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    Fayed issued what was later referred to in the D.T.I. report as a "gagging" writ, a libel suit against The Observer for its Sunday story. Whenever any newspaper deviated from the Fayed version, similar writs were routinely threatened or issued. All critical reporting outside The Observer virtually stopped.

    On March 14, 1985, the government issued a press release announcing that it would not refer the Fayeds' bid to the Monopolies and Mergers Commission. The bloody battle was over. The Fayeds owned Harrods. But the war had just begun.

Between 1985 and 1993, Tiny Rowland relentlessly pursued Mohamed Al Fayed. "Anyone who fell out with Mohamed knew where to go," says journalist Michael Gillard. Rowland's suspicions were further aroused when, just a few hours before the announcement on March 14, 1985, Fayed showed up at 10 Downing Street for a reception in honor of President Hosni Mubarak of Egypt, whom he had never met. According to Bower's biography, the invitation had been arranged by Mubarak's and Mrs. Thatcher's mutual adviser, Gordon Reece, who, several people told me, kept his free Park Lane apartment courtesy of Fayed from the spring of 1985 until the summer of 1994. (Reece denies both claims.) Since then, according to former Harrods employees, the Egyptian president's family has enjoyed Fayed's hospitality at Harrods, and while Mubarak's son was living in London, his apartment was decorated by Fayed.

    After the controversy generated by the House of Fraser affair, business relations between Fayed and the sultan suddenly ceased. On April 25, 1985, the sultan and Fayed terminated, by mutual agreement, all powers of attorney given to Fayed since 1984. Publicly the sultan has always denied that his money was used. "What the sultan says... is that if any of his money was used in the purchase of the House of Fraser it was without his knowledge and consent," explained the sultan's public-relations adviser, Lord Chalfont, in 1989. Chalfont also said that the sultan, "has decided to retain more professional advisers and has ceased all commercial contacts with Mohamed Al Fayed."

    In a 1988 article in Forbes by Pranay Gupte, it was first reported that the Swami and the sultan had met in Singapore in 1985 to discuss ways of getting back part of the $900 million the sultan had "entrusted" to Fayed. Acting on behalf of the sultan, the Swami persuaded Fayed to meet with him on June 6 and 7, 1985, in a rented apartment at 1 Carlos Place in Mayfair, and the meetings were secretly tape-recorded. On these infamous "Carlos Place tapes"-partly in Hindi, partly in broken English, but mostly gibberish-which the D.T.I. subsequently had authenticated by an audio lab, Fayed brags to the Swami about his influence with both Mrs. Thatcher and the sultan. "I have power of attorney… I can have $10 billion if I want." Gupte, who speaks Hindi, and Michael Gillard, both of whom have interviewed Fayed, told me the voice on the tapes is unmistakably Fayed's. Fayed once swore in an affidavit - and still avers today - that the tapes are not authentic.

    Rowland, however, believed the tapes were just the smoking gun he had been looking for. Once he found out about them from Adnan Khashoggi, he flew to New York, where he met the Swami in Khashoggi's 45th-floor duplex, and then to Canada, where the tapes were stashed, to listen to them. Later, a delegation from Lonrho met the Swami aboard Khashoggi's yacht in Antibes and paid $2 million for the tapes. (Rowland also paid $3 million for a document purporting that Mark Thatcher, the son of the prime minister, and Fayed had traveled to Brunei together, which was later proved false.) The transcript of the tapes yielded Rowland a 185-page peccadillo-laden biography of Fayed, printed privately and sent "to anybody who was qualified"-80,000 of them. It was called A Hero from Zero, which is how the Swami described Fayed at Carlos Place, and it caused a sensation.

    When I visited Rowland at his posh town house on Chester Square last November, the silver-haired titan casually picked up a phone and promptly got through to "His Holiness," the Swami, at his ashram in India. His Holiness would be interviewed only in person. Then Rowland made another call and handed me the phone. I was talking to Adnan Khashoggi-on the record.

    "The tapes are authentic. The Swami taped him on the sultan's orders," Khashoggi said. "In my mind he definitely, officially bought Harrods with the sultan's money. I saw the agreement. He gave the sultan £300 million [$390 million] back." Did the sultan show you the agreement? I asked. "No. The sultan showed it to the Swami, and the Swami showed it to me."

