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In a 1988 article in Forbes by Pranay Gupte, it was first reported that the Swami and the sultan had met in Singapore in 1985 to discuss ways of getting back part of the $900 million the sultan had "entrusted" to Fayed. Acting on behalf of the sultan, the Swami persuaded Fayed to meet with him on June 6 and 7, 1985, in a rented apartment at 1 Carlos Place in Mayfair, and the meetings were secretly tape-recorded. On these infamous "Carlos Place tapes"-partly in Hindi, partly in broken English, but mostly gibberish-which the D.T.I. subsequently had authenticated by an audio lab, Fayed brags to the Swami about his influence with both Mrs. Thatcher and the sultan. "I have power of attorney… I can have $10 billion if I want." Gupte, who speaks Hindi, and Michael Gillard, both of whom have interviewed Fayed, told me the voice on the tapes is unmistakably Fayed's. Fayed once swore in an affidavit - and still avers today - that the tapes are not authentic.
Rowland, however, believed the tapes were just the smoking gun he had been looking for. Once he found out about them from Adnan Khashoggi, he flew to New York, where he met the Swami in Khashoggi's 45th-floor duplex, and then to Canada, where the tapes were stashed, to listen to them. Later, a delegation from Lonrho met the Swami aboard Khashoggi's yacht in Antibes and paid $2 million for the tapes. (Rowland also paid $3 million for a document purporting that Mark Thatcher, the son of the prime minister, and Fayed had traveled to Brunei together, which was later proved false.) The transcript of the tapes yielded Rowland a 185-page peccadillo-laden biography of Fayed, printed privately and sent "to anybody who was qualified"-80,000 of them. It was called A Hero from Zero, which is how the Swami described Fayed at Carlos Place, and it caused a sensation.
When I visited Rowland at his posh town house on Chester Square last November, the silver-haired titan casually picked up a phone and promptly got through to "His Holiness," the Swami, at his ashram in India. His Holiness would be interviewed only in person. Then Rowland made another call and handed me the phone. I was talking to Adnan Khashoggi-on the record.
"The tapes are authentic. The Swami taped him on the sultan's orders," Khashoggi said. "In my mind he definitely, officially bought Harrods with the sultan's money. I saw the agreement. He gave the sultan £300 million [$390 million] back." Did the sultan show you the agreement? I asked. "No. The sultan showed it to the Swami, and the Swami showed it to me."
Khashoggi and Fayed have a long history. They met in the early 50s, when Fayed was married to Samira Khashoggi, whom he had met on the beach in Alexandria. She gave birth to a son, Dodi. Today, Dodi Fayed, who got a producer's credit on Chariots of Fire, continues to function in the film business. Khashoggi claims that at the time of their meeting Fayed was a Singer sewing-machine salesman who had previously sold Coca-Cola. Khashoggi gave him a job coordinating furniture deliveries for a company that he owned. "He started making side deals to put fees in his hands," Khashoggi claims. Fayed says that Khashoggi worked for him, and that he couldn't take Khashoggi's stealing and gambling away his money. "It was such a dirty family."
In fact, Khashoggi's father was the doctor of the late Saudi Arabian king Abdul-Aziz. According to Fayed and Michael Cole, however, Khashoggi's father was merely "a nurse orderly" who injected the old king so that he could perform sexually with the virgins who were brought to him nightly. When I repeated this to Khashoggi, he said, "It makes the story more fairytale. My father is a surgeon, who studied with Madame Curie." Khashoggi added, "Mohamed always had the image of lying and making up stories - "It's a sickness."
In 1987 the Conservatives were facing a general election, and numerous business scandals had fueled criticism that their regulation was too lax. Rowland was still relentlessly pounding the government about Fayed, and, more important, The Observer had begun publishing stories critical of the business dealings of Mark Thatcher, the adored son of, and frequent embarrassment to, the prime minister. The government also learned from the D.T.I. report that Kleinwort Benson had based its confidence in the Fayeds' assets on a single telex from a Swiss bank and on the sultan's denial that he was involved. On April 9, 1987, the Department of Trade and Industry appointed inspectors to look into the acquisition of Harrods, if only to keep Rowland and The Observer quiet. To this day, the British government has chosen never to explain fully why, although the D.T.I. report was completed in July 1988, it was not officially released until March 1990, and why, since it was full of damaging findings, it was never acted upon. To most Americans, this would indicate a clear cover-up. The report might never have been published at all if Rowland hadn't gotten a hold of it and printed its findings in March 1989, in an extraordinary mid-week edition of The Observer, which usually publishes only on Sundays. Fayed and the government obtained an injunction which forced the paper off the newsstands within a few hours.
Only recently has it become possible to piece together how desperately Fayed was trying to curry favor with the Conservative Party while he was under investigation. Between 1985 and 1987, he not only gave the Tories £250,000 ($367,000) for the 1987 election but also met dozens of times with Tim Smith and Neil Hamilton - the two ministers whose resignations he would later force - sometimes alone and sometimes with lobbyist Ian Greer, whose firm acted as Fayed's go-between. (Hamilton, who stayed free at the Ritz, admits to attending meetings but denies receiving payment. He and Greer sued, but their action was recently struck down.) The meetings stopped six months after the D.T.I. report was published in The Observer. Last month, Fayed was called to tell what he knows in an inquiry involving Jonathan Aitken, another minister implicated in the scandal over free stays at the Ritz.
During the late 80s, while Rowland continued to flood the Establishment with reports detailing the Fayeds' background, Mohamed, according to two ex-security guards, kept wooing high-ranking officials in the Thatcher government. He played host in Surrey, for example, to then home secretary Douglas Hurd, who resigned this June as Major's foreign secretary. To counter Rowland, Fayed set up his own digging-for-dirt department, headed by lawyer Royston Webb and private investigator Richard New. They produced a scathing, Nazi-baiting propaganda report on Tiny: Faircop Fuhrhop. Lord McAlpine likened the struggle to watching afternoon wrestling on TV. "Nobody quite cares who wins, but it's fun to watch for half an hour." It wasn't, he says, as if anything important were at stake. Harrods, after all, was just a shop.
Since the scandal Fayed has continued to invite politicians of all parties up to his offices, where he plies them with drink and bags full of Harrods goodies. "He has loads of politicians up there, and they all get the red-carpet treatment," says former security guard Russ Conway, who says he was dismissed on a whim in March. "There's liquor all over the place. Half of them can't walk because they're stone drunk. Then you're dispatched to go down and bring up big teddy bears in bags, and if they hadn't got a car, you'd drive 'em to [the] Commons."