This document is taken from Section Six of:-
Rowland's $1.5 billion allegation
The Observer, 3 November 1985
In this article “Rowland‟s $1.5 billion allegation” (and its trail “Rowland tells of Al-Fayed‟s power of
attorney”) Observer City editor Melvyn Marckus reports a letter from Tiny Rowland to the Office of
Fair Trading referring to a „promissory note‟ that Fayed had given the Sultan of Brunei; and also
referring to transcripts of taped conversations between Fayed and the Sultan‟s associates, all of which,
Rowland contended, proved further that the Fayeds had bought Harrods with the Sultan‟s cash.
Marckus also reports on a document about the Fayeds' assets, which Fayeds‟ bankers Kleinwort
Benson had sent the OFT.
Sunday, 3 November 1985
Rowland tells of Al-Fayed's power of
by MELVYN MARCKUS, City Editor
THE UNPRECEDENTED battle between Tiny Rowland, Lonrho‟s chief executive, and Mohamed Al-
Fayed, the Egyptian Proprietor of House of Fraser, appears to be approaching a climax.
Rowland has informed Sir Gordon Borrie, Director General of the office of Fair Trading, that he
believes Mohamed Al-Fayed held a $1½ billion general power of attorney for the oil rich Sultan of
Brunei between August 1984 and 25 April 1985.
The Al-Fayeds acquired a key 30 per cent block of House of Fraser in November 1984 and launched
a full-scale takeover bid — valuing House of Fraser at £615 million — last March.
Rowland has consistently alleged that the Sultan of Brunei‟s funds were involved in the House of
Fraser take-over. He continues to do so.
The Al-Fayeds, supported by City merchant bankers Kleinwort Benson, insist that the £615 million
Harrods coup was financed entirely out of their own liquid funds.
But, in a recent letter to the Office of Fair Trading, Rowland also alleged that Mohamed Fayed is in
debt to the Sultan of Brunei. Rowland has informed the OFT of the existence of a promissory note
bearing 9 per cent interest „for the part of the still outstanding, monies owing to His Majesty and Yang
di-Pertuan, the Sultan of Brunei.‟ A promissory note is an unconditional promise in writing to pay on
demand at a fixed or determinable future time a certain sum of money.
According to Rowland, in a letter to the Prime Minister dated 21 October, a promissory note has
been issued by Mohamed Fayed for $200 million.
According to Rowland : „On 25 April 1985 the Sultan of Brunei cancelled the power of attorney,
and demanded return of his funds — which were no longer intact. Part was repaid, but a promissory
note was issued for $200 million by Mohamed Fayed, the man whom John MacArthur of Kleinwort
Benson described as having a „net worth, from what I know, of several billion dollars.‟ Referring to
the Al-Fayeds/Harrods deal, Rowland says : Lonrho expects cancellation of the entire approval, since
the circumstances were misrepresented and in addition reparations from all those who were party to it.
We believe that negligence at the Department of Trade and Office of Fair Trading has gone hand in
hand with an abuse of power.‟
Meanwhile Rowland has informed the OFT that Lonrho is in possession of „many authenticated
transcripts of talks between Mohamed Fayed and associates of the Sultan‟ but, so far, has declined to
produce evidence to support his allegations.
Rowland's $1½ billion allegation, page 29
Sunday, 3 November 1985
Rowland's $1.5 billion allegation
by MELVYN MARCKUS, City Editor
The eye-for-an-eye battle being waged between Tiny Rowland, Lonrho‟s chief executive, and
Mohamed Fayed, the Egyptian proprietor of House of Fraser, will almost certainly turn on the subject
of the powers of attorney granted by the Sultan of Brunei to the secretive habitué of 60 Park Lane.
The crucial questions which have remained unanswered — and for the most part unasked —
throughout the eight-month controversy surrounding the Al-Fayeds‟ £615 million Harrods take-over
1. What power or powers of attorney were enjoyed by Mohamed Al-Fayed before and during the
House of Fraser take-over last March? and
2. For what purpose were any such powers used?
Early last month — on 11 October — Rowland attended a meeting at the Office of Fair Trading
with Sir Gordon Borrie, the director general. Others present included Elizabeth Llewellwyn-Smith, the
deputy director general, and Lonrho directors Terry Robinson and Robert Dunlop.
