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(Continued from overleaf)
Further questions about the fabulous Fayed fortune have been raised by events inside House of Fraser Holdings, formerly Alfayed Investment & Trust (UK), the Liechtenstein company's English subsidiary which made the bid for Fraser. Its financial statements filed at Companies House showed bank loans at £347.8 million at 30 April 1985. These were then refinanced in December 1985 by two £215 million loan agreements from the Swiss Bank Corporation. On 3 March 1986 these were in turn replaced by a £425 million syndicated bank loan led by Midland Bank's Samuel Montagu Merchant Bank. The loan is secured by a legal charge over House of Fraser shares.
Moreover, according to House of Fraser Holdings' 1986 report and accounts: 'Alfayed Investment & Trust SA (the Liechtenstein parent) had previously agreed with the company to lend £50 million to the company at the company's demand. No sums have been drawn under this agreement. The company's rights under that agreement were subsequently assigned to the banks subscribing the syndicated bank loan.' A £100 million unsecured interest-free loan from the Liechtenstein parent remains.
The basic question facing the DTI inspectors, Philip Heslop QC and chartered accountant Hugh Aldous, is where did the money for the House of Fraser take-over come from? Did it come from the Fayeds' own resources or from some other source? If from their own resources why the multi-million loans? Are the incredibly high interest payments on the loans -- totalling £56.7 million in the 1986 financial year -- indicative of tax efficiency or evidence of borrowings required to replace funds used to take over Fraser?
The inspectors will be unable to answer these questions without probing the Fayeds' family history. The Fayeds have promoted themselves as billionaires, fabulous pharaohs, who inherited vast sums which they successfully invested in a variety of businesses. Yet last June journalist Peter Wickman wrote in The Observer that his extensive search in Egypt failed to uncover any such family background of wealth.
On the contrary, what he did discover -- which has been confirmed by further Observer inquiries -- is that far from being a rich shipowner and legendary cotton king the Fayeds' father was a humble schoolteacher in Alexandria.
In 1964 Mohamed Fayed appeared in Haiti, obtained oil and port concessions from dictator 'Papa Doc' Duvallier but then left the Caribbean in controversial circumstances pursued by allegations of missing funds.
No doubt the inspectors, who can compel the production of documents as well as testimony, will establish which version of the Fayed family history is correct, the true nature of the Fayeds' dealings with the Sultan of Brunei and the details of their Swiss bank accounts.
Hopefully, on this occasion, the Fayeds will be less Sphinx-like in providing detailed information, documentation and explanation.
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