The Guardian, Fayed and the cash for questions affair 9 January 2006; revised 17 Jan/24 February
Not only was the letter carried in the print edition of the newspaper but it was also featured as one of ‘Today's picks’ on the Guardian website. Its flavour is conveyed well by its opening:
And so the letter goes on for thirteen progressively more vitriolic paragraphs, most of which are longer than the ones quoted here. During the course of it Alexander Chancellor, who writes a regular column for the Guardian Weekend magazine, is described not only as ‘an odious creep’ and ‘a disease on the face of the Guardian’ (see above), but also as a ‘fool’, a ‘jackal’, a ‘morally bankrupt swine’, ‘an establishment toady’, ‘a middle class racist’, ‘poisonous’, ‘the cringing [former] lackey of Conrad Black’, ‘double-dealing’, sleazy, and the propagator of ‘slimy establishment propaganda’. The letter ends by suggesting that, if Chancellor persists in his ‘axe-grinding’ the editor might wish to dispense with his services: ‘Though, having failed at so many jobs, it is difficult to imagine upon whom he might next inflict himself.’
Never before, one may speculate, has any national newspaper (or any newspaper anywhere) published such a vicious and abusive attack on one of its own columnists.
Quite why it decided to do this was not explained. Perhaps the editor took the view that since the letter, on its surface, does far more damage to Fayed’s own reputation than it does to the Guardian’s, it would be as well to publish it so that readers could be treated to the spectacle of Fayed dying by his own sword in the very act of seeking to inflict hurt on others. Perhaps Alexander Chancellor happily agreed to sit in the stocks while Fayed hurled his rotten eggs of abuse at him because to be insulted so grossly by such an artist in defamation might be thought to be a kind of compliment.
Many readers of the Guardian may share the view posted on one weblog that Fayed’s letter was ‘hilarious’ and it does seem likely that one of the Guardian’s motives in publishing it was to attempt to used Fayed’s own words in an attempt to subject him to mockery or even humiliation. If you want to attack somebody and distance yourself from them without fearing unpleasant reprisals, what better way could there be than to make public an absurdly vindictive letter they have sent you? If it is by their own words that they are subjected to ridicule they will hardly be in a position to complain.
But Mohamed Fayed is not a figure of fun or a fairground freak, and portraying him as though he was is misleading. It may also be dangerous. For it runs the risk of obscuring the very real threat that Fayed has posed, and continues to pose, to the integrity of British public life.
The letter which the Guardian published makes it reasonably clear that Fayed can be, when he chooses, exceptionally vindictive and unpleasant. In that he refers, without explanation or any attempt at justification, to the time when ‘Diana, Princess of Wales, and my beloved son, Dodi Fayed, were murdered’ it is also reasonably clear that he does not always have a firm grasp on reality.
Given all this, and given the facts about Fayed which are already in the public domain, it might be thought that what the Guardian owes its readers is not an ironic gesture at Fayed’s expense but an explanation of its past conduct in relation to him.
In this respect there is one sentence in Fayed’s letter which merits consideration by anyone who values the ideal of democracy and the vigilant free press which is supposed to go with it. ‘You will remember,’ Fayed writes to the editor of the Guardian, ‘that I helped defeat the last Tory government.’
Fayed is not generally known for speaking the truth (see below). It must be said though that what he writes here comes rather closer to the truth than most of the claims he makes. For the issue which dominated the months leading up to the 1997 election, when Labour won its massive majority, was that of Tory corruption or ‘sleaze’. And the central allegation in the greatest political scandal of the decade, which rapidly became the hanging offence for the entire Conservative party, was the claim that Neil Hamilton, MP for Tatton in Cheshire, had, while a backbench MP, accepted many thousands of pounds in cash in brown envelopes in return for asking parliamentary questions.
