|
The Observer
Sunday, 9 April 1989
The Fayeds: Fraud squad
flies to Cairo
by MICHAEL GILLARD
A TWO-MAN team of Fraud Squad detectives is scheduled to arrive in Cairo this weekend to investigate Mohamed Fayed's false claims to come from an old established and wealthy Egyptian family of cotton kings and shipowners.
The detectives will also be examining the Fayed brothers' equally spurious claims to have amassed a multi-million pound fortune before leaving Egypt in the early Sixties.
The Fraud Squad inquiries are part of the accelerating Serious Fraud Office investigation into the 'wrongdoing' disclosed by the Department of Trade and Industry report into the 1985 Fayed takeover of House of Fraser. The SFO/Fraud Squad investigation targets the deception of the DTI, the Office of Fair Trading and the HoF directors over the Fayeds' wealth and the financing for the bid.
Tomorrow the Law Lords begin hearing the appeals by Lonrho, which owns The Observer, against Trade Secretary Lord Young's decisions not to publish the DTI report or refer the takeover to the Monopolies and Mergers Commission to consider whether the Fayeds should be forced to sell the Harrods stores group.
Meanwhile, Labour Party trade and industry spokesman Bryan Gould has highlighted Mohammed Fayed's visits to Downing Street and speculation that he may have made substantial donations to Conservative Party funds. There is increasing suspicion in Labour minds that Young's surprising decision to rule out the divestment option suggests there may be more involved than just the DTI inspectors' findings of serious wrongdoing by the Fayeds.
Gould wrote to Lord Young last Thursday raising a number of significant questions concerning the DTI report and the decision neither to publish nor make an MMC reference. In his letter, Gould raises the crucial issue of Fayed 's links to the Sultan of Brunei, in whose company he met Mrs Thatcher at Downing Street in January 1985, only weeks before he made the full bid for House of Fraser.
Fayed was also invited to Downing Street in mid-March for a dinner given by the Prime Minister for Egypt's President Mubarak. That dinner took place the day the bid was cleared.
The Fraud Squad team is expected to be in Egypt for at least a week seeking witness statements and documents relating to the Fayeds' family and business background. Far from coming from the background of Pharaonic wealth they claimed, the Fayeds were the sons of a teacher and had equally humble business credentials when they left Egypt. This trip had been delayed a week because the official request for assistance had not been received by the Egyptian authorities.
Although the SFO, led by John Wood, is now under considerable pressure to expedite a decision on prosecution the investigation could still take months rather than weeks.
Four months went by before the Fraud Squad was called in last December. No explanation has been given for this delay. Initially, only two detectives were assigned to the investigation. This was increased to five after the Attorney General demanded more action.
In spite of legal problems there is a growing confidence among those with knowledge of the investigation that there will be a prosecution.
The deception over the Fayeds' wealth resulted in the HoF board recommending and shareholders accepting the Fayed cash bid which was cleared from any MMC inspection by the OFT, a decision accepted by then Trade Secretary Norman Tebbit.
Tebbit personally interviewed Fayed and relying on Fayed's advisers and the OFT accepted his now discredited claims to be financing the bid from the family billions.
The issue of possible perjury is under consideration by the Director of Public Prosecutions regarding evidence given to the DTI inspectors.
Labour suspicions about Young's decisions have been fuelled by the knowledge of the Fayeds' links to such Thatcher confidantes as Sir Gordon Reece, who became a Fayed adviser.
Fayed's meetings with Mrs Thatcher, the impression of great wealth and influence he presented to the Prime Minister and Tebbit plus the Reece connection has resulted in speculation that Fayed may have been approached for and contributed substantially to Conservative Party funds.
Gould has now raised this matter directly, asking Young: 'Will you assure me that the Fayeds have never made any financial contributions to the Conservative Party or related institutions?'
As Gould asks: 'What embarrassment do you hope to avoid by protecting the Al Fayed takeover from further investigation? Could it be linked to the continuing mystery of where the Al Fayeds obtained the money for the bid or could it be that the Al Fayeds could themselves make disclosures which would be embarrassing to you and the Conservative Party?'
Gould has requested an early reply to his letter and is likely to raise the matter in the Commons no later than next week when Young's deputy, Tony Newton, is due to answer parliamentary questions.
The five Law Lords who will decide whether the report should be published and to whether the reference to the MMC should be made include Lords Templeman, Ackner, Keith and Griffiths. The hearing is expected to last at least until Thursday and could extend into next week. The Law Lords could announce their decision at the end of the hearing and give their reasons later or reserve judgment to a later date.
But they must first resolve whether they wish to read and refer to the DTI report during the hearing and in making at their decision.
Lonrho will make an application that the DTI should make available a copy of the report. This is expected to be opposed by the DTI.
- On Friday speculation had it that the Bank of England was monitoring events closely. The Fayed/HoF fall-out could have long-term implications in respect of City takeover practice. Harrods Bank also falls under its jurisdiction.
|
|
