Shouting in the Street

by Donald Trelford

  Had I chosen not to appoint Marckus, Tiny would certainly have been disappointed, to put it mildly, but he would have accepted my decision, especially if I had been able to make a strong argument in favour of a candidate of at least equal quality and experience. In reality, however, this was an area of journalism I knew next to nothing about and none of my senior colleagues could come up with a better idea. Marckus seemed to be as good a City editor as we were likely to find – and he went on to justify his appointment with some cracking business scoops that had nothing to do with Lonrho, as well as some talented additions to his staff.

  The Harrods story, which set Rowland and Fayed on a collision course that resulted in one of the world’s most poisonous feuds, went back to 1981, when the Monopolies and Mergers Commission made two rulings affecting Lonrho: one approved the company’s purchase of The Observer, the other prevented it bidding for House of Fraser, which owned Harrods and which Rowland had been pursuing since 1977.

  Rowland was incandescent about the verdict on Harrods, but even more so at a ruling by the Secretary for Trade and Industry, John Biffen, that Lonrho must give undertakings not to buy more shares. It was then that he began to sell some of his Fraser holdings to Fayed, whom he had met when the Egyptian was briefly a Lonrho director.

  Tiny once explained to me and to Marckus why he had chosen to ‘warehouse’ the Lonrho shares with Fayed in what he regarded as purely a holding operation. ‘I look at you two,’ he said, eyeing our manifestly non-Savile Row suits, ‘and I can work out how much you are worth. I know your salaries, your houses and I can guess about your mortgages. The same was true of Fayed. I knew that Tootsie could never afford to purchase the whole of House of Fraser.’

  And yet, of course, he famously did, in early 1985, in one of the City’s greatest ‘stings’. Rowland was certainly motivated in his vendetta against Fayed by outrage at having been conned. But he was also convinced that his shareholders had been cheated. He believed Fayed had used a power of attorney he held for the Sultan of Brunei, then the world’s richest man, to fund the purchase.

  Furthermore, that he had lied to the government about the sources of his wealth, supported by lawyers and banks who took his word on trust without checking, that the government had failed to investigate Fayed’s credentials and approved the sale without a reference to the Monopolies Commission (while Lonrho had faced three inquiries), and that the Trade Secretary, by then Norman Tebbit, had prevented Lonrho from bidding while the Fayed deal went through.

  Between 1985 and 1987, Rowland led an extraordinary worldwide investigation into Fayed and his acquisition of Harrods. He employed several firms of accountants and solicitors, private detectives and freelance journalists in an operation, said to cost many millions of pounds, that was way beyond the scope of any newspaper inquiry. Illicit bugging devices were used and some of the money was spent on bribes to officials to unearth incriminating documents in Egypt, Haiti, Dubai, Brunei, France and Switzerland, allegedly proving fraudulent dealings by Fayed and showing his humble origins and limited net worth.

  It was this incendiary material that Rowland placed at The Observer’s disposal. There were some editorial doubts about becoming involved in our owner’s feud. I consulted Marckus and assured him of my backing if, as City editor, he didn’t want to publish anything. He took the view, which I shared, that if a major British institution had been secured by fraud, and the authorities had been negligent in their regulatory duties, it was a matter of genuine public interest. We determined, however, that every line should be double-checked and not accepted simply on Lonrho’s say-so. Observer business journalists travelled the world in pursuit of the facts – a sentence that could not have been written before Lonrho provided the funds to make it possible.

  As it happened, on the day The Observer had to decide whether or not to publish the first instalment of what was to become an all-consuming campaign, I was away on a long-arranged holiday in Egypt, in the Valley of the Kings and on to Luxor and Aswan, oblivious of the drama being played out in the office about a modern-day Egyptian. Marckus told Anthony Howard, who was standing in as editor, that he wanted to proceed with the first of the anti-Fayed blockbusters.

  It was Howard who made the historic decision to go ahead with The Observer’s Harrods campaign. It is worth remembering this when taking account of Howard’s later claim that he had always opposed what he called Rowland’s use of The Observer to pursue his company’s vendetta. This is not to say that I would have reached a different decision.