Rowland promptly dropped a bombshell. He is reliably understood to have informed Borrie that the
Sultan of Brunei had granted Mohamed Al-Fayed a power of attorney for some $1.5 billion. Some of
these funds, according to Rowland, had been used to acquire House of Fraser.
Borrie asked Rowland to produce evidence to support his allegation. Rowland refused and, instead,
made some scathing remarks about the OFT‟s handling of the Al-Fayed/House of Fraser affair from
the outset. Borrie, not best pleased, abruptly brought the meeting to a close, but not before Rowland
had hinted darkly of tape-recordings of Mohamed Al-Fayed which, he told Borrie, he had considered
playing at a press conference.
It was at this brief meeting — which lasted little more than 25 minutes — which set the scene for
Rowland‟s recent spate of much-publicised correspondence to the Prime Minister and Borrie.
Mohamed Al-Fayed, for his part, has always insisted that the House of Fraser take-over was entirely
financed by the family‟s own liquid resources.
John MacArthur, of merchant bankers Kleinwort Benson, advisers to the Al-Fayeds, has constantly
endorsed this. He has proclaimed that the Al-Fayeds have a net worth of „several billion dollars‟ and,
in June, he declared that the Al-Fayeds „had neither drawn on bank borrowings nor loans from any
other party to make the purchase.‟
But what of Mohamed Al-Fayed‟s former powers of attorney? It was The Observer which, in an
article entitled : „Harrods : Tiny taunts Tebbit‟ on 2 June, revealed that „various mandates and powers
of attorney‟ granted by the Sultan of Brunei had been terminated.
Confirmation of the revocation of such „powers of attorney‟ came from Mohamed Al-Fayed, who
told The Observer : „In view of my additional responsibilities following the House of Fraser
acquisition, I have asked to be relieved of my powers of attorney. The Sultan kindly acceded to my
Way back in March, in the heat of the House of Fraser battle, MacArthur declared : „Mohamed Al-
Fayed has longstanding connections with Brunei. He knows the Sultan and the Sultan‟s father very
well and there is no doubt that he did act on behalf of the Sultan‟s purchase of the Dorchester Hotel.‟
The document, terminating Mohamed Al-Fayed‟s various mandates and powers of attorney, was
dated 25 April 1985.
Allen & Overy, one of several UK law firms acting for the Al-Fayeds, has informed The Observer
that Mohamed Al-Fayed was the recipient of two letters of authorisation — each dated 20 August,
1984 — concerning the design contracts and construction of a „super luxury yacht.‟
It is also known that Mohamed Al-Fayed was further empowered on a specific matter later that
A letter from the Sultan dated 23 August 1984, referred to in The Observer article on 10 March
entitled : „This bloody Harrods battle,‟ starts : „We wish this letter to be considered as a power of
attorney to Mr Mohamed Al-Fayed, our personal and official financial adviser, in everything to do
with the 747 acquired by the newly-formed company called Jet Aviation Corporation.‟
But Rowland‟s allegation of a $1.5 billion transfer of funds marks a new chapter in the bloodiest
corporate war ever waged in the City.
In a letter dated 11 October — the same day as the story Borrie/Rowland meeting — Miss
Llewellyn-Smith wrote to Rowland : „Although, in the course of your meeting with the Director
General, you said that you had brought with you evidence that has a direct bearing upon the existence
of a merger situation, you also indicated that you were not prepared to hand it over.‟
She added : „For the avoidance of doubt, I would like to make it clear that the Director General has,
as yet, reached no conclusion in connection with the inquiries currently being made, and that he would
welcome any evidence from you that you believe might have a bearing upon the outcome of those
inquiries and be of assistance to him…‟
In his reply, dated 16 October 1985, Rowland also referred to „the avoidance of doubt‟ and declared
that it was his belief that :
(1) In August 1984, His Majesty and Yang di-Pertuan the Sultan of Brunei granted a general
power of attorney empowering Mohamed Al-Fayed to control the investments of certain
of His Majesty‟s funds;
(2) That $1.5 billion was transferred under that authority to Al-Fayed accounts.
