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The 752-page report by Sir Henry Brooke, QC, and Hugh Aldous, an accountant, says there is no conclusive evidence to identify who provided the money for the takeover.
However, the Fayeds used their strong links with the Sultan of Brunei to allow them to buy Fraser even if it was not the Sultan himself who provided the cash.
Even now, five years after the company changed hands, it is not clear exactly who really owns Harrods, D H Evans, Dickins & Jones and the other stores in the retailing empire.
The inspectors feel certain that the money did not come from the Fayeds themselves as they have consistently claimed. The group has subsequently been forced to take out huge loans to repay whoever put up the initial sum.
The interest burden of those loans now threatens the development of the business unless stores are sold off, the inspectors say.
Kleinwort Benson, the merchant bank which helped the Fayeds to buy Fraser, and the Fayed's solicitors, Herbert Smith, unwittingly connived in the deception.
The report says: "The lies which the Fayeds were telling about themselves and their resources were given a credibility they would not have otherwise attained when they were repeated by their very reputable advisers.
"Their advisers accepted at face value what they were told by the Fayeds. In our opinion they did not take sufficient steps to check the accuracy of what they were told."
Mr Norman Tebbit, the Trade Secretary in 1985, who had to decide whether to refer the Fayeds' takeover of House of Fraser to the Monopolies Commission, had to accept the word of the Fayeds particularly when their lies about their origins were being given qualified endorsement by Kleinwort and Herbert Smith.
The Fayeds pretended that they came from a Egyptian family which had had a formidable reputation in business for generations. In fact, they were the sons of a schoolmaster.
The brothers, when bidding for House of Fraser, issued a statement endorsed by Kleinwort and the public relations firm Broad Street Associates that the family had "widespread international interests including, in particular, ship-owning, luxury hotels, construction, oil, oil services, banking and property." This gave "entirely the wrong impression" say the inspectors.
- The idea that they controlled a large fleet of ships was wrong: they had two small ferries in the Mediterranean plus a small fleet of tugs and support vessels used in the offshore industry.
- The "luxury hotels" were in fact one luxury hotel, the Ritz in Paris.
- Oil interests amounted to two small stakes in concessions in Abu Dhabi and these concessions were of no value at the time that the Fayeds were making extravagant claims about their wealth.
- Their oil services interests amounted to a company in Dubai which was losing money, and a tiny British concern which yielded a profit for the first time in 1985. The profit that year amounted to £8,000.
- The Fayeds' banking business consisted of a 4.9 per cent stake in a Texas bank, valued in 1985 at $8.7 million.
- The inspectors concede that "the Fayeds owned quite valuable interests in property, particularly in Great Britain, USA and France. The underlying capital value of their interests in some of their properties had appreciated since they were acquired, but none of them were wealth-producing and the Fayeds did not suggest that they were."
These findings by the inspectors accord closely with the conclusions of a Guardian investigation published on March 21, 1985, described by the inspectors as "a well-researched article by three journalists questioning the Fayeds' wealth".
The Fayeds were saying at the time of the House of Fraser takeover that they had accumulated sufficient funds in Switzerland from their international business empire to buy the group outright without borrowing money.
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