  Predictably, writs from Fayed soon poured in. I was shocked to learn from these that our own lawyers, Herbert Smith, had chosen to switch to the other side. Other newspapers, which had been supplied by Lonrho with much of the same material, did not dare to touch it for legal reasons, but were quick to follow up when we led the way. This was another reason that persuaded me to publish the material; The Observer was in effect indemnified against legal risks by our owner, which gave us a special responsibility denied to other papers.

  We were campaigning for an inquiry into the takeover, something the government was reluctant to concede in case it opened a can of worms. Eventually, however, it launched an inquiry by Department of Trade inspectors, to which we all gave evidence. Their report was delivered in July 1988, but the DTI declined to publish it, on the unconvincing grounds that they didn’t want to interfere with police inquiries into possible criminal charges that might arise from it. Eventually, after ten months of stubborn road-blocking, Tiny Rowland got hold of a copy. How he managed this I never discovered, but assumed that some policeman or civil servant would be sunning himself in the Bahamas on the illicit finder’s fee.

  Tiny rang me on Good Friday 1989 to say he had a copy of the report and asked if I would go to Hedsor to read it. It was a sensational document, justifying almost every charge The Observer had laid against the Fayed brothers. ‘We are satisfied’, it stated, ‘that the image they created between November 1984 and March 1985 of their wealthy Egyptian ancestors was completely bogus.’ The report concluded that Fayed could not have found the £615 million asking price for Harrods from his own resources. It fell short of saying it was the Sultan of Brunei’s money, for lack of definite proof.

  For The Observer, this was total vindication. The inspectors contrasted our reporting with the ‘lies’ promoted by Fayed’s PR spin machine and accepted by other papers. The last line of the report read: ‘Lies became the truth and the truth became a lie.’ We were facing three impending libel actions, so it was vital for us that the report should see the light of day. It was too late to publish it in detail in that Sunday’s small Easter edition, so I suggested holding it until the following week. Rowland said we should meet at his London house in Chester Square on the Tuesday with the Lonrho board.

  We immediately hit a brick wall. Sir Edward du Cann, the Lonrho chairman, insisted that the company’s shareholders were entitled to know first about the report and he proposed to tell them at the annual meeting two days later. I pointed out that the government would then take out an injunction and prevent The Observer or any other paper using the material. We were snookered.

  Eventually, the idea came up of a special edition of the newspaper to be published on Thursday morning, ahead of the AGM. I suggested it and Nick Morrell, the paper’s managing director, worked out how to do it. It wasn’t Lonrho’s idea. This would at least put the inspectors’ findings into the public arena, making them available for the paper’s libel defence, and would hopefully pressure the government into releasing the report.

  We set up a special unit within the paper to produce the sixteen-page issue, headlined ‘The Phoney Pharaoh’. It was meant to be secret, but few secrets escape journalists in their own office and the NUJ chapel called a meeting. After I addressed them, the journalists voted overwhelmingly in favour of publishing the special edition.

  I had no doubt that we were doing the right thing. The government had blundered and, by publishing the DTI inspectors’ damning
conclusions, we were ending the official cover-up and providing our lawyers with ammunition to beat off Fayed’s legal assault on the paper. As with the Matabeleland story five years before, this was ‘a story that had to be published’. None of my senior staff, including Tony Howard, said a word against publishing the special edition, though Tony suggested some changes to my introduction.

  The special edition was given away free from 7 a.m. at news vendors’ sites around London (the vendors got 10p a copy for their pains) and was soon being quoted on the radio and television. When du Cann stood up in the Barbican to quote the report to his assembled shareholders, lawyers representing the Department of Trade stepped forward with an injunction and ordered all copies of the special report to be handed over or pulped.

  The damage, however, had been done. The papers on Friday morning hailed The Observer’s scoop. One or two, including David Montgomery, then editing the News of the World, rang me up to congratulate me; Tom Bower’s claim that I was immediately reviled for publishing the special edition was simply untrue. I don’t think a single newspaper criticised me at the time. They all saw that we had an important scoop. It was only later that Fleet Street’s ‘dog-eat-dog’ instincts took over and I was regularly accused by rival papers of using The Observer to serve my owner’s commercial interests.

