Main Index

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

The Observer's financial journalist Lorana Sullivan and law reporter Jane Renton report on the previous week's legal battles between Lonrho and Trade Secretary Lord Young.
    Five days earlier at the High Court Tiny Rowland won a Judicial Review of Young's recent decision not to refer Mohamed Al Fayed's purchase of House of Fraser to the Monopolies & Mergers Commission.  The court ordered Young to refer the bid and also ordered him to reconsider his decision not to publish the DTI Inspectors' report into the affair.
    Young immediately appealed to the Court of Appeal, which three days later on Friday - i.e. two days before publication of the Observer - announced its decision overturning the High Court's decision.  Tiny Rowland of Lonrho immediately intimated that he would be appealing to the highest court in the land - the House of Lords.

The Observer 
Sunday, 22 January 1989

IT is now common knowledge that Lonrho will take Lord Young to the House of Lords following Friday's decision by the Appeal Court that the Secretary of State for Trade & Industry was correct in not referring the Egyptian Fayed brothers' 1985 takeover of House of Fraser to the Monopolies and Mergers Commission.
    Lonrho, led by chief executive 'Tiny' Rowland, will also challenge the finding by Lord Justices Dillon, Mustill and Stocker that Young was right to defer publication of the DTI inspectors' report on the £615 million takeover pending investigations by the Serious Fraud Office and any resulting trial. 
    Young went to the Court of Appeal after the High Court ordered him to refer the House of Fraser takeover to the MMC.  The Division al Court also ordered him to reconsider his decision to defer publication of the DTI inspectors' report.
    The Appeal Court's decision was delivered at 4 p.m. on Friday after three days of argument by counsel for Young, Lonrho and House of Fraser.  Lonrho is seeking through the courts to force Young to refer the bid and publish the report.  The Court of Appeal judgement will be delivered tomorrow morning.
    Lonrho was ordered to pay Young's costs but the court rejected a request for costs from House of Fraser. 
    Because of today's deadline for referral of the House of Fraser takeover to the MMC, the Court of Appeal -- with the agreement of all parties -- conditionally and uniquely referred the Fayed/House of Fraser acquisition to the MMC.  Should Lonrho's appeal succeed, the referral is in place.  Should it fail, the referral will be cancelled. 
    It was on Tuesday that Lord Justice Watkins -- the second highest criminal judge in the country -- sitting with Lord Justice Mann and Mr Justice McCowan, set the stage for a possible unscrambling of Mohamed Fayed's takeover of House of Fraser by ordering Young to refer the takeover to the MMC and to think again about publishing the report by DTI inspectors Sir Henry Brooke QC, himself now a judge, and accountant Hugh Aldous.  Young sent a copy of the report to the Serious Fraud Office within days of receiving it on 24 July and later refused to release it on the grounds that publication would prejudice the SFO investigation and any subsequent trial or trials.
    Lord Justice Watkins described Young's decision not to refer the takeover to the MMC as 'irrational'.  He added: 'No reasonable Minister could have reached the decision that he did -- which is another way of putting the same test…'
    Mr Justice Watkins said the findings by the DTI inspectors called out for a reference to the MMC.  'I can see no sensible reason why that was not done,' he commented.
    Mr Justice McCowan added: 'The Secretary of State was able to give a reason for not publishing the (DTI) report at this time without disclosing the contents of it, and I have no doubt he could have done the same in respect of the decision not to refer (to the MMC) if he had a good reason.'
    Lord Justice Watkins' ruling was a bombshell.  Young, The Guardian observed, 'suffered an unprecedented defeat'.  The Guardian's Financial Editor Hamish McRea noted that if Young should ultimately be forced by the courts to refer the House of Fraser bid, 'the whole nature of corporate mergers is going to be changed, with the courts playing a far greater role'.  As for the DTI report on the affair, McRea suggested that 'there is an overwhelming case in terms of natural justice that the report should be available for all to see'.
    On Wednesday -- not surprisingly -- action moved to the Court of Appeal where Mr John Mummery, Young's counsel, argued against Lord Justice Watkins' orders.  All the participants -- the DTI who were appealing, Lonrho and the Fayeds -- faced today's apparent deadline for referral of the Fayed bid for Fraser to the MMC and appeals to the House of Lords were promised.
    By Thursday afternoon, however, all parties had hit upon an unprecedented means of beating the deadline.  The Court of Appeal would conditionally refer the House of Fraser takeover to the MMC from today.  Should a subsequent ruling against referral be made, then the referral would be cancelled.  This, their Lordships said, would preserve the rights of all parties. 
    David Oliver QC, counsel for House of Fraser, attacked the Divisional Court's ruling.  'This decision -- if it is allowed to stand in its present form -- will represent a major landmark in the breakdown of trust between the courts and ministers of the crown,' he warned. 
    But Lord Justice Mustill interjected: 'That may be too bad.  I don't mean that facetiously because if it is the duty of the court to give relief, it doesn't matter how much it annoys the minister.  That is what we are obliged to do.'
    Rowland's campaign for a review of Mohamed Fayed's takeover of House of Fraser has been unremitting.  In the spring of 1985 Norman Tebbit, the then Trade & Industry Secretary, failed to refer the House of Fraser takeover to the MMC -- acting on the recommendation of Sir Gordon Borrie, Director General of the Office of Fair Trading.  In the winter of 1985 Leon Brittan, Tebbit's successor -- presumably having taken Borrie's advice -- declared that he saw 'no grounds whatsoever' for a DTI inquiry.  (His successor, Paul Channon, disagreed and ordered one).  At the time Brittan reported that Borrie was 'making no further inquiries' and, as a result, the possibility of a reference to the MMC 'was not under consideration.'

Previous article

Continued overleaf