Letters from London (6 page)

By the end of 1984, Rowland was still hanging around the church like a much-rebuffed bridegroom, hoping that a ban imposed by the Department of Trade and Industry on Lonrho’s making a bid for Harrods would be lifted. But he had retained 29.9 percent of the House of Fraser’s shares and now agreed to sell them to Mohamed Al-Fayed (who had himself served on the board of Lonrho back in the seventies). Rowland offered the stock at three hundred pence a share, or fifty pence above the market price, on condition that he was paid in cash within forty-eight hours. Al-Fayed replied that Rowland could have the money within twenty-four hours. It must have seemed a sound enough deal to Rowland: first, he turned a decent profit, and, second, everyone knew that Al-Fayed did not have nearly enough money to mount a full-scale bid for the House of Fraser. If the DTI subsequently rescinded its ban on Lonrho, Rowland could always buy back the 29.9 percent. It was at this point, however, that someone shuffled the script. Rowland sold to Al-Fayed on November 2, 1984. On March 4, 1985, to everyone’s surprise and to Rowland’s fury, Al-Fayed bid for all the remaining shares of the House of Fraser, and the company’s board, eager to escape the Unacceptable Face of Capitalism, swiftly accepted.

Two immediate questions were raised. Where on earth did the extra money—£450 million in cash, at a low estimate—come from? And would Al-Fayed be allowed to get away with the purchase without scrutiny from the Monopolies and Mergers Commission? Whereupon the story broadens politically and brings in the richest man in
the world: the Sultan of Brunei. The Sultan had come to the attention of the British government and public a year and a half earlier: in August 1983, he had withdrawn the Brunei Reserve Fund, worth $5.7 billion, from the Crown Agents in Britain, to the noticeable detriment of sterling. In 1985, the following events occurred, some or all of which may be connected. In January, the Sultan of Brunei bought London’s Dorchester Hotel—a deal fronted by Mohamed Al-Fayed, using a power of attorney to draw funds on the Sultan’s behalf On March 4, Mohamed Al-Fayed and his brothers were suddenly revealed to be much richer than anyone thought they had a right to be. On March 14, the Minister for Trade and Industry, Norman Tebbit, announced that he would not be referring the Al-Fayed bid for Harrods to the Monopolies and Mergers Commission; he also released Lonrho from the ban on its making a bid—by which time, of course, it was mockingly too late, as the Al-Fayeds had already acquired the 51 percent of the company’s shares they needed. Later in the year, as the sterling crisis deepened, with the pound falling to $1.04 and a continuing miners’ strike threatening to make things even worse, the Sultan of Brunei transferred £5 billion pounds into sterling to help prop up the British currency. Whereupon the pound sat up in bed and took a little soup, staggering back to $1.08.

The brothers Al-Fayed now owned Harrods, but Lonrho kicked up such a fuss that a Department of Trade and Industry inquiry was ordered into the circumstances of the takeover. In 1988, its report was presented to the new Trade Minister, Lord Young, but a delay of publication was immediately imposed on the ground that criminal investigations into the takeover were being conducted by the Fraud Squad. The chief executive of Lonrho continued to fume, and the following year, when the report had still not been published, Tiny Rowland (or one of his adjutants) slipped Tiny Trelford (or one of his adjutants) a bootleg copy of the report, which Trelford published as a special, unprecedented midweek edition of the Sunday
Observer
. It was injuncted shortly after it hit the streets, but Rowland, who by then seemed to be the only person in the country still interested in the ownership of Harrods, had managed to keep the story running.