    Khashoggi and Fayed have a long history. They met in the early 50s, when Fayed was married to Samira Khashoggi, whom he had met on the beach in Alexandria. She gave birth to a son, Dodi. Today, Dodi Fayed, who got a producer's credit on Chariots of Fire, continues to function in the film business. Khashoggi claims that at the time of their meeting Fayed was a Singer sewing-machine salesman who had previously sold Coca-Cola. Khashoggi gave him a job coordinating furniture deliveries for a company that he owned. "He started making side deals to put fees in his hands," Khashoggi claims. Fayed says that Khashoggi worked for him, and that he couldn't take Khashoggi's stealing and gambling away his money. "It was such a dirty family."

    In fact, Khashoggi's father was the doctor of the late Saudi Arabian king Abdul-Aziz. According to Fayed and Michael Cole, however, Khashoggi's father was merely "a nurse orderly" who injected the old king so that he could perform sexually with the virgins who were brought to him nightly. When I repeated this to Khashoggi, he said, "It makes the story more fairytale. My father is a surgeon, who studied with Madame Curie." Khashoggi added, "Mohamed always had the image of lying and making up stories - "It's a sickness."

In 1987 the Conservatives were facing a general election, and numerous business scandals had fueled criticism that their regulation was too lax. Rowland was still relentlessly pounding the government about Fayed, and, more important, The Observer had begun publishing stories critical of the business dealings of Mark Thatcher, the adored son of, and frequent embarrassment to, the prime minister. The government also learned from the D.T.I. report that Kleinwort Benson had based its confidence in the Fayeds' assets on a single telex from a Swiss bank and on the sultan's denial that he was involved. On April 9, 1987, the Department of Trade and Industry appointed inspectors to look into the acquisition of Harrods, if only to keep Rowland and The Observer quiet. To this day, the British government has chosen never to explain fully why, although the D.T.I. report was completed in July 1988, it was not officially released until March 1990, and why, since it was full of damaging findings, it was never acted upon. To most Americans, this would indicate a clear cover-up. The report might never have been published at all if Rowland hadn't gotten a hold of it and printed its findings in March 1989, in an extraordinary mid-week edition of The Observer, which usually publishes only on Sundays. Fayed and the government obtained an injunction which forced the paper off the newsstands within a few hours.

    Only recently has it become possible to piece together how desperately Fayed was trying to curry favor with the Conservative Party while he was under investigation. Between 1985 and 1987, he not only gave the Tories £250,000 ($367,000) for the 1987 election but also met dozens of times with Tim Smith and Neil Hamilton - the two ministers whose resignations he would later force - sometimes alone and sometimes with lobbyist Ian Greer, whose firm acted as Fayed's go-between. (Hamilton, who stayed free at the Ritz, admits to attending meetings but denies receiving payment. He and Greer sued, but their action was recently struck down.) The meetings stopped six months after the D.T.I. report was published in The Observer. Last month, Fayed was called to tell what he knows in an inquiry involving Jonathan Aitken, another minister implicated in the scandal over free stays at the Ritz.

    During the late 80s, while Rowland continued to flood the Establishment with reports detailing the Fayeds' background, Mohamed, according to two ex-security guards, kept wooing high-ranking officials in the Thatcher government. He played host in Surrey, for example, to then home secretary Douglas Hurd, who resigned this June as Major's foreign secretary. To counter Rowland, Fayed set up his own digging-for-dirt department, headed by lawyer Royston Webb and private investigator Richard New. They produced a scathing, Nazi-baiting propaganda report on Tiny: Faircop Fuhrhop. Lord McAlpine likened the struggle to watching afternoon wrestling on TV. "Nobody quite cares who wins, but it's fun to watch for half an hour." It wasn't, he says, as if anything important were at stake. Harrods, after all, was just a shop.

    Since the scandal Fayed has continued to invite politicians of all parties up to his offices, where he plies them with drink and bags full of Harrods goodies. "He has loads of politicians up there, and they all get the red-carpet treatment," says former security guard Russ Conway, who says he was dismissed on a whim in March. "There's liquor all over the place. Half of them can't walk because they're stone drunk. Then you're dispatched to go down and bring up big teddy bears in bags, and if they hadn't got a car, you'd drive 'em to [the] Commons."