  Lord Goodman rang to offer legal support if I needed it. He added: ‘I won’t congratulate you, because what you have done is illegal.’ It must have been around this time that he said of me (as quoted in the autobiography of Robin Lustig, my former news editor): ‘Donald Trelford has a remarkable capacity for staying upright in a shipwreck.’

  The report was eventually published officially in 1990, following heated demands by MPs and a declaration by Lord Justice Dillon that it was in the public interest for people in financial circles to know whether or not the owners of Harrods were ‘fraudulent rogues’. Anyone who doubts the validity of The Observer’s reporting of the Fayed affair need only read the DTI inspectors’ report.

  Looking back, I think we were unlucky with our timing in two ways. One was the accident of the Lonrho AGM falling in the same week as Tiny procured the report, forcing us to produce the midweek edition to forestall a legal ban on its publication. The other was the Maxwell effect. Multimillionaire owners of newspapers were in disrepute at that time: Murdoch, Maxwell, Rowland – they all seemed to be tarred with the same brush. It was only when it came under the wing of The Guardian in 1993 that The Observer shook off that tainted label.

  I remember meeting Roy Jenkins at a book launch around that time. He asked me: ‘Do you think the Fayed business has damaged The Observer’s reputation? Has it damaged yours? And do you regret it?’ I answered yes to the first two questions and no to the third, because I felt I had no alternative but to publish an important story when the facts were known to us. That remains my view.

  When Fayed eventually sold Harrods to the Qatari royal family in 2010, some of the reporting amused me. After twenty-five years, despite an official report condemning him and revealing the lies he had told about himself, the media still accepted Fayed at face value. He was not, for example, entitled to the aristocratic prefix ‘al-’ Fayed, being the son of an impoverished schoolteacher, though he still appears in reference books as al-Fayed, as if the DTI report had never existed.

  I feel the same about those who still, three decades on, criticise me and The Observer for running the anti-Fayed campaign. I want to say: just read the DTI report and you will see that we were right in nearly every respect. As the final line of the report said: ‘Lies became the truth and the truth became a lie.’

  • • •

  In the summer of 1997, when reports came out about Princess Diana’s affair with Fayed’s son Dodi, Tiny rang me at home – something he had never done since we parted company four years before. He was very disturbed and unusually emotional. It was a year before he died.

  You know people in authority, Donald, more than I do. They will listen to you. Please warn them that this affair between Princess Diana and Dodi Fayed will end badly. It is bound to. If they stay at the Ritz together, or on his boat, Tootsie will have them filmed in bed together. Believe me, I know him. He used to boast to me about doing things like that. But it’s more than just that. Something terrible will happen. I know it will. Please, please warn them that it will end in disaster.

  CHAPTER 12

  EDWARD

  One afternoon I was summoned to Cheapside, where I found the directors of Lonrho waiting for me, all seated round the boardroom table. Tiny Rowland was present, but he was keeping quiet. This was Sir Edward du Cann’s show. ‘Donald,’ he said in his silky way, ‘the Lonrho board are disturbed by The Observer’s figures and would like you to take some decisive action to correct them.’

  ‘What do you have in mind?’ I asked.

  ‘Well,’ said Sir Edward, looking round for support. When none of the directors offered any comments, he changed tack and said: ‘Donald, we’re not concerned about you. You are a good editor and we like you. It’s Tony Howard we’re worried about. Did you know’, he went on, ‘that he’s a socialist?’ – pronouncing the word with the kind of distaste people might show about the word ‘paedophile’.

  ‘Do you think you could find a way to get rid of him?’ There were murmurs of assent around the table.

  ‘If all you want is to get rid of Tony Howard,’ I said, ‘that’s easy.’

  I sensed the relief all round.

  ‘Yes,’ I went on, ‘all you have to do to get rid of Tony Howard is to get rid of me first.’ I swept up my papers and left the room.

  Tiny caught up with me at the lift and said: ‘This is nothing to do with me, you know. But if the paper loses money, I have to let them have their say.’ He grinned at me, as if to say: ‘Take no notice.’