It was this allegation, always denied by Hamilton, which would eventually prompt former BBC news reporter Martin Bell to put on his white suit and fight the Tatton constituency at the 1997 election as an independent ‘anti-sleaze’ candidate. The angry contest between Hamilton and Bell, whose campaign was supplemented by the efforts of Labour and Liberal Democrat party workers, and who was at one point briefed by Labour spin doctor Alasdair Campbell, seemed at times to dominate media coverage of the entire election. When Bell overturned a Conservative majority of almost 16,000 to win the seat by 11,000 votes, he became the first independent MP to be elected to Westminster for 55 years. Perhaps more importantly still, the massive shift of votes away from the Conservatives which took place in Tatton was reflected in the country as a whole and Labour was returned to power with a spectacular majority of 179 votes.
There can be little doubt that Labour, freshly invigorated by the leadership of Tony Blair, would have won the election in any case. But there can also be little doubt that the anti-sleaze campaign, which ultimately hinged on Fayed’s stories about cash payments and brown envelopes, was the single largest factor in bringing about the size of their majority..
Fayed’s claim that he ‘helped defeat the last Tory government’ is in this respect accurate. But, as he acknowledges in his letter, he was able to play this role for one reason and one reason only. This was because the Guardian had entered into an extraordinary alliance with him:
The reason why the alliance which the Guardian chose to form with Fayed is so extraordinary has been obscured both by the passing of time and by the change in Mohamed Fayed’s fortunes. The Fayed we know today is not the Fayed who appeared in the Department of Trade and Industry’s report into the acquisition of Harrods in 1990. He has been all but rehabilitated in British society – partly because of the credit (in the literal sense of the word) given to him by the Guardian throughout the cash-for-questions affair, partly because of lavish donations to charities and Royal causes, and partly because of his subsequent role as the grieving would-be father-in-law of the ‘people’s princess’.
To understand what was truly remarkable about the Guardian’s partnership with Mohamed Fayed we need to recall exactly what the DTI inspectors said about Fayed and his brothers back in 1990. The DTI inquiry had come about as a direct result of the remarkable acquisitions which Fayed had made in Europe since, after working for Adnan Kashoggi, he had become a financial adviser to the richest man in the world, the Sultan of Brunei. Using funds whose origin he has never been able to explain, Fayed acquired the Ritz Hotel group in Paris in 1985.
By this point in his career, however, Fayed was on the verge of making another even more significant acquisition – that of the House of Fraser retail group, which owned the Harrods store in London’s Knightsbridge.
The saga of Fayed’s improbable acquisition of one of the most famous retail stores in the world grew out of some dealings he had with the multi-national conglomerate Lonrho during the mid 1970s. Not long before this, Lonhro, which was headed by the buccaneering capitalist Roland ‘Tiny’ Rowland, came under serious attack from the then Conservative government for its supposedly unscrupulous dealings in Africa. This eventually led prime minister Edward Heath to pronounce his famous verdict on the company when, in 1973, he called it ‘the unacceptable face of capitalism’.
Heath’s verdict was followed three years later by a Department of Trade and Industry investigation. The findings of this investigation were so damaging that a police fraud squad was called in to investigate allegations of dishonesty and UN sanctions-busting. This left Rowland with a legacy of bitterness towards the Conservative government and he used his ownership of the Observer which he acquired in 1981 to launch a number of damaging campaigns against the party – and especially against Heath’s successor as prime minister, Margaret Thatcher.
Throughout this period, however, Rowland was driven by a fierce ambition to gain control of the House of Fraser – and with it Harrods, in which he had already acquired a 29.9% shareholding. The Conservatives for their part, heeding the findings of the DTI investigation into Lonrho, did their utmost to prevent this happening
At this point, however, Rowland was informally advised by an official that it would be a good idea to temporarily divest himself of his Harrods shareholding. If he did this, he was told, it might well be that the DTI would lift its embargo against Lonrho and he could then return to the attack.
