Select Committee on Standards and Privileges First Report


Letter from Sir Andrew Bowden MBE, MP to the Parliamentary Commissioner for Standards

  At our meeting I was concerned that I was unable to explain why I wanted a meeting with Mr Al-Fayed and Mr Greer without lawyers present.

  I have now located some notes[51] and a letter (see Annex) relating to the meeting and I enclose the originals. As you will see, I wished to discuss with Mr Fayed some very frank and sensitive questions about his background, including financial information and his dispute with Mr Rowland. In the circumstances, I felt that the discussion would be less inhibited if legal advisers were not present.

  If you wish to see me again to discuss this matter, or anything else, please let me know.

(Sir Andrew Bowden MBE, MP)

13 February 1997


Letter from Mr Mohamed Al-Fayed to The Rt Hon Paul Channon, MP Secretary of State for Trade and Industry

  My brothers and I understand that Mr R W Rowland, the Chief Executive of Lonrho plc, has resumed his vitriolic correspondence with your Department, protesting Lonrho's ill treatment in its attempts to gain control of House of Fraser. As always, Mr Rowland ignores the fact that it was he who delivered the control of Fraser to us by selling us Lonrho's 36.3 per cent of the equity. He conveniently ignores too the fact that he was able to make a conditional bid of his own for Fraser at any time after 7 March, 1985 but for his own reasons, perhaps inadequate resources, chose not to do so.

  Whilst we are confident that you will accord to Mr Rowland's bile all the respect that it merits, we believe that it is timely to update your Department as to where we stand in our legal battle with Mr Rowland and as to other matters which we feel warrant your interest. We apologise for the length of this letter and its attachments but we are of the view that one should not deal cursorily with matters of such gravity.

A. The Observer   1. We have responded to Mr Rowland's campaign of un-paralleled ferocity by the issue of three libel writs. This pressure has led The Observer's own lawyers to concede:

  (a)   that The Observer has never had sight of any power of attorney whereby the writer was given authority over the funds of the Sultan of Brunei even though The Observer purported to quote from such a power verbatim on 28 July, 1985 (Appendix 1) and on other occasions;

  (b)   that The Observer is no longer seeking to justify its central allegation that the Sultan is the true owner of Fraser and that my brothers and I were merely his agents. This concession was made in open court on 11 July, 1986 before Mr Justice Mann;

  (c)   that The Observer could not justify its sensational, though anonymous stories of 12 January and 18 May, 1986 implicating Mrs Margaret Thatcher, the Sultan, Mark Thatcher and the writer in a ludicrous conspiracy (Appendices 2 and 3). The editor himself, Donald Trelford, eventually admitted writing these and their lack of justification is set out in an open letter of 4 July, 1986 (Appendix 4) from The Observer's solicitors;

  (d)   that certain documents upon which The Observer has sought to rely may well be forgeries. In this respect, we attach an affidavit (Appendix 5) of our Legal Adviser, Mr Royston Webb, the exhibits to which clearly demonstrate the use of a forgery and were instrumental in forcing The Observer's lawyers to admit that the Trelford articles could not be justified.

  2. In addition, internal Observer correspondence indicates that certain of its own journalists considered the Trelford story to be "journalistically unacceptable" and one which could terminally damage the paper's "reputation for journalistic integrity" (Appendix 6). Trelford himself admits (Appendix 7) that his investigation "has been handled mostly behind closed doors" and that he had the evidence to support it - which his lawyers later admitted was not the case.

  3. To obtain these concessions at an interlocutory stage represents substantial progress and we have now moved into the discovery phase of the action where it is abundantly clear that the Observer, at Mr Rowland's behest, will conduct a speculative "fishing" trip in the hope of finding something from us with which to plug its own alarming vacuum of evidence. Its only specific - and much repeated - allegation is that the Sultan provided the funds and we are disclosing personal bank accounts proving that we already had the money well before our relationship with the Sultan began. In the absence of further specific allegations, we are not prepared to disclose more to Mr. Rowland, labelled by a DTI inspector as the man "whose wishes often father his memory".

  4. Interestingly, Mr Rowland is now making less of those "tapes", the subject of much of his correspondence last year and the "transcript" of which was used by him to plant an article in the little known New York publication, Jewish Press, which in turn was used by Trelford as an apparently independent source from which to cull his anti-semitism quote in his article of 12 January. A copy of the retraction published by Jewish Press is enclosed (Appendix 8), [52] together with Mr Rowland's letter to Trelford of June, 1986 (Appendix 9) in which he names a Washington lawyer, Mr Steven Martindale, acting on behalf of a Shri Chandra Swamiji Maharaj, as the man who made the recording. Enclosed also are an affidavit from Mr Martindale (Appendix 10) flatly denying the allegation and documents from the guru (Appendix 11) contradicting his alleged involvement. The man whose wishes father his memory seems to be wishing very hard!