Finally, this March, five years after the government gave the Al-Fayed brothers the nod, a 752-page report—by a High Court judge and an accountant—was published, and everyone got excited all over again.
The Times
ran the front-page headline “
LYING FAYEDS” KEEP HARRODS
over a large photograph of Mohamed Al-Fayed, straw-boatered and white-coated, slicing up a salami in the Harrods food department. The DTI inspectors declared that the brothers, both before and after their bid for the House of Fraser, had “dishonestly represented” their origins, wealth, business interests, and resources to the Secretary of State, the Office of Fair Trading, the press, the House of Fraser board, the company’s shareholders, and even to their own financial advisers. The “catalog of lies” makes interesting reading, not least for its great variety of category: some of the lies seem to be calculated deceptions; others seem to the outsider like normal business practice; still others do no more than comically reflect the quaint British snobbery of those who compiled the report. The Al-Fayeds, the inspectors concluded, had inflated their income, had exaggerated the start-up wealth they possessed when they left Egypt, and had failed to come clean about the origins of their mysterious cash injection. They claimed to have had a fleet of ships that survived Nasser’s nationalization, whereas in fact they had owned only two 1,600-ton cargo ferries at the time. In 1964, Mohamed had spent seven months in Haiti, where he posed as a Kuwaiti sheikh, obtained two valuable government concessions, and decamped after cheating Papa Doc out of $100,000 (which some might consider merited a medal for public service as much as a rebuke). The brothers’ father had not, as they maintained, been close friends with the Sultan of Brunei. The yacht
Dodi
, which they claimed had always been in the family, was not acquired until 1962. And so on. Nor were their standards of veracity any better when it came to their personal lives and background. They did not, as they had said and allowed to be repeated, come from an old-established Egyptian family who had been shipowners and industrialists for more than a hundred years; on the contrary, they came from “respectable but humble origins” and were “the sons of teachers.” They had supplied false birth certificates, lowering their ages by
between four and ten years. They had “improved” their name from Fayed to Al-Fayed. Finally, their claim to have been subjected in childhood to the benign influence of British nannies was rejected as false.

Backbench Conservative MPs reacted to the report with pop-eyed rage. Don’t let the crooks get away with it! Take the shop away from them! Damn Gippo parvenus—first you let them into the club and then it turns out they didn’t even have proper nannies! Such was the tenor of their remarks. Sir Edward du Cann, a former chairman of the powerful Tory backbench pressure group the 1922 Committee, demanded that Harrods be stripped of its four royal warrants (the public sign that the store supplies members of the Royal Family), adding, “I think the Fayeds should be forced to leave the country.” However, since Sir Edward is currently the chairman of Lonrho, his remarks may not have been entirely objective. In contrast with all this backbench clamor, the Conservative Cabinet has throughout the affair shown an extraordinary, almost heroic consistency. Despite the fiercest pressures, it has tenaciously stuck to the holy principle of laissez-faire and has most actively remained passive. The first Trade Secretary to be involved, Norman Tebbit, declined to refer the Al-Fayed bid to the Monopolies Commission. The second, Lord Young, followed this lead and also declined to publish the DTI report. Sir Patrick Mayhew, the Attorney General, declined to prosecute. The third Trade Minister involved, Nicholas Ridley, did even better. Naturally, he declined to refer the matter to the Monopolies Commission. Naturally, he declined to disqualify the brothers from being company directors, as he could have done. But he far outstripped his predecessors in Nelsonic nonnoticing and lizardlike somnolence. His entire statement to the Commons on the Harrods affair and the inspectors’ epic report lasted a mere two minutes, and ended, “No other matters require action from me.” The nearest he came to any judgment on the whole business was to say, “Anyone who reads the report can decide for themselves what they think of the conduct of those involved.”

So what are we to decide? Tory MPs cry bounder and rogue. Labour MPs cry fraud and cover-up (plus bounder and rogue). The
Sultan of Brunei, who declined to cooperate with the inquiry, continues to deny that any of his money was involved in the purchase. (The inspectors’ theory runs as follows: the Fayeds used their association with the Sultan, and their possession of wide powers of attorney, to raise money on their own account. This would explain the sudden, huge influx of funds, and also why the Sultan has severed contact with his former representatives.) The Fayed brothers, having lost their “al-” throughout the British press, continue to own Harrods, even if it is now smearily nicknamed Harrabs in some quarters. Mohamed Fayed, who never had a British nanny, continues to slice up salami in the food hall whenever there is a photo opportunity. Harrods itself has gone from being a publicly owned company to being a family business whose parent organization in Liechtenstein is beyond British scrutiny and British law. And the Conservative Government, if we are to believe some Labour analysts, has discovered a new way of rescuing the currency when it bumps against the seabed. What does it cost? Just the occasional national monument Harrods and the Dorchester this time, Windsor Castle the next.

