Main Index

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

Lonrho's chief executive, Tiny Rowland, explains first-hand the fascinating, conspiratorial events that surrounded Mohamed Al Fayed's acquisition of House of Fraser, and which eventually led to the appointment of DTI Inspectors to investigate the affair. 
    His article is preceded by a short trail item by City editor Melvyn Marckus.

THE OBSERVER 
Sunday, 14 August 1988

In an article entitled 'The Harrods Scandal', exclusively published in The Observer today, Tiny Rowland, Lonrho's chief executive, reveals his version of the events which led up to the controversial £615 million takeover of House of Fraser by the Egyptian Fayed family. 
    Rowland's article is highly critical of Norman Tebbit, the former Trade and Industry Secretary who waved Mohamed Fayed's takeover bid through in the space of 10 days -- in stark contrast to the series of Monopolies Commission inquiries which Lonrho was subjected to. 
    In Rowland's words: 'I particularly remember going to see Tebbit with six Lonrho directors and our solicitors, and experiencing his "sod off Lonrho" attitude at first hand.  I don't think I would have believed it otherwise.'
    Rowland declares: 'I saw how the well-documented material containing the truth about Fayed that we began to put before the DTI was received in absolute silence. 
    'I saw how Leon Brittan, the incoming Secretary of State for Trade and Industry, was prepared to say he could find nothing wrong with the matter.'
    He concludes: 'It is the worst thing I've ever seen in business, that deceits triumph so well, and can even find apologists when they are exposed.'
    Lonrho, which owns The Observer and aggressively campaigned for the DTI investigation into the Fayed/House of Fraser controversy, is known to be compiling its own 35,000-word report on the affair.
    Expectations were that the publication of Lonrho's report would coincide with the Government's publication of the findings of inspectors Henry Brooke QC and accountant Hugh Aldous but, in view of the decision by Trade and Industry Secretary Lord Young to delay publication of the 750-page official report, Lonrho is understood to be considering unleashing its own report in advance of the official document.
    Indications are that Young, who received the official report more than three weeks ago, will not release the findings until late September.  Young was originally believed to favour swift publication -- early on during the parliamentary recess -- but is reliably understood to be concerned by legal implications.
    Speculation that Young may choose to publish an 'edited' version of the report has already incensed opposition MPs and Tony Blair, Labour spokesman on the City, has urged Young not to publish an 'abridged' account of the affair.
    A spokesman for the DTI confirmed last week that no DTI reports had previously been edited.
The Harrods Scandal, page 55 [reproduced below]

The Observer 
Sunday, 14 August 1988

It was pressure from Lonrho chief executive TINY ROWLAND that forced the Government to mount an inquiry into Mohamed Fayed's controversial £615 million takeover of House of Fraser.  With publication of the DTI report still awaited, Rowland details the events which led up to 'The Harrods scandal'

I FIRST met Hugh Fraser in 1977.  Charming, rather hesitant, a heavy smoker and heavy gambler, he had made such headway through his fortune that he had decided to sell his last major asset, the controlling shares in the business which his father had built up and named Scottish & Universal Investments.  Scottish & Universal had, among its assets, 10 per cent of the British stores group House of Fraser.  Lonrho bought 26 per cent of Scottish & Universal. 
    It was part of Lonrho's understanding with Hugh that he would stay on as chairman of House of Fraser, but it gradually became clear that Sir Hugh was not on terms of mutual respect with most of his board, and that the loyalty of his employees had been to his formidable father rather than to him.  They did not welcome the sale of Hugh's shares to Lonrho -- and it was only natural as a change was obviously in the air.  Lonrho was an expanding and acquisitive company, and House of Fraser was a quiet and pedestrian one. 
    My private views about bidding for the company were unformed at that time.  I felt that House of Fraser needed Sir Hugh Fraser as the chairman, and he had shown outstanding talent as a retailer, winning the 'Young Businessman of the Year' award in 1973.  His career had been erratic at times, but he promised to give up gambling, and I promised to support him with Lonrho's ablest executives.
    We jointly thought that we'd link House of Fraser with the prestigious Carter Hawley Hale (Neiman Marcus) store group in the United States, and at the same time incorporate the well-sited Woolworth chain in the United Kingdom, to form a modern powerful buying organisation which would be capable of attracting by price benefits combined with the service tradition of House of Fraser.

MANY of the crowded High Street locations could be given improved access by taking in National Car Parks, then on offer to us by Sir Donald Gosling.
    The purchasing power of the proposed 1,500 shop outlets would have meant excellent price reductions to customers across Britain and the US.  The flagship, Harrods, had never been integrated with the rest and would demerge to retain its particular character and choice.
    It's often written, as a handy journalist's tag, that I suffered from an obsession to control the splendid Knightsbridge store.  It would be a very static and limited aim, I think.  For Lonrho's purpose, it could have been any well-spread stores group.  It was chance, and also roulette, that brought Hugh Fraser, the seller, and Lonrho, the buyer, together in 1977.

Previous article

Continued overleaf