By now Mohamed Fayed was a member of the Lonrho board and Rowland came to the conclusion that he was the ideal person to act as steward to his shareholding until such time as the embargo was lifted. He therefore sold the shareholding to Fayed for £138 million. He did this on the understanding that Fayed would sell the shares back to him when the time came, and in the belief that the Egyptian businessman was not wealthy enough to use the holding in an attempt to acquire Harrods himself. In January 1985 Mohamed Fayed and his brother Ali took the seats on House of Fraser board which had been vacated by Rowland and his chairman, Sir Duncan Sandys.
Fayed, however, appears to have had no intention of keeping his agreement. He once said that ever since the age of eleven he had dreamed of being like the white-uniformed English officers he watched on the ships passing the quayside in Alexandria. Believing that the acquisition of Harrods would be a step towards becoming a member of the English establishment, he resolved to use the trust Rowland had placed in him to help realise his dream. Almost immediately he started shifting huge amounts of money (of unknown provenance) from a Swiss bank account. By 11 March, a mere ten weeks after acquiring Rowland’s holding, Fayed’s merchant bankers, Kleinwort Benson, announced that the Fayed brothers’ offer of £4 a share – a total of £615 million – had been accepted by more than 50% of House of Fraser shareholders.
Rowland appears to have seen Fayed’s breach of trust as an act of theft and his rage against the Conservative party was now transferred to Fayed. He immediately ordered a team of Observer financial journalists to dig into Fayed’s background and attempt to trace the source of his wealth. Their conclusion was that Fayed had probably stolen the vast proportion of the money he used to buy Harrods from then Sultan of Brunei during a period when he had been given powers of attorney by his former employer.
Rowland then began to exert intense pressure on his erstwhile enemy, Margaret Thatcher’s government, to set up a new DTI investigation to inquire into Fayed and his acquisition of Harrods. Rowland’s campaign eventually succeeded and, in April 1987, Paul Channon, Secrretary of State for Trade and Industry, appointed two independent inspectors to examine in detail Fayed’s acquisition of the House of Fraser. The two inspectors, Hugh Aldous, a chartered accountant, and barrister Phillip Heslop QC, who was later replaced by Henry Brooke QC, conducted one of the most extensive global investigations ever undertaken by the British government. The investigation took an entire year to complete and cost £1.5 million.
When the report was presented to Lord Young, the Secretary of State for Trade and Industry in 1988, he decided that its conclusions were so grave that publication should be delayed in order that the draft report could be examined by the Serious Fraud Office. When in March 1989 the report had still not appeared Rowland managed to acquire a leaked copy and, in order to pressurise the government into publication, he produced a special midweek edition of the Observer containing choice extracts from it.
It was not until a year later, however, on 7 March 1990, that it was finally published. The two DTI inspectors concluded that the money which had been used to buy Harrods had almost certainly been taken from the Sultan of Brunel’s vast wealth without his knowledge. They also describe how Fayed had stolen $100,000 from the Port au Prince Harbour Board in Haiti, how he had robbed his former brother-in-law, Adnan Kashoggi, and how he had systematically set out to destroy the good name of anyone who crossed him.
The 750-page report documented deceit of a kind and on a scale which had perhaps never before been exposed by a government inquiry:
The excerpt below is the final paragraph from the DTI report:
The DTI report on the Fayeds’ acquisition of Harrods was unprecedented in the severity and the explicitness the criticisms it made of the conduct of Mohamed Fayed and his close associates. This was recognised at the time by the entire British press. The Guardian was no exception. In view of the manner in which the Guardian’s relationship with Fayed subsequently developed, it is instructive to recall how it reacted to the publication of the report. On 8 March 1990, that day after it was published, the Guardian ran a two-page spread under the title ‘Lies, lies and more lies: the mountain that came from Mohamed’. The report, said the headline, had revealed ‘deceit on a massive scale’:
In its leader the newspaper called for action from the government:
The leader went on to reiterate its call for firm government action:
This was what the Guardian was saying about Fayed in March 1990. It was warning that there was a danger of Fayed being rewarded for his gross deceit. In the four years that followed there was no obvious sign that the newspaper had revised its realistic estimate of Fayed’s character. It had, indeed, reported prominently a number of stories in which he was accused variously of theft, racism, vindictiveness and making false bribery claims against MPs. Yet in 1994, the newspaper which is widely regarded as a bastion of journalistic integrity, appeared to be handing to Fayed just the kind of reward he craved. For by deciding that it was acceptable to depend upon the word of this serial fabricator in order to lay one of the gravest possible charges of corruption against a government minister, the Guardian was in effect restoring Fayed’s justly damaged reputation to him. They were doing so by treating him, against all the evidence, as an honest man and a reliable witness.
