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(Continued from overleaf)
Way back in March, in the heat of the House of Fraser battle, MacArthur declared : 'Mohammed Al-Fayed has longstanding connections with Brunei. He knows the Sultan and the Sultan's father very well and there is no doubt that he did act on behalf of the Sultan's purchase of the Dorchester Hotel.'
The document, terminating Mohamed Al-Fayed's various mandates and powers of attorney, was dated 25 April 1985.
Allen & Overy, one of several UK law firms acting for the Al-Fayeds, has informed The Observer that Mohamed Al-Fayed was the recipient of two letters of authorisation -- each dated 20 August, 1984 -- concerning the design contracts and construction of a 'super luxury yacht.'
It is also known that Mohamed Al-Fayed was further empowered on a specific matter later that month.
A letter from the Sultan dated 23 August 1984, referred to in The Observer article on 10 March entitled : 'This bloody Harrods battle,' starts : 'We wish this letter to be considered as a power of attorney to Mr Mohamed Al-Fayed, our personal and official financial adviser, in everything to do with the 747 acquired by the newly-formed company called Jet Aviation Corporation.'
But Rowland's allegation of a $1.5 billion transfer of funds marks a new chapter in the bloodiest corporate war ever waged in the City.
In a letter dated 11 October -- the same day as the story Borrie/Rowland meeting -- Miss Llewellyn-Smith wrote to Rowland : 'Although, in the course of your meeting with the Director General, you said that you had brought with you evidence that has a direct bearing upon the existence of a merger situation, you also indicated that you were not prepared to hand it over.'
She added : 'For the avoidance of doubt, I would like to make it clear that the Director General has, as yet, reached no conclusion in connection with the inquiries currently being made, and that he would welcome any evidence from you that you believe might have a bearing upon the outcome of those inquiries and be of assistance to him…'
In his reply, dated 16 October 1985, Rowland also referred to 'the avoidance of doubt' and declared that it was his belief that :
(1) In August 1984, His Majesty and Yang di-Pertuan the Sultan of Brunei granted a general power of
attorney empowering Mohamed Al-Fayed to control the investments of certain of His Majesty's funds;
(2) That $1.5 billion was transferred under that authority to Al-Fayed accounts.
From this point the correspondence flew fast.
In a letter dated 18 October Miss Llewellyn-Smith made a further plea which concluded : 'I would also invite you to disclose, or let us take details of, any other information currently in your possession…'
On 23 October Rowland's reply starts : '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 Fayed.
'First of all, there is a legal action in progress against The Observer [which is owned by Lonrho]sic. It is doubtful if they can be properly made available to you in these circumstances, even assuming that we are willing.'
Then Rowland breaks new ground. He refers to 'the many authenticated transcripts of talks between Mohamed Fayed and associates of the Sultan.' He also refers to 'a promissory note at 9 per cent interest for the part of the still outstanding monies owing to His Majesty and Yang di-Pertuan, the Sultan of Brunei' and once again refers to a 'general power of attorney between the crucial dates of August 1984 and 25 April 1985, which put $1.5 billion (£1.2 billion) directly under Mohamed Fayed's control.'
Two days earlier, on Monday 21 October, Rowland penned a letter to the Prime Minister. Once again he refers to the power of attorney and a promissory note.
Rowland declares : 'The widening speculation about the financial background to the take-over is not likely to be contained by the official replies already offered this year. We are told that Norman Tebbit relied upon the considered advice of Sir Gordon Borrie at the Office of Fair Trading. Last week the Office were continuing their investigations into the Offer and Purchase and claim to have reached no conclusion.'
Once again Rowland refers to a promissory note. He alleges: '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 Mohammed Fayed, the man whom John MacArthur of Kleinwort Benson described as having "a net worth, from what I know, (of) several billion dollars." '
Last week saw the war of words -- and willpower --reach a crescendo.
Rowland is now in possession of certain documents concerning Kleinwort Benson's submissions to the Office of Fair Trading on behalf of the Al-Fayeds.
Of particular interest is a two-page memorandum from Kleinwort Benson to the Office of Fair Trading marked 'Strictly Confidential' and dated '16 November 1984.' Its analysis of the Al-Fayed's assets is sketchy to say the least.
The paragraph concerning estates reads as follows :
(1) The 32,000 [acre] Banagown Estate and Castle at Kildary, Tain, Ross-shire, Scotland. The estate is
also involved in breeding cattle and sheep together with game and fish for shooting and fishing. 20
employees.
(2) 25-acre farm in Oxted employing 23 people.
A request from the OFT for 'further details of the financial background of the Al-Fayeds' on 3 December brought a two-page reply on 6 December from Kleinwort's MacArthur which declares : 'As you already know, they have a substantial world-wide business based on a variety of interests in the UK, Europe and elsewhere.'
Rowland's response on Tuesday was to accuse Borrie of acting 'irresponsibly and improperly' and to point to 'your haste on behalf of the Fayeds and your vicious delays against Lonrho…' Rowland describes Kleinwort's submission as a 'ridiculous confidential two-page typewritten survey of the assets and intentions of the Fayeds.' He concludes:
'My company intends to pursue a fair outcome, and to discover whether anyone, including yourself and those above you, acted with improper motives. As long as this remains undone, the title of your Office, which I personally think you have disgraced, remains a mockery.'
Rowland also sent a copy of this letter to Margaret Thatcher. He declared :
'I believe that the decision to allow Mohamed Fayed to become the owner of House of Fraser will prove to be a scandalous blot upon your Government's stewardship of the Department of Trade.'
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