Thatcher calls crisis meeting on Harrods ownership row

Press, 3 April 1989, Page 10

Thatcher calls crisis meeting on Harrods ownership row

By

TONY VERDON

The British Prime Minister, Mrs Margaret Thatcher, called a crisis meeting at 10 Downing Street last evening to discuss the row surrounding the ownership of Harrods.

She summoned the Secretary of State for Trade, Lord Young, to the meeting as the Government found itself caught in the crossfire of the bitter fight over control of the House of Fraser store group.

The Government has been embarrassed by the leaking of a Department of Trade and Industry inspector’s report into the takeover of the store group by the Egyptian Fayed brothers, in 1985.

Last week Lord Young was forced to get an injunction to stop Mr Tiny Rowlands’ “Observer” newspaper distributing a special edition running lengthy extracts from the report. But thousands of copies of the newspaper reached the streets of London, and yesterday it looked as though the Government was heading for a repeat of the embarrassment it suffered over publication of the book “Spycatcher.”

Its publication in Australia

and the United States quickly resulted in copies finding their way to Britain, while the British Government tried in vain to prevent its publication. Pirate copies of the Department of Trade and Industry report on the House of Fraser buy by the Fayeds were reportedly being printed in Switzerland, West Germany and the United States over the weekend.

Mr Rowland contends his conglomerate Lonrho was cheated of a chance of winning control of the House of Fraser group when the Fayed brothers won control.

The group is made up of dozens of major department stores throughout Britain, the most prestigious of which is Harrods in Knightsbridge. Mr Rowland has fought hard to prove the Egyptian brothers may have misled authorities about the extent of their financial backing when they won approval to buy the stores. It is understood the Department of Trade and Industry inspector’s report also calls into question assurances given by the Fayeds at the time of the takeover.

Lord Young has refused to release the report, saying it has been referred to the Serious Fraud Office for consideration, and publication could jeopardise possible court proceedings.

But the British Government has clearly been embarrassed by the length of time the Serious Fraud Office has taken to act on the matter.

The row blew up again last week while Mrs. Thatcher was touring several States in southern Africa. But she called Lord Young and the Solicitor General, Sir Nicholas Lyell, to the Downing Street meeting within hours of arriving back in London. The “Sunday Times” said yesterday the meeting reflected a growing concern in Whitehall at the manner in which the battle for Harrods was becoming an embarrassment for the Government.

Although the “Observer” has been criticised by some newspapers for releasing the document, most Sunday papers yesterday blamed the Government for failing to act on the issue earlier. -

The “Observer” said Lord Young was believed to be reconsidering whether he should

change his mind and release the report. He was coming under severe pressure from both Conservative backbenchers and Labour Opposition M.P.s to do so.

Government backbenchers believe Lord Young should release the report, clearing the way for the two opposing companies "to fight their battle to the death if they want to.” Mr Rowland wants the deal referred to the Monopolies Commission, which would have the power to order the Fayed brothers to sell the company if it decided this was justified.

He said Lonrho had no association with those involved in printing pirate copies of the departmental report overseas. But Mohamed Al-Fayed, the oldest of the three brothers, told the “Sunday Times,” “a maverick overseas printing of the report would pose serious questions about Lonrho, which has admitted it did not return all the copies to the D.T.1.”

The newspaper said a massive hunt was under way for the person who leaked the report to Lonrho, whose chairman is Sir Edward du Cann, a former Conservative Party chairman.