There have been many odd alliances in the history of British journalism but the Guardian’s decision to trust implicitly a man they had themselves described, in an editorial written on 9 March 1990, as being guilty of ‘gross and certified deception’, seems on the face of it to be one of the oddest.
It is quite true that, as the result of this alliance, we discovered a number of facts about the conduct of some of our elected members which we would not otherwise have known. We discovered, for example, that after the lobbyist Ian Greer had enlisted Hamilton’s support for Fayed’s cause against Rowland, the MP accepted Fayed’s hospitality. In September 1987 he stayed at the Ritz in Paris with his wife Christine for six nights before being taken on a private tour of the Duke and Duchess of Windsor’s former home outside Paris. During this time he and his wife repeatedly dined in the hotel and repeatedly consumed bottles of champagne. Although he accepted this lavish hospitality from a man whose financial interests he was promoting through his parliamentary work, Hamilton never declared it in the register of members’ interests.
He also accepted two commission payments from Ian Greer for introducing new clients to him. The first of these payments was made to him in 1987, the same year as his stay in the Ritz. On this occasion he accepted £4,000 from Greer in return for introducing as a client a company – the National Nuclear Corporation – located in his Cheshire constituency. (In addition to this commission payment from Greer, he subsequently accepted the role of consultant to the same company for an annual fee of £7,500, which he did register.)
The second payment was for £6,000; this was part of a commission of £12,000 split between him and another MP, Michael Brown, in return for their introduction of US Tobacco to Greer as a new client. Hamilton subsequently lobbied the then Health Minister, Edwina Curry, urging her not to ban one of the company’s products, a form of ‘oral snuff’. Hamilton did not declare either of these payments in the register of members’ interests, and he did not declare his indirect financial involvement with US Tobacco to the minister whom he lobbied. Not only this, but he did not even admit to having accepted these commission payments when specifically asked by the deputy prime minsiter, Michael Heseltine, whether he had any financial relationship with Greer. He subsequently suggested that the commission fees he had received from Greer did not place him under any obligation and therefore did not constitute a 'financial relationship'.
Of course Hamilton’s improprieties were far from being unique. On the question of failing to register the stay at the Ritz, Hamilton has claimed that, during the 1980s at least, private hospitality was never considered something which should be registered. In a relatively recent interview with the Scotsman, his wife, Christine, has taken this argument further:
It is a spirited defence but one of the questions which which is inevitably begged is whether the stay at the Ritz was indeed ‘private’ hospitality as Hamilton pleads. This claim is one that most people would probably reject. And Blair’s apparent lack of probity cannot and should not be used to excuse Hamilton’s.
When Hamilton took his case to the Standards and Privileges Committee in 1998 they found that his stay at the Ritz should have been registered and that he must have known that it should have been.
Beyond these specific revelations it became quite clear, as a result of the Guardian’s investigations, that Hamilton had shown execrable personal and political judgment in harnessing himself to the cause of a vengeful fabricator, whose lack of probity he seems either not to have suspected, or not to have cared about. In one of its submissions to the House of Commons Standards and Privileges Inquiry under Sir Gordon Downey, the Guardian itself went further than this:
This is indeed a serious charge and it may contain more truth than Hamilton himself would like to admit.
However, the argument is one which cuts, or ought to cut, both ways. For it has to be said that the Guardian itself was sometimes less than scrupulous when it came to the question of making sure that the allegations of Fayed which it printed were actually true.
