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The Observer
Sunday, 22 January 1989
An open letter to Lord Young
by City editor Melvyn Marckus
'Dear Lord Young,
YOU must be exceedingly relieved that three Appeal Court judges have reversed the High Court's judgment of your handling of the House of Fraser affair.
I would put it to you, however, that neither you, nor your department, nor Sir Gordon Borrie, Director General of the Office of Fair Trading, have much, if anything, to celebrate.
In the first place the criticisms levelled against you in the High Court are unprecedented and will remain in the public's mind far longer than the Daily Telegraph's photograph of you posing outside the DTI's offices on Friday.
Two questions, as we all know, are at issue: why did you not refer Mohamed Fayed's takeover of House of Fraser to the Monopolies Commission in the light of the DTI report compiled by Sir Henry Brooke QC and accountant Hugh Aldous?; and, why have you refused to publish the report?
You may or may not recall that, in an article entitled 'Young: It's my ball', I expressed my astonishment at the manner in which you chose to make public your decision not to refer HoF to the MMC.
At the time, your department declared that the report 'indicates the existence of previously undisclosed material facts about the transaction.'
My argument was that the existence of such 'previously undisclosed material facts' hardly offered an explanation as to why you decided not to refer.
It was with not a little amusement, therefore, that I read Lord Justice Watkins' judgment that you did not provide the Court with any reasons for not referring HoF to the MMC. I quote: 'In the absence of a reason, I am prepared to assume that the Minister did not have a reason which could be called in any way acceptable for not referring the matter to the MMC.'
It was his Lordship's considered opinion that, in the absence of any reasons, your decision not to refer the matter to the MMC was 'irrational'. In his words: 'No reasonable Minister' could have reached the decision you did.
Not only, of course, did you not give a reason for non-referral but, inevitably, you used Sir Gordon Borrie as a crutch.
According to the DTI statement, your decision not to refer was taken 'in accordance with the advice of the Director General of Fair Trading.'
But was it not Borrie who advised non-referral to Norman Tebbit, the Trade Secretary who originally waved through Fayed's £615 million takeover in the space of 10 days? And was it not Borrie who advised Tebbit's ill-fated successor, Sir Leon Brittan, who pronounced in the winter of 1985, that he saw 'no grounds whatever' for a DTI inquiry -- an inquiry which, in the event, revealed 'the existence of previously undisclosed material facts' -- so material that they required the immediate attention of the Serious Fraud Office [SFO].
And was it not Brittan who let it be known that Borrie was 'making no further inquiries' into the House of Fraser affair and, in view of this, the possibility of a reference to the MMC 'was not under consideration.'
Would it not have been 'reasonable' for Borrie to have stepped aside on this issue?
So much for your decision not to refer HoF to the MMC. What of your refusal to publish the 750-page DTI report? You must realise that the tenor of the report has been widely leaked: note the wail by Fayeds' counsel, David Oliver QC, that the inspectors exceeded their remit.
It is understood that the report alleges that Mohamed Fayed misled the Government, misled merchant bankers Kleinwort Benson and may have committed a number of breaches of the Companies Act.
What is now the subject of widespread discussion, as you well know, is whether the Fayed family is a suitable proprietor of House of Fraser; a matter on which the inspectors are understood to have a view.
Within days of receiving the report in July you passed the inspectors' findings to the SFO which, to all intents and purposes, has proved slow to proceed -- despite the benefits of DTI evidence taken under oath. This, I point out, contrasts with the rapidity of charges brought by the SFO in respect of the Guinness scandal and the Barlow Clowes fiasco.
I note that Lord Justice Watkins described it as 'fanciful to suggest that there would be interference with the gathering of evidence by the publication of the report'. At the least, I urge you to whisper a few words of urgency into the shell-like ears of John Wood, director of the SFO, since its formation on All Fools Day.
I did, of course, urge you to publish the report last July in an article entitled 'Publish and be damned'. Alas, you now run the risk of being damned when you do publish -- particularly if the consensus is that the inspectors' findings did indeed warrant referral to the MMC.
And, or course, in view of your refusal to give reasons for your actions you have lain yourself open to allegations that you are either acting under instructions from Mrs Thatcher or are intent on protecting the reputation of your department which, I suspect, hardly wins acclaim in the inspectors' report.
I would appreciate your comments.
As ever,
Melvyn Marckus
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