Harrods’ Buyers Lied Repeatedly, Britain Reports

The Al Fayed brothers lied during their successful 1985 takeover of Harrods’ owner, House of Fraser PLC, the government said today.

“They repeatedly lied to us about their family background, their early business life and their wealth,” according to a 752-page report by the Department of Trade and Industry.

The government released the previously withheld report after the Serious Fraud Office and the director of public prosecutions decided that they would not pursue a criminal prosecution stemming from the $1-billion takeover.

The report said documents produced by the Al Fayeds as evidence for the trade department’s investigation, including their birth certificates, were false and they knew they were false.

The Al Fayeds denied that they misled anyone. In a statement issued today they said they bought House of Fraser with their own cash.

The government’s decision not to prosecute was a major setback for Roland (Tiny) Rowland, the Lonrho PLC chairman who was a rival bidder for the famous Harrods department store and its parent company.

Rowland has waged a long, expensive and very public campaign to have the takeover reversed, repeatedly alleging that the Al Fayeds misrepresented their background and wealth to win Harrods.

The report said it is likely that the Egyptian-born brothers used their association with the Sultan of Brunei to raise funds toward the purchase of the department store chain.

“We are of the very clear opinion that none of the activities of the Al Fayeds of which we have been told generated sufficient cash for the Al Fayeds to have been in a position to acquire House of Fraser, or any substantial part of it, with their own funds,” trade department inspectors Hugh Aldous and Sir Henry Brooke said in their report.

The Al Fayeds denied that anyone else was involved.

“You would think . . . that if there was some mystery figure behind the scenes who was the real beneficial owner of House of Fraser, he or she might by now have shown himself or herself, or hinted that he or she was the proud owner of Europe’s biggest department store group and proprietor of its most celebrated and prestigious component--Harrods itself,” the Al Fayeds said.

The report said the misleading information was given greater credibility by officials because it was repeated by the brothers’ reputable financial advisers, who took what their clients said at face value.