The most glaring example of its willingness simply to reproduce or parrot Fayed’s allegations is to be found in the front-page article of 20 October 1994 which effectively created the entire cash for questions scandal.
At the heart of the article was the claim that Fayed paid a £50,000 fee to Ian Greer for his lobbying services and that on top of this there was a further monthly charge for ‘parliamentary services’. This money was supposedly passed on by Greer to two MPs, Tim Smith and Neil Hamilton, in return for them putting parliamentary questions at a rate of £2,000 per question: ‘Every month we got a bill for parliamentary services and it would vary from £8,000 to £10,000 depending on the number of questions.’.
When Smith promptly resigned in response to the appearance of the article it seemed that the Guardian’s judgment in publishing Fayed’s allegations had been vindicated. Smith was indeed guilty. But it turned out that he had never received any money from Ian Greer. He resigned because he had actually accepted cash payments directly from Fayed himself.
It eventually emerged that every other detail in the claims made by the Guardian was false. The annual fee which Fayed had paid Greer had been £25,000 not £50,000. There had been no additional charges for ‘parliamentary services’ and although Fayed clearly claimed that he had been billed for these services. he was unable to produce any invoices to substantiate his claim.
When Greer and Hamilton denied the charges made against them and sued, it soon became clear that even the Guardian accepted that the charge which had been made against Hamilton was untrue. For the allegation that Fayed’s money had been channelled to him via Greer was now quietly dropped.
In its place Fayed now made a quite different allegation, claiming that he had paid Hamilton directly in cash. This had been done in private and there had been no witnesses. Hamilton denied this and suggested that Fayed was simply using the facts of what had happened with Smith as a template in order to make a false allegation against him.
At the eleventh hour, as the libel action drew close, Fayed’s story changed again. Three witnesses, all of them employees or ex-employees of Fayed, were suddenly discovered and, exhibiting truly remarkable powers of recall, claimed to have witnessed various incidents which supposedly substantiated the previously unwitnessed and unwitnessable payments which Fayed had allegedly made.
At this point the sceptical observer might have been forgiven for recalling the words of the DTI inspectors:
In the circumstances, it was perhaps fortunate both for Fayed and for the Guardian that the libel action collapsed before it began. This happened because of Greer’s previous concealment from a select committee of some of his commision payments to another MP, Michael Grylls.
It so happened that Downey believed them. But Downey’s inquiry, whose report was published in July 1997, was scarcely equipped to conduct the kind of investigation which was necessary if the definitive truth of a complex scandal was going to emerge. Indeed one might be forgiven for applying to his inquiry the words which the Guardian had applied to the DTI investigation many years previously: ‘The inspectors themselves,’ suggested the Guardian leader-writer in March 1990, ‘assuredly need extra resources if they are to check out cock-and-bull stories of the Al-Fayed variety.’
Of course it is the case that Fayed has since been able to fend off a second libel action taken by Hamilton and heard in the high court in 1999. But he was able to do so only by dint of introducing another completely separate allegation involving Mobil Oil, and only after Benjy the Binman had stolen, from the dustbin of Hamilton’s barristers, the cross-examination papers relating to the three Fayed employees, thus enabling them to do yet more preparation before giving evidence.
A close scrutiny of all the facts in the case suggests, indeed, that there is no credible or reliable evidence that Neil Hamilton ever accepted bundles of cash in brown envelopes from Mohamed Fayed. There is also a great deal of circumstantial evidence which suggests that he did not, and that Fayed’s story was yet another of his vengeful fabrications.
Perhaps the Guardian’s decision to engage in oblique ridicule of Fayed by making public a vindictive and unpleasant letter they had received from him indicates that the newspaper is itself having doubts about the wisdom of its extraordinarily close alliance with him in the past.
If so, it would be a good thing if these doubts could be expressed a little more straighforwardly and with a little more candour.
9 January 2006; revised 17 January/24 February
© Richard Webster, 2006