Mohamed Fayed’s casual relationship with the truth held back his business achievements
Little has been heard from Mohamed Fayed during the last decade.
He sold Harrods to Qatar Holdings as long ago as May 2010 and his other main trophy asset in the UK, Fulham FC, was offloaded to the US businessman Shahid Khan in July 2013.
That latter deal brought down the curtain on a controversial – to say the least – career during which he had been a prominent figure in British business for nearly 30 years.
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Fayed (he added the honorific ‘al’ to his name, despite having no right to, after he arrived in the UK in the 1960s) remains best known to the general public for the relationship his late son, Dodi, enjoyed with Diana, Princess of Wales and for the corrupt payments he made to MPs to ask questions on his behalf in parliament.
Before that, though, the Egyptian tycoon had become a notorious figure in the City and in British business circles for his unorthodox approach and his somewhat casual relationship with the truth.
Many people, including some who should have known better, bought the story that this son of a primary school teacher was, in fact, the expensively educated scion of one of Egypt’s richest shipping families – although he did, in the end, accumulate a fortune the size of which was never entirely clear.
Founding his fortune
That fortune was founded on his early dealings with Adnan Khashoggi, a wealthy Saudi arms dealer, whose sister he married and later divorced.
After working for Khashoggi, his ability as a deal-maker drew him to the attention of the Sultan of Brunei, for whom he worked for a while and under whom he accumulated sufficient wealth to acquire a shipping agency.
He later sought to establish an oil production business in Haiti, posing as a Kuwaiti sheikh, before the samples he had hoped might be crude oil turned out to be molasses.
He eventually had to flee the island after falling out with its monstrous dictator ‘Papa Doc’ Duvalier.
After acting as a middleman in more deals in the Middle East, Fayed pitched up in London, again posing as an Arab sheikh and setting himself up in an apartment on Park Lane.
Many were taken in by him. He and his brother, Ali, had sufficient funds or backing by 1978 to buy the Ritz hotel in Paris for $30m.
The nastiest and dirtiest takeover battles in history
What really put him on the map though, so far as the City was concerned, was the saga which began in November 1984 and which turned into one of the nastiest and dirtiest takeover battles in history.
The mining conglomerate Lonrho, which owned a sprawling portfolio of assets across the world but primarily in Africa, had for years been trying to buy Harrods – then owned by the House of Fraser department store chain.
Its chief executive, Roland “Tiny” Rowland, had built a 29.9% stake in House of Fraser as a prelude to a takeover bid for the company – which was referred to the old Monopolies & Mergers Commission by Margaret Thatcher’s government.
Mr Rowland, who had been famously dubbed “the unacceptable face of capitalism” by the former prime minister Edward Heath, knew the referral could be tricky.
So he hit on the wheeze of “parking” the stake with the Fayed brothers.
Unfortunately for him, he was double-crossed by Mohamed who, backed by the Sultan of Brunei, used the stake to launch a £615m takeover bid of his own.
He acquired the business and, in the process, deprived Mr Rowland of a treasured asset he had been stalking for the best part of a decade.
An enraged Mr Rowland waged a campaign against him thereafter to obtain revenge on the ‘”phoney pharaoh”.
The Department of Trade & Industry investigated the takeover and, when Mr Rowland obtained a leaked copy of its report, he published it in March 1989 in a special midweek edition of The Observer, the world’s oldest Sunday newspaper, which was at the time owned by Lonrho.
The DTI report pulled no punches.
A ruined reputation
In their most damning line, the DTI inspectors said the Fayeds had “dishonestly misrepresented their origins, their wealth, their business interests and their resources to the secretary of state, the Office of Fair Trading, the press, the House of Fraser board, House of Fraser shareholders and their own advisers”.
It forever ruined Fayed’s reputation and, arguably, ensured that he was never given the British passport he craved for so many years.
Two years later, in an unprecedented move, the Bank of England forced the Fayed brothers to relinquish control of Harrods Bank after deciding they were not fit and proper people to run a deposit-taking institution.
However, despite Mr Rowland’s best efforts, Mr Fayed retained control of Harrods.
He gave up his fight in 1993 when, just before Christmas, he and Fayed publicly embraced in the Harrods food hall.
Months later, Mr Fayed floated House of Fraser on the stock market, but kept Harrods.
Harrods
Troubled time at Harrods
The first two decades of his ownership of the department store were troubled.
Profits fell and Fayed was variously accused of electronically eavesdropping on employees and of firing minority employees with no cause.
Mr Rowland also alleged that papers he had kept in a security box at Harrods had been stolen and, while the police never charged anyone, damages were ultimately paid to Mr Rowland’s widow.
By the turn of the century, the business was in a bad way, with Mr Fayed’s management style ensuring a vast turnover of top management.
Between 2000 and 2002, Harrods lost no fewer than 12 directors, while between 2000 and 2005 it got through five managing directors.
Meanwhile the store itself, in the eyes of critics, degenerated into a “vulgar Egyptian theme park”.
Fayed finally got it right when, in March 2006, he poached Michael Ward, a retailer-turned-private equity executive, from Apax to fill the vacant post of Harrods managing director.
It was a fine and shrewd appointment.
During his first year in charge, Mr Ward increased annual profits at the business by 152% and, crucially, found a way of working with the owner.
Shortly after the Qatari takeover, in 2010, Mr Ward – who stayed with Harrods under its Qatari owners and propelled it to record annual sales and profits several times since – explained to the Sunday Times: “Once trust was established he was a very good person to work with. The problem, historically, was that nobody managed to cross that barrier.”
Interestingly, while Fayed sold both Harrods and Fulham, he never relinquished control of the Paris Ritz, the trophy asset he held on to longer than any other despite the fact that, for long periods of his ownership, it was heavily loss-making.
It will be interesting to see whether his heirs choose to cash in on this most valuable of properties after his death.
The cost of having staff is going up this Sunday as the increase in employers’ national insurance kicks in.
Chancellor Rachel Reeves announced in the October budget employers will have to pay a 15% rate of national insurance contributions (NIC) on their employees from 6 April – up from 13.8%.
She also lowered the threshold at which employers pay NIC from £9,100 a year to £5,000 a year, meaning they start paying at an earlier point on staff salaries.
This is on top of the national minimum wage rising, the business relief rate for hospitality, retail and leisure reducing from 75% to 40% and the rising cost of ingredients and services.
Sky News spoke to people working in some of the industries that will be hardest hit by the rise in NIC: Nurseries, hospitality, retail, small businesses and care.
NURSERIES
Nearly all (96% of 728) nurseries surveyed by the National Day Nurseries Association (NDNA) said they will have no choice but to put up fees because of the NIC rise, leaving parents to pick up the shortfall.
The NDNA has warned nurseries could close due to the rise, with 14% saying their business is at risk, 69% reducing spending on resources and 39% considering offering fewer places with government-funded hours as 92% said they do not cover their costs.
Sarah has two children, with her youngest starting later this month, but they were just informed fees will now be £92 a day – compared with £59 at the same nursery when her eldest started five years ago.
“I’m not sure how we will afford this. Our salaries haven’t increased by 50% during this time,” she said.
“We’re stuck as there aren’t enough nursery spaces in our area, so we will have to struggle.”
Karen Richards, director of the Wolds Childcare group in Nottinghamshire, has started a petition to get the government to exempt private nurseries – the majority of providers – from the NIC changes as she said it is unfair nurseries in schools do not have to pay the NIC.
She told Sky News she will have to find about £183,000 next year to cover the increase across her five nurseries and reducing staff numbers is “not off the table” but it is more likely they will reduce the number of children they have.
Joeli Brearley, founder of Pregnant Then Screwed, said parents are yet again having to pay the price for the government’s actions. Pic: Pregnant Then Screwed
Joeli Brearley, founder of the Pregnant Then Screwed campaign group, told Sky News: “Parents are already drowning in childcare costs, and now, thanks to the national insurance hike, nurseries are passing even more fees on to families who simply can’t afford it.
“It’s the same story every time – parents pay the price while the government looks the other way. How exactly are we meant to ‘boost the economy’ when we can’t even afford to go to work?”
Purnima Tanuku, executive chair of the NDNA, said staffing costs make up about 75% of nurseries’ costs and they will have to find £2,600 more per employee to pay for the NIC rise – £47,000 for an average nursery.
“The government says it wants to offer ‘cheaper childcare’ for parents on the one hand but then with the other expects nurseries to absorb the costs of National Insurance Contributions themselves,” she told Sky News.
“High-quality early education and care gives children the best start in life and enables parents to work. The government must invest in this vital infrastructure to make sure nurseries can continue to deliver this social and economic good.”
HOSPITALITY
The hospitality industry has warned of closures, price rises, lack of growth and shorter opening hours.
Dan Brod, co-owner of The Beckford Group, a small southwest England restaurant and country pub/hotel group, said the economic situation now is “much worse” than during COVID.
The group has put plans for two more projects on hold and Mr Brod said the only option is to put up prices, but with the rising supplier costs, wages, business rates and NIC hike they will “stay still” financially.
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Dan Brod, co-owner of The Beckford Group, said the government does not value hospitality as an industry. Pic: The Beckford Group
He told Sky News: “What we’re nervous about is we’re still in the cost of living crisis and even though our places are in very wealthy areas of the country, Wiltshire, Somerset and Bath, people are feeling the situation in their pockets, people are going out less.”
Mr Brod said they are not getting rid of any staff as their business strongly depends on the quality of their hospitality so they are having to make savings elsewhere.
“I’m still optimistic, I still feel that humans need hospitality but we’re not valued as an industry and the social benefit is never taken into account by government.”
Chef/owner Aktar Islam, who runs Opheem in Birmingham, said the rise will cost him up to £120,000 more this year. Pic: Opheem
Aktar Islam, owner/chef at two Michelin-starred Opheem in Birmingham, said the NIC rise will cost him up to £120,000 more in staff costs a year and to maintain the financial position he is in now they would have to make “another million pounds”.
He got emails from eight suppliers on Thursday saying they were raising their costs, and said he will have to raise prices but is concerned about the impact on diners.
The restaurateur hires four commis chefs to train each year but will not be able to this year, or the next few.
“It’s very short-sighted of the government, you’re not going to grow the economy by taxing hospitality out of existence, these sort of businesses are the lifeblood of our economy,” he said.
“They think if a hospitality business closes another will open but people know it’s tough, why would they want to do that? It’s not going to happen.”
The chef sent hundreds of his “at home” kits to fellow chefs this week for their staff as an acknowledgement of how much of a “s*** show” the situation is – “a little hug from us”.
RETAIL
Some of the UK’s biggest retailers, including Tesco, Boots, Marks & Spencer and Next, wrote to Rachel Reeves after the budget to say the NIC hike would lead to higher consumer prices, smaller pay rises, job cuts and store closures.
The British Retail Consortium (BRC), representing more than 200 major retailers and brands, said the costs are so significant neither small or large retailers will be able to absorb them.
Andrew Bailey, the governor of the Bank of England, told the Treasury committee in November that job losses due to the NIC changes were likely to be higher than the 50,000 forecast by the Office for Budget Responsibility (OBR).
Big retailers have warned the NIC rise will lead to higher prices, job cuts and store closures. File pic: PA
Nick Stowe, chief executive of Monsoon and Accessorize, said retailers had the choice of protecting staff numbers or cancelling investment plans.
He said they were trying to protect staff numbers and would be increasing prices but they would likely have to halt plans to increase store numbers.
Helen Dickinson, head of the BRC, told Sky News the national living wage rise and NIC increase will cost businesses £5bn, adding more than 10% to the cost of hiring someone in an entry-level role.
A further tax on packaging coming in October means retailers will face £7bn in extra costs this year, she said.
“This huge cost burden will undoubtedly reduce investment in stores and jobs and is likely to lead to higher prices,” she added.
SMALL BUSINESSES
A massive 85% of 1,400 small business owners surveyed by the Federation of Small Businesses (FSB) in March reported rising costs compared with the same time last year, with 47% citing tax as the main barrier to growth – the highest level in more than a decade.
Just 8% of those businesses saw an increase in staff numbers over the last quarter, while 21% had to reduce their workforce.
Kate Rumsey, whose family has run Rumsey’s Chocolates in Wendover, Buckinghamshire and Thame, Oxfordshire, for 21 years, said the NIC rise, minimum wage increase and business relief rate reduction will push her staff costs up by 15 to 17% – £70,000 to £80,000 annually.
To offset those costs, she has had to reduce opening hours, including closing on Sundays and bank holidays in one shop for the first time ever, make one person redundant, not replace short-term staff and introduce a hiring freeze.
The soaring price of cocoa has added to her woes and she has had to increase prices by about 10% and will raise them further.
Kate Rumsey, who runs Rumsey’s Chocolates in Buckinghamshire and Oxfordshire, said they are being forced to take a short-term view to survive. Pic: Rumsey’s Chocolates
She told Sky News: “We’re very much taking more of a short-term view at the moment, it’s so seasonal in this business so I said to the team we’ll just get through Q1 then re-evaluate.
“I feel this is a bit about the survival of the fittest and many businesses won’t survive.”
Tina McKenzie, policy chair of the FSB, said the NIC rise “holds back growth” and has seen small business confidence drop to its lowest point since the first year of the pandemic.
With the “highest tax burden for 70 years”, she called on the chancellor to introduce a “raft of pro-small business measures” in the autumn budget so it can deliver on its pledge for growth.
She reminded employers they can claim the Employment Allowance, which has doubled after an FSB campaign to take the first £10,500 off an employer’s annual bill.
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National Insurance rise impacts carers
CARE
The care sector has been warning the government since the October that budget care homes will be forced to close due to the financial pressures the employers’ national insurance rise will place on them.
Care homes receive funding from councils as well as from private fees, but as local authorities feel the squeeze more and more their contributions are not keeping up with rising costs.
The industry has argued without it the NHS would be crippled.
Raj Sehgal, founding director of ArmsCare, a family-run group of six care homes in Norfolk, said the NIC increase means a £360,000 annual impact on the group’s £3.6m payroll.
In an attempt to offset those costs, the group is scrapping staff bonuses and freezing management salaries.
It is also considering reducing day hours, where there are more staff on, so the fewer numbers of night staff work longer hours and with no paid break.
Raj Sehgal said his family-owned group of care homes will need £360,000 extra this year for the NIC hike
Mr Sehgal said: “But what that does do unfortunately, is impact the quality you’re going to be able to provide, at a time when we need to be improving quality, but something has to give.
“The government just doesn’t seem to understand that the funding needs to be there. You cannot keep enforcing higher costs on businesses and not be able to fund those without actually finding the money from somewhere.”
He said the issue is exacerbated by the fact local authority funding, despite increasing to 5%, will not cover the 10% rise.
“It’s going to be a really, really tough ride. And we are going to see a number of providers close their doors,” he warned.
Nadra Ahmed, executive co-chair of the National Care Association, said those who receive, or are waiting to access, care as well as staff will feel the impact the hardest.
“As providers see further shortfalls in the commissioning of care services, they will start to limit what they can do to ensure their viability or, as a last resort exit the market,” she said.
“This is very short-sighted, with serious consequences, which alludes to the understanding of this government.”
Government decided to ‘wipe the slate clean’
A Treasury spokesperson told Sky News the government is “pro-business” but has “taken the difficult but necessary decisions to wipe the slate clean and properly fund our public services after years of declines”.
“Our budget choices have already delivered an NHS with falling waiting lists, a £3.7bn rescue package for social care, and vital protection for Britain’s small businesses,” they said.
“We’re making tough choices today to secure a better tomorrow through our Plan for Change. By investing in economic growth and early years education while capping corporation tax, we’re putting more money in working people’s pockets and giving every child the best start in life.”
Russell Brand has been charged with rape and two counts of sexual assault between 1999 and 2005.
The Metropolitan Police say the 50-year-old comedian, actor and author has also been charged with one count of oral rape and one count of indecent assault.
The charges relate to four women.
He is due to appear at Westminster Magistrates’ Court on Friday 2 May.
Police have said Brand is accused of raping a woman in the Bournemouth area in 1999 and indecently assaulting a woman in the Westminster area of London in 2001.
He is also accused of orally raping and sexually assaulting a woman in Westminster in 2004.
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Ashna Hurynag discusses Russell Brand’s charges
The fourth charge alleges that a woman was sexually assaulted in Westminster between 2004 and 2005.
Police began investigating Brand, from Oxfordshire, in September 2023 after receiving a number of allegations.
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The comedian has denied the accusations and said he has “never engaged in non-consensual activity”.
He added in a video on X: “Of course, I am now going to have the opportunity to defend these charges in court, and I’m incredibly grateful for that.”
Metropolitan Police Detective Superintendent Andy Furphy, who is leading the investigation, said: “The women who have made reports continue to receive support from specially trained officers.
“The Met’s investigation remains open and detectives ask anyone who has been affected by this case, or anyone who has any information, to come forward and speak with police.”
Search teams are looking for a 16-year-old boy who went missing after “getting into difficulty” in a lake in southeast London.
Officers and paramedics were called shortly after 3pm on Friday to Beckenham Place Park in Lewisham.
The Metropolitan Police said the boy’s family has been told and are being supported by specialist officers.
In a statement, officers added that emergency services are “co-ordinating a search” and “the park has been evacuated”.
Beckenham Place Park, which borders the London borough of Bromley, covers around 240 acres, according to the park’s website.
Emergency teams were called to Beckenham Place Park on Friday afternoon
The lake is described as 285 metres long, reaching depths of up to 3.5 metres. It is designed as a swimming lake for open-water swimming and paddle boarding.
A London Ambulance Service spokesperson said: “We were called at 3.02pm this afternoon to reports of a person in the water.
“We sent resources to the scene, including an ambulance crew, an incident response officer and members of our hazardous area response team.
“We are still at the scene working alongside our emergency services partners.”
Emergency teams have not explained how the boy entered the water, or whether he was accompanied by others.
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