5. The only remaining "evidence" provided by Mr Rowland concerning the Sultan is the so-called acknowledgment and promissory note, made much of in The Observer article of 3 November, 1985 (Appendix 12). Mr Rowland claims that the guru gave these conveniently unsigned documents to him but this was denied in front of Mr Webb and a partner of the Washington law firm, Williams and Connolly, in New York on 20May, 1986. In addition the Sultan has stated in writing (Appendix 13) that he has no financial investment in any of our enterprises.

  6. Six months silence in The Observer campaign permits the inference to be naturally drawn that Mr Rowland's continued abuse of his ownership of the paper to pursue his shabby and misguided vendetta has encountered the resistance of his own lawyers and independent directors - hence the escalation of wild and irresponsible correspondence which is checked by no one. It must be plain to anyone familiar with the facts that the DTI and OFT were magnanimous indeed in extending to Mr Rowland in the autumn of 1985 the courtesy of an investigation and that the findings set out in the letter of your predecessor, Mr Leon Brittan (Appendix 14), were very much to the point.

B. The 1976 DTI Report

The Hayman/Slimmings report of 1976 led to certain Lonrho practices being dubbed the "unpleasant and unacceptable face of capitalism" and was notable in that it laid bare Mr Rowland's methods of doing business, with an emphasis on corruption and personal enrichment at his company's expense.

  Having been prompted by the events of the last two years to study the report in depth, it surprises us greatly that criminal prosecutions were not brought. It may be noteworthy that the investigating officer in the Fraud Squad, Chief Superintendent Etheridge, should have subsequently joined Lonrho as Chief Security Officer at a salary greatly in excess of that paid to the average main board director. The writer is concerned that the report disclosed clear prima facie breaches of the criminal law and yet no action was taken.

C. The Amethyst Case

Consistent with many of the events uncovered by Hayman and Slimmings is that set out in two Sunday Times articles of June, 1986 and one of 1 February 1987 (Appendix 15) relating to suspicious amethyst dealings.

  Complaints were lodged last summer with the City of London police but it is understood (Appendix 16) that the Law Officers decided that the DPP should not initiate an investigation. No reasons were given and it may well be a matter of public interest to initiate a private prosecution in respect of Mr Rowland's documented abuse of the criminal law.

  In the amethyst case, it is a matter of fact that the existence of two Lonrho subsidiaries in Liechtenstein, Blorg and Contango, was never disclosed as demanded by Section 3 of the Companies Act of 1967. This illegal non-disclosure is part of a complex pattern of concealment in the case and derivative suit has now been filed on behalf of the minority shareholders seeking an account in respect of the proceeds which run to millions of dollars. A copy of the writ is enclosed (Appendix 17). At some point Mr Rowland and his henchmen must brought to book for this matter and those uncovered in 1976.

D. The 1984 DTI Report

A further point of concern stems from the 1984 report of John Griffiths, QC, appointed by the DTI to enquire into alleged concert parties in share dealings in the House of Fraser. The report was prepared on an interim basis and issued prior to the sale by Lonrho to my family of Lonrho's 29.9 per cent holding in Fraser on 2 November 1984. We believe that the time has now come for further enquiry to make the report final.

Amongst those suspected of acting in concert with Mr Rowland were Ashraf Marwan, Sir Hugh Fraser and Sir Jack Hayward. The inspector could find no firm proof of a concert party but - after the publication of the report and immediately after the sale of Lonrho's shares - Lonrho brought the holdings of those three individuals. One obvious interpretation is that they were acting in concert with Mr Rowland and that there was an agreement between them to the effect that if Lonrho sold its shares then Lonrho would buy out the others immediately, thus protecting them from the prospect of any loss consequent upon Lonrho quitting the scene as a potential bidder for the whole of Fraser. The finalisation of the Griffiths Report is now needed to clarify these matters.

E. Arms Dealing

Contrary to the protestations of Mr Rowland at the time of disclosure of his role in the US/Iran arms deal, Lonrho has previously been involved in arms dealing and one must question why Mr Rowland sought to mislead the press in this way (Appendices 18[53] and 19).