From this point the correspondence flew fast.
In a letter dated 18 October Miss Llewellyn-Smith made a further plea which concluded : „I would
also invite you to disclose, or let us take details of, any other information currently in your
On 23 October Rowland‟s reply starts : „There are some practical difficulties for Lonrho, in doing as
you would wish — that is, giving the Office of Fair Trading sight of, or copies of, any papers
surrounding the offer for House of Fraser by Mohamed Fayed.
„First of all, there is a legal action in progress against The Observer [which is owned by Lonrho]sic.
It is doubtful if they can be properly made available to you in these circumstances, even assuming that
we are willing.‟
Then Rowland breaks new ground. He refers to „the many authenticated transcripts of talks between
Mohamed Fayed and associates of the Sultan.‟ He also refers to „a promissory note at 9 per cent
interest for the part of the still outstanding monies owing to His Majesty and Yang di-Pertuan, the
Sultan of Brunei‟ and once again refers to a „general power of attorney between the crucial dates of
August 1984 and 25 April 1985, which put $1.5 billion (£1.2 billion) directly under Mohamed Fayed‟s
Two days earlier, on Monday 21 October, Rowland penned a letter to the Prime Minister. Once
again he refers to the power of attorney and a promissory note.
Rowland declares : „The widening speculation about the financial background to the take-over is not
likely to be contained by the official replies already offered this year. We are told that Norman Tebbit
relied upon the considered advice of Sir Gordon Borrie at the Office of Fair Trading. Last week the
Office were continuing their investigations into the Offer and Purchase and claim to have reached no
Once again Rowland refers to a promissory note. He alleges: „On 25 April 1985, the Sultan of
Brunei cancelled the Power of Attorney, and demanded return of his funds — which were no longer
intact. Part was repaid, but a promissory note was issued for $200 million, by Mohammed Fayed, the
man whom John MacArthur of Kleinwort Benson described as having “a net worth, from what I know,
(of) several billion dollars.” ‟
Last week saw the war of words — and willpower —reach a crescendo.
Rowland is now in possession of certain documents concerning Kleinwort Benson‟s submissions to
the Office of Fair Trading on behalf of the Al-Fayeds.
Of particular interest is a two-page memorandum from Kleinwort Benson to the Office of Fair
Trading marked „Strictly Confidential‟ and dated „16 November 1984.‟ Its analysis of the Al-Fayed‟s
assets is sketchy to say the least.
The paragraph concerning estates reads as follows :
(1) The 32,000 [acre] Banagown Estate and Castle at Kildary, Tain, Ross-shire, Scotland.
The estate is also involved in breeding cattle and sheep together with game and fish for
shooting and fishing. 20 employees.
(2) 25-acre farm in Oxted employing 23 people.
A request from the OFT for „further details of the financial background of the Al-Fayeds‟ on
3 December brought a two-page reply on 6 December from Kleinwort‟s MacArthur which declares :
„As you already know, they have a substantial world-wide business based on a variety of interests in
the UK, Europe and elsewhere.‟
Rowland‟s response on Tuesday was to accuse Borrie of acting „irresponsibly and improperly‟ and
to point to „your haste on behalf of the Fayeds and your vicious delays against Lonrho…‟ Rowland
describes Kleinwort‟s submission as a „ridiculous confidential two-page typewritten survey of the
assets and intentions of the Fayeds.‟ He concludes:
„My company intends to pursue a fair outcome, and to discover whether anyone, including yourself
and those above you, acted with improper motives. As long as this remains undone, the title of your
Office, which I personally think you have disgraced, remains a mockery.‟
Rowland also sent a copy of this letter to Margaret Thatcher. He declared :
„I believe that the decision to allow Mohamed Fayed to become the owner of House of Fraser will
prove to be a scandalous blot upon your Government‟s stewardship of the Department of Trade.‟