As for Tiny Rowland, he continues, as he has done all through the affair, to dispatch bizarre and hectoring circular letters to Members of Parliament and other opinion formers. They are printed on fine paper and sturdily bound like an investment prospectus; inside, they mix ferocious denunciations of the Fayeds with lofty calls to arms. In their obsessiveness they are, in a way, love letters to Harrods. The latest, a sixteen-pager (of March 27), typically entitled “Practise to Deceive,” catalogs the recent high crimes and misdemeanors of the Fayeds—roughly, bleeding Harrods dry and cooking the books—but also comes up with a novel line of attack. Rowland analyzes statements that the brothers made to the DTI inspectors about their periods of residence in Britain (which do make very contradictory reading) and concludes that, whatever they may have claimed officially for tax purposes, they are and have been resident in Britain for many years. This, Rowland points out, makes them taxable in this country. “There is one regulatory body still to act,” he writes, and bursts into capitals with the new threat: “
THE INLAND REVENUE
.” The
Fayeds, he calculates, have over the years evaded “hundreds of millions” of pounds in income tax. Worse—though much better, of course, for Rowland—if, as they claim, they purchased the House of Fraser with their own money, “then their funds are the taxable funds of United Kingdom residents, bringing the outstanding Tax payable to one billion pounds. That is the position today.” One billion pounds: as precise as that. It seems unlikely, however, that the Revenue will heed this public-spirited tip-off, and Rowland himself clearly doubts it. “All is silent,” he laments on the final page of his letter. “No dogs bark. It is because the Fayed affair was put in motion by the Prime Minister, Mrs. Thatcher.” At which point paranoia begins to fizz and crackle in the air like static. “Is it not laughable,” he inquires of the MPs he is addressing, “that the Prime Minister of Britain should have been so naive as to seek advice from the Indian ‘holy man’ who introduced Fayed to the Sultan of Brunei; should have obeyed his instructions to part her hair, to wear a red dress, and to tie an Indian amulet above her left elbow to assist his supernatural pondering; should spend many hours closeted with him and his mystic tantric little balls of paper—and then tell the House of Commons that the Fayed decisions have nothing to do with her?”

What is the color of money? Amid the empurpled Tory rage, it’s hard to make out whether the Fayeds’ main offense is to have been (a) deceitful, (b) parvenu, or (c) Egyptian. Probably all three. Had the Sultan of Brunei come out and said
he
wanted to buy Harrods, we probably wouldn’t have minded; but then not only did he have top-notch British nannies, but he also went to Sandhurst. (Though behind the snobbery a central point remains: if the money used to buy Harrods was not unequivocally owned by the Fayeds, then debt financing would have to take priority over capital investment, and the stability of the company might be affected.) In general, the Conservative Government has taken a relaxed view of foreign companies buying up parts of Britain. (Stop press: the American food giant CPC International has just bought three staples of the British kiddie’s pig-out—Ambrosia creamed rice; Bovril, an umber spread made from ground-up ox; and Marmite, a vegetarian equivalent of take-no-hostages
pungency.) As for the Labour Party, though instinctively protectionist, it, too, knows when to take a practical stance on foreign ownership. For instance, I live in the London Borough of Camden. Like many other Labour councils squeezed by a Tory central government over the last decade, Camden at one point succumbed to a bit of creative accounting. In a striking (or perhaps batty) financial coup, it sold all the parking meters in the borough to a French bank and then leased them back. The council benefited by a capital sum, though quite what was in it for the French bank was a mystery to us locals. It also became a strange experience to park your car and reflect that the meter you were feeding belonged to the French. You felt as if you ought to insert a five-franc piece instead of fifty pence. And it has to be said that Gallic ownership has made no difference to the efficiency of these stubbornly temperamental machines.

I
T’S NOT JUST
the parking meters, the creamed rice, and Harrods. These days, we don’t even own
The Times
. First, it was bought by a Canadian, Roy Thomson; and now it belongs to Rupert Murdoch, an Australian who couldn’t even be relied upon to stay Australian but turned into an American, no doubt for the best of business reasons. At least the editor has remained traditionally British, and the new one, appointed in mid-March, couldn’t be more so. Simon Jenkins is Murdoch’s fourth editor in a decade, a period during which the newspaper’s finances have remained healthy but its personality has endured a running state of trauma.
The Times
, of course, has always attracted labels and expectations like no other newspaper: from “the Thunderer” of Victorian days to “the newspaper of record,” “the noticeboard of the Establishment,” “the Top People’s Paper,” and so on. There is, naturally, a rival view as well:
The Times
is the paper that sought to appease Hitler in the late thirties, and a decade later kissed its hand to Stalin. “The Sycophants’ Gazette,” it was called recently by the columnist Edward Pearce. “In truth,” wrote Pearce, “the old
Times was
a rotten paper, incapable of being judged objectively since it was not sustained by objective merits but [by] levitating two feet off the ground by divine will, like St Joseph of Copertino.”