  • • •

  I recall a journey to India with Sir Edward and Tiny on the company plane. As soon as we were seated and before the steward had come round with the drinks, the chairman announced: ‘I had lunch the other day with Cecil Parkinson. He was asking about you, Tiny.’ Rowland went ominously silent for a few moments, then exploded.

  ‘So you entertained to lunch the man who, as Secretary for Trade, ordered a malicious inquiry into some of our share dealings that seriously delayed Lonrho’s bid for the House of Fraser?! And I expect you did this at the company’s expense?!’ He sat there fuming with rage and curtly refused a drink when it was offered.

  Sir Edward Dillon Lott du Cann sank in his chair and looked several years older. It was a Sunday evening and we had a long journey ahead. He was clearly a man who was used to a whisky and soda at that time of day. He desperately needed one now. But he couldn’t have one unless I ordered a drink first, obviously unable to sit there alone sipping whisky after such an angry blast from his boss. I ordered a gin and tonic, not because his eyes were pleading with me, but because I wanted one.

  • • •

  Simon Hoggart used to tell a story, doubtless apocryphal, about a constituent in the lobby of the House of Commons who asked du Cann for the time. He is said to have put his arm round her shoulder and said: ‘Tell me, my dear, what time would you like it to be?’ I prefer Alan Watkins’s description: ‘Talking to Sir Edward du Cann’, he said, was ‘like descending a staircase in the dark and missing the final step. You are not hurt but you are mildly disconcerted.’

  People have often wondered why Sir Edward was constantly being chased for unpaid bills and appeared to be permanently on the edge of bankruptcy. Lonrho paid him an extravagant salary as chairman and provided him with a vintage Rolls-Royce and driver, after a long career in Parliament and as a director of financial companies in the City. He wasn’t a known gambler, so how could he have allowed his finances to have got into such a mess?

  By 1991, he was so deeply in trouble, facing bankruptcy and possible criminal charges, that he had to resign as Lonrho’s chairman. He had been deputy chairman of a company called Homes Assured, which provided lo
ans for council house tenants to buy their properties. When the company collapsed, owing £6 million, the DTI sought to have him disqualified as a company director and he soon had to declare himself bankrupt.

  The Lonrho board met to consider the situation this created for the company. Tiny was sympathetic to Sir Edward and came up with a bizarre proposal to help save him. He suggested that du Cann should submit himself to an examination by a doctor at the London Clinic, who would pronounce him temporarily out of his mind. Tiny offered to provide a doctor who would say this. Du Cann was summoned to the meeting and told to report to the London Clinic on Saturday morning.

  He seemed remarkably unfazed by the proposal, then hesitated and said: ‘Tiny, would you mind awfully if I went into the clinic on Monday?’

  ‘Why?’ asked Tiny.

  ‘Because I’m due to open the Taunton Flower Show on Saturday.’

  • • •

  It seems incredible that du Cann, who had been described as ‘incompetent’ by a Department of Trade Inspectors’ report into Keyser Ullman in 1976, ever became chairman of a FTSE 100 company. It was even more remarkable that he was seen as a serious right-wing challenger to Margaret Thatcher as leader of the Conservative Party around that time.

  He was certainly a brilliant chairman of meetings, as he showed for twelve years on the backbench 1922 Committee and as chairman of the Public Accounts Committee. Rowland valued his ability to use his silky tones to pacify the unruly small shareholders at Lonrho’s lively annual meetings. Tiny said he first spotted this quality in du Cann by hearing him on the BBC’s Any Questions? programme. I suspect it also suited him to have such an eminent public figure financially dependent upon him.

  I remember once going to see John Selwyn Gummer (now Lord Deben) when he was chairman of the Conservative Party. We had read English together at the same Cambridge college. I was asking for some help in a dispute with Lonrho. He looked doubtful, obviously thinking that The Observer was hardly a Tory sort of paper. Then I mentioned that Sir Edward du Cann was the Lonrho chairman. On hearing this, his attitude changed completely and he declared: ‘If du Cann is your enemy, we’re on your side.’