Apart from the notorious Red Baron affair acknowledged by Mr Rowland's co-director, Robert Dunlop, the Lonrho subsidiary Tradewinds has been named as the carrier in deals whereby ex-CIA agent, Edwin P Wilson, shipped to Libya its weapons of terrorism. Wilson is presently serving 52 years in a US prison for his enterprise whilst, interestingly, a co-director in Tradewinds with Messrs Rowland, du Cann and Dunlop, from April 1981 to May 1983, was the head of Libyan "security", Ahmed el Gaddafadam, a cousin of Colonel Gaddafi.

  Until 1983, Lonrho's 40 per cent partner in Tradewinds was Ashraf Marwan who, however, served only fleetingly as a director and it is possible that he was acting merely as a front for Libyan interests. It is something of a coincidence that Wilson should have been arrested, Marwan sold his shareholding and Gaddafadam resigned as a director almost at the same time. A Sunday Times article of 1984 (Appendix 20) gave some background on the Marwan/Libya involvement and it is interesting that Gaddafadam cited Marwan's office as his address in the notification of his directorship to Companies House.

  The activities of Tradewinds in particular and Lonrho's arms links in general merit the closest inspection and Mr Rowland's attempts to deceive the press serve only to heighten one's suspicions.

F. Mozambique

The twin spectres of Libya and Ashraf Marwan loom large in Mr Rowland's recent business dealings with Mozambique.

  It is well known that Lonrho has substantial commercial interests in Mozambique and that it was a staunch supporter of Samora Machel's government. Indeed it was revealed in Africa Analysis (Appendices 21 and 22) that Lonrho was financing the provision of security services and military training by Defence Systems Ltd. This was also dealt with at length by the Spectator (Appendix 23). It has also become apparent that the rebel forces in Mozambique, the MNR, enjoy the backing not only of the South Africans but also the Israelis and that the government is facing grave military difficulties (Appendix 24). Following the death of Samora Machel, the Lonrho jet (HB - ITM, Gulfstream III) flew to Maputo on 26 October, 1986 but Rowland was not on it. The plane was being used by Ashraf Marwan of whom Rowland had said on oath in the Griffiths Report (Appendix 25):

  "I would not want to do business with Ashraf Marwan . . . who is totally unreliable when it comes to business . . . In terms of business Dr Ashraf Marwan is totally unreliable".

  Thus a man considered unreliable flew in the Lonrho jet at a cost of £2,500 an hour at a most sensitive time in Mozambique's history. He was there for the swearing in of the new President, Chissano, and then - on 2 November flew, in the same jet, direct to Tripoli in Libya. We know that Rowland has no need of any political assistance in black Africa because his own abilities in that area are unrivalled. So why did Marwan go to Maputo, at a cost to Lonrho of over £60,000, at such a sensitive time?   There is only one ready explanation. In order to secure the economic prizes of Mozambique, Rowland needs a strong Frelimo government and that government needs all the military support it can get if it is to remain in office. Marwan's role may well have been to assess what armaments were required and then travel to Libya to arrange the financing with Gaddafi or the Gaddafadams. Thus, the Mozambique government is supported, Rowland gets his economic concessions, Marwan gets a large commission on the arms and Gaddafi gets a new theatre of ferment in an area where he has to date enjoyed little influence.

  The closeness of the Lonrho/Libya link is further underlined by the proposed oil deal covered in December's Business magazine (Appendix 26).

G. The Guinness Affair

  The Guinness/Distillers affair is likely to remain a corporate cause celebre for months to come but one should not lose sight of the fact that the Guinness bid for Distillers would certainly have been referred to the Monopolies Commission for thorough scrutiny if Guinness had not agreed to sell certain of the Distillers' whisky brands to Lonrho. In essence, a £10 million purchase permitted a £2.6 billion deal to go through.

  The Daily Mail of 4 December (Appendix 27) [54] called for the DTI to probe the Guinness/Lonrho deal since it was so riddled with inconsistency that it might be suspect. For example, to quantify the domestic Scotch market at £35 million per annum - which the Lonrho purchase price implied - is patently ridiculous and the deal deserves the fullest scrutiny - most particularly in the light of Guinness' own admissions as to the conditions under which it induced its friends to influence share prices.


  Having suffered at the hands of the unprincipled and unscrupulous Mr Rowland for so long, we believe that it is now time that his conduct be thoroughly investigated and exposed. We shall use all the legitimate means at our disposal to ensure that this man can no longer abuse his position of trust at the head of a public company and we trust that your Department will also exercise its far greater powers to the same end - both to finalise such outstanding matters as the Griffiths enquiry and to conduct a further thorough investigation into the affairs of Lonrho under Section 432 of the Companies Act, 1985. Should you require any further information, please do not hesitate to let us know.

(Mohamed Al-Fayed)

2 February 1987

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Prepared 8 July 1997