    Fayed and Rowland both employ former Scotland Yard detective chief superintendents as security heads, men whose close ties to the police are ongoing and of enormous help to their bosses. "They were both hired for their contacts, and still to this day they use them," says former security guard Bill Dunt. "They still have access to the police."

    In 1990, shortly before the D.T.I. report was officially released, 1,000 copies of the report bound in Moroccan leather and meant to be sent to everyone from "the Queen on down" turned up in Bangkok in the possession of a German arms dealer named Herman Moll. He claimed he had been hired by Khashoggi lawyer Sam Evans, who had helped Rowland write A Hero from Zero. (Rowland claimed that the report had landed on his desk in a brown envelope.) Moll called Fayed's security chief, John Macnamara, asking for more than £1 million ($1.8 million) for the report. Macnamara flew to Bangkok and managed to grab a copy away from Moll in a hotel bar.

    Finally, in March 1990, five years after the Fayeds' purchase of House of Fraser, Nicholas Ridley, the then secretary of state for trade and industry-the fifth since the fight had begun-released the D.T.I. report, because, he said, the Department of Public Prosecutions had decided there were no grounds to prosecute. "Only God can take House of Fraser from me," crowed Fayed.
"If I had to do it all over again," says Fayed, "I could. I could sleep in Hyde Park. All I would need was a piece of bread and some cheese."

    "Among all the boys, we called him Fayed the Liar," says Ibrahim El Araby Abou Hammed, a former classmate who says he has known Fayed since they were seven in the Gomrok. "All the time he was dreaming to be rich. He wanted to dress and walk around with the rich people. He is one week older than I am," says El Araby, who was born in 1929. Fayed claims he was born in 1933. The D.T.I. report flatly says he lied. But such talk is dangerous. El Araby, once the editor of Alexandria Magazine, was beaten while helping a British TV crew investigate the Fayeds' origins, and his magazine had to close. Channel 3 broadcast that three eyewitnesses had identified Salah Fayed as the man who attacked El Araby. House or Fraser categorically denied that Salah had had anything to do with the incident.

    Perhaps Fayed's greatest caper before Harrods was the brief time he spent in Haiti. "He introduced himself as Sheikh Mohamed Fayed," Luckner Cambronne, Papa Doc Duvalier's former right-hand man, says today. Fayed arrived in Haiti in late 1964, when Papa Doc, the brutal dictator, was increasingly isolated. Fayed told people that he could bring Middle Eastern riches to the wretchedly poor island if they would allow him the concessions to build an oil refinery and develop the wharf at Port-au-Prince. In short order a contract with an American firm was canceled, and Fayed was being driven around in a limousine with Tonton Macoute bodyguards and given a diplomatic passport. According to Raymond Joseph, editor of the Haiti Observateur newspaper in New York and one of the organizers of the opposition to Papa Doc at the time, Fayed became engaged to one of Papa Doc's daughters, and whenever he made a trip to Miami, he'd send flowers to Madame Duvalier. "It was like giving Indians trinkets, and you steal the whole thing."

    Although Fayed claimed that he had invested $4 million in Haiti and that the government owed him money, the D.T.I. inspectors found his signature on an account for the harbor authority in October 1964, when the account held just over $160,000. By the end of the year, both he and $150,000 were gone. "We have no doubt at all that Mohamed Fayed perpetrated a substantial deceit on the government and people of Haiti in 1964."

    After Haiti, Fayed landed in London and moved into a flat at 60 Park Lane, which he would later acquire. He began traveling frequently to Dubai, and today takes credit for building its harbor and trade center, though those claims are widely disputed in Dubai. Through commissions and his association with the Dubai billionaire Mahdi Al Tajir, Mohamed became rich, and two British construction firms, Sunleys and Costain, give him credit for helping them gain hundreds of millions of dollars' worth or business in Dubai. This year, however, in arbitration with the ruling Makhoum family, he lost the management contract for the Dubai trade center, and he can no longer have a shipping business there. For failing to comply with government regulations, he has effectively been banned from Dubai.

    In the 70s, Fayed met his Finnish wile, Heini. According to numerous former employees, the union appears volatile. The couple is rarely seen together in public.

