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The truth about Mohamed Fayed
THE 752-page House of Fraser report, painstakingly compiled by Department of Trade and Industry inspectors Sir Henry Brooke QC and accountant Hugh Aldous, represents a damning indictment of Mohamed Fayed, the Egyptian financier who, by foul means rather than fair, won control of Harrods in the Spring of 1985.
Mohamed Fayed, who issued the first of a series of writs against The Observer in March 1985 following the publication of an article entitled 'The Bloody Harrods Battle' -- written by myself -- is indelibly branded, along with his brother Ali, as a liar.
Chapter 1 -- the introduction to the report -- and the conclusions, which comprise Chapter 2 -- provide the flavour of the inspectors' findings.
As month after month of the inspectors' investigation went by they uncovered more and more cases -- and I quote from the introduction: 'Where the Fayeds were plainly telling us lies.'
According to the inspectors: 'These discoveries culminated in a two-day questioning session in March 1988 when it became obvious to us, from the manner and demeanour of both Mohamed and Ali Fayed, that they were witnesses who were only prepared to assist our inquiry when they believed it suited them to do so. In consequence of watching them give evidence we became reluctant to believe anything they told us unless it was reliably corroborated by independent evidence of a dependable nature.'
In contrast, the inspectors admit that 'perhaps as a consequence of reading Mr John Griffiths QC's 1984 Interim Report of his investigation into the ownership of HOF [House of Fraser] shares, we started our investigations with a predisposition not to trust what some of those opposed to the Fayeds were to tell us. Mr 'Tiny' Rowland, the chief executive of Lonrho and Dr Ashraf Marwan were the principal witnesses about whose evidence we were particularly cautious. However, as our investigations proceeded we encountered more and more instances in which their evidence was supported by independent external evidence and, although our caution remained, we were satisfied by the end of our investigations that it was safe to rely on much of what those two witnesses told us.' As the inspectors put it: 'The main thrust of their attack on the Fayeds was well founded on a sound basis of substantiated fact.'
The inspectors stress that 'because of the evidence we received and accepted about Mohamed's capacity for fantasy and because of the large number of lies he certainly told us we are not willing to be deflected from making findings.' It is in the introduction that the inspectors state: 'We were unable to establish precisely how and when in 1984 the Fayeds came into possession of the very large funds with which they were to buy HOF.' Such is the wording in the introduction but, in the Fayeds came into possession of the very large funds with which they were to buy HOF.'
Such is the wording in the introduction but, in the body of the report and in the conclusions, the inspectors consistently uphold The Observer's four-year old claim that the Fayeds' £615 million takeover of House of Fraser was not financed entirely out of their own cash resources.
The inspectors' conclusions -- which The Observer publishes in full on the opposite page -- are damning, albeit not only for the Fayeds. The first conclusion, namely that the Fayeds 'dishonestly misrepresented their origins, their wealth, their business interests and their resources to the Secretary of State, the Office of Fair Trading, the Press, the HOF Board and HOF shareholders, and their own advisers,' speaks for itself.
We learn that, during the course of their investigations, Brooke and Aldous received evidence from the Fayeds, under solemn affirmation and in written memoranda, 'which was false and the Fayeds knew to be false.' We also learn that the Fayeds produced a set of documents they knew to be false. As the inspectors put it: 'This false evidence related mainly, but not exclusively, to their background, their past business activities and the way in which they came to be in control of enormous funds in the autumn of 1984 and the spring of 1985.'
The inspectors point out that as at 31 October 1984 the Fayeds had at their disposal deposits of £50.5 million and $330 million at Royal Bank of Scotland in London and $225 million in cash and securities at a Swiss bank. In the inspectors' words: 'We have seen no credible evidence to explain how the Fayeds came to control such sums. We are of the view that these sums, or at any rate a large part of them, were not beneficially owned by the Fayeds and had come under their control not long before October 1984.'
Not only did Mohamed Fayed shower The Observer with writs for alleging what is now confirmed as the truth but he also brought injunctive proceedings against the newspaper. Although The Observer won the case, certain undertakings were volunteered by the newspaper and, in view of such legal undertakings -- and the time factor involved in attempting to clear such obstacles -- there are aspects of the inspectors' findings which I will refrain from touching upon. All the more reason, of course, for Lord Young, Secretary of State for Trade & Industry, to stand by his original declaration that the House of Fraser report would be published in full.
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