cent interest 'for the part of the still outstanding, monies owing to His Majesty and Yang di-Pertuan, the Sultan of Brunei.'  A promissory note is an unconditional promise in writing to pay on demand at a fixed or determinable future time a certain sum of money.
    According to Rowland, in a letter to the Prime Minister dated 21 October, a promissory note has been issued by Mohamed Fayed for $200 million. 
    According to Rowland : 'On 25 April 1985 the Sultan of Brunei cancelled the power of attorney, and demanded return of his funds -- which were no longer intact.  Part was repaid, but a promissory note was issued for $200 million by Mohamed Fayed, the man whom John MacArthur of Kleinwort Benson described as having a 'net worth, from what I know, of several billion dollars.'  Referring to the Al-Fayeds/Harrods deal, Rowland says : Lonrho expects cancellation of the entire approval, since the circumstances were misrepresented and in addition reparations from all those who were party to it.  We believe that negligence at the Department of Trade and Office of Fair Trading has gone hand in hand with an abuse of power.'
    Meanwhile Rowland has informed the OFT that Lonrho is in possession of 'many authenticated transcripts of talks between Mohamed Fayed and associates of the Sultan' but, so far, has declined to produce evidence to support his allegations.
Rowland's $1½ billion allegation, page 29

The Observer 
Sunday, 3 November 1985

The eye-for-an-eye battle being waged between Tiny Rowland, Lonrho's chief executive, and Mohamed Fayed, the Egyptian proprietor of House of Fraser, will almost certainly turn on the subject of the powers of attorney granted by the Sultan of Brunei to the secretive habitué of 60 Park Lane. 
    The crucial questions which have remained unanswered -- and for the most part unasked -- throughout the eight-month controversy surrounding the Al-Fayeds' £615 million Harrods take-over are:
      1. What power or powers of attorney were enjoyed by Mohamed Al-Fayed before and during the
         House of Fraser take-over last March? and
      2. For what purpose were any such powers used?
    Early last month -- on 11 October -- Rowland attended a meeting at the Office of Fair Trading with Sir Gordon Borrie, the director general.  Others present included Elizabeth Llewellwyn-Smith, the deputy director general, and Lonrho directors Terry Robinson and Robert Dunlop. 
    Rowland promptly dropped a bombshell.  He is reliably understood to have informed Borrie that the Sultan of Brunei had granted Mohamed Al-Fayed a power of attorney for some $1.5 billion.  Some of these funds, according to Rowland, had been used to acquire House of Fraser.
    Borrie asked Rowland to produce evidence to support his allegation.  Rowland refused and, instead, made some scathing remarks about the OFT's handling of the Al-Fayed/House of Fraser affair from the outset.  Borrie, not best pleased, abruptly brought the meeting to a close, but not before Rowland had hinted darkly of tape-recordings of Mohamed Al-Fayed which, he told Borrie, he had considered playing at a press conference. 
    It was at this brief meeting -- which lasted little more than 25 minutes -- which set the scene for Rowland's recent spate of much-publicised correspondence to the Prime Minister and Borrie. 
    Mohamed Al-Fayed, for his part, has always insisted that the House of Fraser take-over was entirely financed by the family's own liquid resources. 
    John MacArthur, of merchant bankers Kleinwort Benson, advisers to the Al-Fayeds, has constantly endorsed this.  He has proclaimed that the Al-Fayeds have a net worth of 'several billion dollars' and, in June, he declared that the Al-Fayeds 'had neither drawn on bank borrowings nor loans from any other party to make the purchase.'
    But what of Mohamed Al-Fayed's former powers of attorney?  It was The Observer which, in an article entitled : 'Harrods : Tiny taunts Tebbit' on 2 June, revealed that 'various mandates and powers of attorney' granted by the Sultan of Brunei had been terminated. 
    Confirmation of the revocation of such 'powers of attorney' came from Mohamed Al-Fayed, who told The Observer : 'In view of my additional responsibilities following the House of Fraser acquisition, I have asked to be relieved of my powers of attorney.  The Sultan kindly acceded to my request.'

Previous article

Continued overleaf