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The Observer
Sunday, 9 April 1989
'WRONG-DOING'
Upon returning from her African safari, Margaret Thatcher attempted to cool the Harrods crisis, brought about by Trade Secretary Lord Young's refusal to publish the DTI inspectors' report on Mohamed Fayed's £615 million takeover of House of Fraser. The Premier achieved only limited success as Young's credibility came under renewed attack
MELVYN MARCKUS
CITY EDITOR
IT WAS at 5 o'clock last Sunday afternoon that a repeat performance of 'The Harrods Sale' was broadcast on Channel 4.
'The Harrods Sale' has proved something of a classic in the world of financial documentaries. John Plender, who presented the programme, achieved on film in the space of one hour what the vast majority of Britain's senior financial journalists failed to achieve in four years: namely a well researched analysis of the House of Fraser affair.
The documentary came across as an impressive work when it was first televised last July. More to the point, it has stood the test of time.
As Plender concluded: 'This has been first and foremost a story about deception. Mohamed Fayed and his brothers duped the British Press and public about their family background and the origins and scale of their wealth. By public misrepresentation they succeeded three years ago in taking over one of this country's leading store chains…'
In his words: 'If… the Department of Trade inspectors reach similar conclusions to our own, Lord Young, the Secretary of State, might refer the case to the Monopolies Commission. The Commission would then investigate and could, in turn, recommend that the Secretary of State use his powers to force the Fayeds to divest. He could compel the brothers to put a "For Sale" notice on the whole House of Fraser stores group.'
Such was Plender's reasoning when the programme was first screened on 24 July last -- the day after DTI inspectors Sir Henry Brooke QC and Hugh Aldous submitted their 752-page House of Fraser tome to Lord Young.
But Young -- as every man and his now much sought after mid-week edition of The Observer knows -- did not choose to refer the Fayeds' £615 million takeover bid for House of Fraser to the Monopolies and Mergers Commission. Why?
Why has Trade Secretary after Trade Secretary -- in the accident-prone Victoria Street Lubianka which is responsible for the regulation of British business -- refused to embark upon the only course of action which might conceivably wrest control of House of Fraser from Mohamed Fayed?
Why, way back in the spring of 1985, did Norman Tebbit, the incumbent Trade Secretary, wave the Fayeds' controversial takeover bid through in the space of 10 days rather than opt for a Monopolies and Mergers inquiry?
Why did Tebbit's successor, Sir Leon Brittan -- a mere 'Mr'
at the time of his brief reign at the Department of Trade and Industry -- pronounce, in the winter of 1985, that he saw 'no grounds whatever' for a DTI inquiry?
And was it not Brittan who, at the same time, let it be known that Sir Gordon Borrie, Director General of the office of Fair Trading, 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?'
Brittan's singular lack of perspicacity -- and subsequent demise as a result of the Westland affair -- found its reward in the shape of his much criticised appointment as European Commissioner in succession, to Lord Cockfield.
It finally fell upon Paul Channon, Brittan's successor, to appoint DTI inspectors in April 1987 to investigate 'the circumstances surrounding the House of Fraser acquisition'.
Channon's decision inevitably begged the question: why had the Government not acted earlier? Or, to put matters another way, why wait until the run up to the June general Election?
* * *
Throughout this period I and my colleagues -- Michael Gillard and Lorana Sullivan -- carried out extensive inquiries in the UK, the Channel Islands, France, the US, Haiti and Dubai.
Peter Wickman, a former correspondent for Stern, was assigned to Egypt in search of the Fayed dynasty. He could not find it. Wickman -- who offered The Observer the story in the summer of 1986 -- wrote the most amusing article I have ever had the privilege of editing. Its perception was devastating. His article -- entitled 'In search of the fabulous Pharaohs' -- began 'The Fayed dynasty in Egypt,' I was told, 'will make a great story. Egypt's richest and most famous sons; owners of Harrods and the Paris Ritz.
'It was the Al Fayed brothers, Mohamed, Salah and Ali, who had forsaken the land of the pyramids for the pulchritude of Park Lane. A magic carpet of publicity had brought the family power and prestige. Mohamed, who had found favour with the Prime Minister, was known as "The Fabulous Pharaoh".
'In preparation for Assignment Pharaoh, I read the interviews in Britain's quality newspapers, which explained that "the Al Fayeds went to English schools in Egypt, the oldest graduated and the family cotton and shipping millionaires since 1880".
'In anticipation of entering a world of caviar and champagne, I booked on Air Egypt and studied more news clippings on the Al Fayeds. "One of Egypt's most distinguished families," declared the Sunday Telegraph. "Fourth generation Egypt money," said the Financial Times. "Cotton millionaires for 100 years," I read in the Daily Mail, the Scotsman, the Sunday Times and the august Wall Street Journal.'
During his journey through the shifting desert sands, Wickman, in his attempt to trace the Al Fayed cotton dynasty, interviewed the venerable 'king of cotton': Fargally Pasha.
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