The Attack on Sleaze: Mystery origins of brothers' paper fortune: James Cusick looks at the revelations of the DTI investigation into the Fayed family's business affairs

When the Fayed family bid for the House of Fraser its family wealth was said to be sufficient to buy the company - including the prize of Harrods - 'without recourse to outside borrowing'.

The bankers Kleinwort Benson had once estimated that the family was worth 'several billion dollars'. The Department of Trade and Industry report which investigated the Fayeds in 1988 shattered the myth of their wealth.

The 750-page report damningly said the Fayeds had 'dishonestly represented their origins, their wealth, their business interests and their resources to the Secretary of State, to the Office of Fair Trading, to the House of Fraser board and shareholders, and their own advisers'.

The investigators, led by Henry Brooke QC and Hugh Aldous, said that the evidence they had received from the Fayeds was 'false' and that the Fayeds 'knew it was false'. Documents produced, relating to how they had come to be in control of enormous wealth, were false.

In a submission to the OFT, the Fayed brothers claimed at the time of the bid that they were worth dollars 1bn, later revised to dollars 760m.

'Frankly we don't believe their stories,' said the report.

Their actual wealth in 1984- 85 was based on cargo ferries, the Ritz Hotel in Paris, a stake in a Texas bank and film profits. But their claim to be oil- rich was rejected.

The report asked how they came, on 31 October 1984, to have at their disposal pounds 50.5m and dollars 330m at the Royal Bank of Scotland in London and a further dollars 225m in cash and securities in Switzerland. The source of the money was never proved. However, the report said it was likely that they had used their association with the super-rich Sultan of Brunei.

The report appeared amazed at the occasional 'quantum leap' in their wealth, which at one point included a plan to buy the Savoy hotel group. Although the Fayeds were accused of using the Sultan's association to acquire the House of Fraser, there was no evidence that the Sultan knew he was being used.

The Fayed wealth, they claimed, was based on riches from cotton dating back in their family to 1876. Their Anglicisation was 'completely bogus' said the report. In reality their father was a teacher of Arabic. The brothers were born in a poor district of Alexandria, in Egypt, and their first business was set up in 1956. In 1964, the DTI report alleged, Mohamed al-Fayed 'perpetuated a substantial deceit on the government and people of Haiti', over an oil refinery and port development.

Although the report acknowledges that they were genuine over their management concerns at the House of Fraser, it said that Mohamed al-Fayed's leadership at Harrods was 'mercurial'.

The complex network of financial deals which enabled the brothers to take over the House of Fraser, was partially unravelled by the DTI inspectors.

Funds used in acquisitions were gradually replaced by bank borrowing. In April 1988 bank borrowing reached pounds 870m.

In one of its most damning conclusions the report states that 'the comfort taken by the OFT from the assurances' given to it by one bank (Kleinwort) and by the Fayeds' lawyers, 'were greater than those advisers thought they were giving'. The report went on: 'This lack of meeting of minds . . . must be overcome in future if healthy government/city reliance and trust is to prosper.'

Six years after its publication, ripples from the DTI report can still feel like waves.

Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
David Moyes and Louis van Gaal
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
A cabin crew member photographed the devastation after one flight
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Life and Style
food + drink
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Life and Style
Arts and Entertainment
The John Peel Lecture has previously been given by Pete Townshend of The Who, Billy Bragg and Charlotte Church
musicGodfather of punk will speak on 'free music in a capitalist society'
peopleAt least it's for a worthwhile cause
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Pharmaceutical Computer System Validation Specialist

£300 - £350 Per Day: Clearwater People Solutions Ltd: Pharmaceutical Computer ...

High Level Teaching Assistant (HTLA)

£70 - £90 per day: Randstad Education Birmingham: Higher Level Teaching Assist...

Teaching Assistant

£50 - £80 per day: Randstad Education Birmingham: Randstad Education is the UK...

Senior Java Developer - API's / Webservices - XML, XSLT

£400 - £450 Per Day: Clearwater People Solutions Ltd: Our client is currently ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments