Mohamed Fayed’s casual relationship with the truth held back his business achievements

Published

1 year ago

September 1, 2023

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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.

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.

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.

UK

Ellis Cox: Mother appeals to catch son’s killer on birthday anniversary

Published

4 hours ago

January 18, 2025

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Ellis Cox: Mother appeals to catch son's killer on birthday anniversary

Fresh appeals have been made for information on what would have been the 20th birthday of Ellis Cox, who was shot dead in Liverpool last June.

A number of people have been arrested in connection with the murder at Liver Industrial Estate, but no one has been charged yet.

The 19-year-old’s family and police have paid tribute to him and called for those with information to come forward.

He was shot in the back after a confrontation between his friends and another group of up to three males on Sunday 23 June.

His mother Carolyn paid tribute in an appeal to coincide with what would have been his 20th birthday.

“He was so kind… so laid back, so calm, so mature for his age. And he was just funny. Very funny.

“He was my baby… no mum should have to bury a child. He was my life. And I don’t know what to do without him.”

Meanwhile, his aunt Julie O’Toole said he was “the sort of person I think you’d be hard pressed to find anyone to say anything negative about. He was loyal, fiercely loyal… everything was about his family”.

To pay tribute to Ellis, Liverpool City Council will be lighting up the Cunard Building and Liverpool Town Hall in orange on Saturday.

Detective Chief Inspector Steve McGrath, the senior investigating officer, spoke about the information gathered so far, six months on from Mr Cox’s murder.

“I’m satisfied that the group that he was with was probably the target… and I would say that’s got something in relation to do with localised drug dealing in that area. But Ellis had no involvement in that whatsoever,” he said.

He added that police are looking for “really significant pieces of evidence now”, including “trying to recover the firearm that was used in relation to this, looking to recover the bikes that were used by the offenders”.

Mrs Cox also appealed for people to come forward with information.

“If you know anything, don’t let us get to [his] next birthday and still know nothing.

“We need to get justice for Ellis. And we need to get the people who took him from us off the streets.”

UK

Manchester United legend Denis Law dies aged 84

Published

15 hours ago

January 17, 2025

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Manchester United legend Denis Law dies aged 84

Former Manchester United and Scotland footballer Denis Law has died, at the age of 84.

In a statement, his family said: “It is with a heavy heart that we tell you our father Denis Law has sadly passed away. He fought a tough battle, but finally, he is now at peace.

“We would like to thank everyone who contributed to his wellbeing and care, past and much more recently.

“We know how much people supported and loved him and that love was always appreciated and made the difference.”

The Aberdeen-born footballer previously announced in August 2021 that he had been diagnosed with dementia.

A prolific striker, Law scored 237 goals in 404 appearances for Manchester United, for whom he signed for a then-British record transfer fee in 1962.

He is the only man to have two statues dedicated to him at Old Trafford – one on the Stretford End concourse, the other as part of the United Trinity statue overlooking the stadium’s forecourt beside fellow great George Best and Sir Bobby Charlton.

The only Scottish player to have won the Ballon d’Or award, in 1964, he was also part of United’s triumphant campaign in the 1968 European Cup – in which they became the first English club to ever win the competition.

In a statement, the club said: “Everyone at Manchester United is mourning the loss of Denis Law, the King of the Stretford End, who has passed away, aged 84.

“He will always be celebrated as one of the club’s greatest and most beloved players.

“The ultimate goalscorer, his flair, spirit and love for the game made him the hero of a generation. Our deepest condolences go out to Denis’s family and many friends. His memory will live on forever more.”

Wayne Rooney, former United captain and the club’s all-time record goalscorer, described Law as a “legend”.

“Thoughts with all Denis’s family and friends,” he said in an online post.

Another former United captain, Gary Neville, said: “A great footballer and a great man. It’s a privilege and an honour to have spent time in your company. The King of the Stretford End.”

A tribute from the Scotland national team said Law was “a true great”.

“We will not see his likes again,” it said.

Law also played for Huddersfield Town, Manchester City, and Italian club Torino during his club career, and made 55 appearances for Scotland, scoring 30 goals for his country.

Manchester City said in a post on X: “The whole of Manchester, including everyone at City, is mourning with you. Rest in peace, Denis.”

UK

FTSE 100 closes at record high

Published

16 hours ago

January 17, 2025

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The UK’s benchmark stock index has reached another record high.

The FTSE 100 index of most valuable companies on the London Stock Exchange closed at 8,505.69, breaking the record set last May.

It had already broken its intraday high at 8532.58 on Friday afternoon, meaning it reached a high not seen before during trading hours.

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The weakened pound has boosted many of the 100 companies forming the top-flight index.

Why is this happening?

Most are not based in the UK, so a less valuable pound means their sterling-priced shares are cheaper to buy for people using other currencies, typically US dollars.

This makes the shares better value, prompting more to be bought. This greater demand has brought up the prices and the FTSE 100.

The pound has been hovering below $1.22 for much of Friday. It’s steadily fallen from being worth $1.34 in late September.

Also spurring the new record are market expectations for more interest rate cuts in 2025, something which would make borrowing cheaper and likely kickstart spending.

What is the FTSE 100?

The index is made up of many mining and international oil and gas companies, as well as household name UK banks and supermarkets.

Familiar to a UK audience are lenders such as Barclays, Natwest, HSBC and Lloyds and supermarket chains Tesco, Marks & Spencer and Sainsbury’s.

Other well-known names include Rolls-Royce, Unilever, easyJet, BT Group and Next.

FTSE stands for Financial Times Stock Exchange.

If a company’s share price drops significantly it can slip outside of the FTSE 100 and into the larger and more UK-based FTSE 250 index.

The inverse works for the FTSE 250 companies, the 101st to 250th most valuable firms on the London Stock Exchange. If their share price rises significantly they could move into the FTSE 100.

A good close for markets

It’s a good end of the week for markets, entirely reversing the rise in borrowing costs that plagued Chancellor Rachel Reeves for the past ten days.

Fears of long-lasting high borrowing costs drove speculation she would have to cut spending to meet self-imposed fiscal rules to balance the budget and bring down debt by 2030.

Long-term government borrowing had reached a high not seen since 1998 while the benchmark 10-year cost of government borrowing, as measured by 10-year gilt yields, was at levels last seen around the 2008 financial crisis.

The gilt yield is effectively the interest rate investors demand to lend money to the UK government.

Only the pound has yet to recover the losses incurred during the market turbulence. Without that dropped price, however, the FTSE 100 record may not have happened.

Also acting to reduce sterling value is the chance of more interest rates. Currencies tend to weaken when interest rates are cut.