    In 1979 the brothers bought the Ritz hotel in Paris. Their accumulated losses on the opulent establishment have been enormous. The hotel's debts at the end of 1993 were 678 million francs ($120 million), compared with total revenues for 1993 of 243 million francs ($42 million). "The only thing pharaonic about the Fayeds is the size of their debt," says Michael Gillard. The Fayeds are very highly leveraged, but the brothers explain away their vast borrowings as a tax advantage: under British law, interest on debt can offset taxes on profits.

      According to figures obtained from Companies House, the official British register of corporations, between fiscal 1990 and 1994. House of Fraser Holdings paid an astonishing £458.9 million ($785.6 million) in interest to the banks-hardly the business procedure to be expected of entrepreneurs with billions at their disposal.

    By the spring of 1993, the Fayed-controlled House of Fraser had spent £616.3 million ($925 million) of a £668.2 million ($1 billion) credit line, and the banks wanted their money back. In what appeared to be a quick bid to raise cash, House of Fraser took a whopping £68 million ($105 million) loss on its sale of 10.37 percent of Sears, the British retailing company, to raise £156 million ($240 million) in April 1993. The Fayeds were also strapped by numerous Lonrho lawsuits challenging their ownership. Imagine the surprise, then, when in October 1993, Tiny Rowland decided to end the feud.

    Absolutely no one could have anticipated it. The news was so startling to those in the trenches who had slung the mud and to the attorneys who had been putting on the writs for 9 years that a 41-year-old lawyer, whose "whole career had been made on keeping track of all the suits for Lonrho-suddenly dropped dead of heart failure. Dieter Bock, a German businessman whom Rowland had brought in to replace him someday, knew that calling the whole thing off was worth a great deal to Fayed, who in April 1994 happily floated the now steadily declining House of Fraser stock for £413 million ($612 million). Bock, impatient with the battle that had cost both sides about $50 million, wanted it to be over with. At the same time, he was getting on Rowland's nerves, to the point where he was replacing Fayed as Tiny's number-one enemy. "They were going to try to settle for £5 to £10 million [$7.6 to $15.3 million], but Tiny jumped in and pre-empted the settlement. It made the board furious," says Terry Robinson. "But then Tiny had a bigger fight with Bock than with Mohamed."

    Bassam Abu Sharif, a Palestinian adviser to Yasser Arafat, played the go-between. "I told Tiny if the Arabs and the Israelis could make peace, so could he and Fayed." The feud was ended amid lights, cameras, and a very public lowering of a large stuffed shark-which Fayed had dubbed Tiny-from the ceiling in Harrods' Food Halls. Both men insist that no money changed hands, and Fayed takes great pleasure in remembering shark day. "[Tiny] say he's sorry. Kiss my hand. He say, 'I am crazy to do this to you.' "

    I asked Fayed why Tiny had ended the feud. As usual, Michael Cole had the answer. "Two things: One, it cost him £40 million {$61 million]. And the second one, if he was going to pursue his case against Mohamed, he would have had to go into the witness-box. He would never have done it."

"He's a lovely man," Fayed jokes when I ask him what he thinks of Tiny today. Then his real feelings come out. "He's a criminal. He is the worst person this country has from Germany. He has-how do you call it? - Nazi background... He's bullshit, and he's a liar."

    Only two weeks earlier, Fayed had secretly taped Rowland at a lunch at Harrods, although he insists that Tiny knew he was in front of a camera. "I interview him like David Frost," Fayed claims.

    "Do you think I would have gone there for lunch to be video-taped? I was stunned," Rowland tells me. Rowland's comment to the press about the alleged taping was to ask whether the tape also revealed the part of their conversation in which Mohamed urged Tiny to accompany him to the Mayo Clinic, where Mohamed would undergo a penile transplant. "I love the man," Rowland continues, "He's a pathological liar - he can't help it. He began sitting on the back of a truck carrying crates of Coca-Cola, and he only just started paying his taxes." (Cole claims that Fayed has paid more than £200 million [$320 million] in taxes in the last decade.)

    For whatever absurd reason, the Fates have bound these two larger-than-life megalomaniacs together. Within a few days last March, tabloid headlines proclaimed that Tiny Rowland had been kicked out of Lonrho altogether, and that Mohamed Al Fayed had been denied British citizenship. Now Rowland vows to derail his new enemy, Dieter Bock, and Fayed hopes he can bring John Major's divided and struggling government to its knees. The two outsiders, who thrive on conflict and enmity, exchange condolences frequently.

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