Watchdog clears Howard over pounds 1m bribe claim

An allegation that Michael Howard, the Home Secretary, received a bribe of pounds 1m to ensure that there was an investigation of Mohamed Al Fayed's takeover of Harrods, has been firmly rejected by a parliamentary investigation.

But the report, published yesterday, of the investigation by Sir Gordon Downey, the Parliamentary Commissioner for Standards, provides fascinating details of the battle and subsequent reconciliation between Mr Fayed and his defeated opponent in the Harrods takeover battle, Tiny Rowland.

Mr Fayed last night rejected the report, which he said bore "many hallmarks of incompleteness, inconclusiveness on important matters of evidence, and a lack of depth and thoroughness." He would continue to demand a full judicial inquiry.

The bribery allegation was made by Mr Fayed when he gave evidence to a parliamentary committee in November 1995 and Sir Gordon felt it was so serious that he launched an investigation.

Mr Fayed alleged that after he and his brother acquired control of the House of Fraser in March 1985, two trade and industry secretaries, Norman Tebbit and later Leon Brittan, rejected calls by Tiny Rowland's company, Lonrho, for an inquiry by the Monopolies and Mergers Commission. However, in April 1987, by which time Mr Howard was a junior minister at the Department of Trade and Industry, the DTI did appoint inspectors to look into the takeover.

Mr Fayed then constructed an elaborate conspiracy theory around the fact that a distant cousin of Mr Howard, Harold Landy, had worked for Mr Rowland and was the supposed conduit for the cash. Mr Howard lived in a house above his means, Mr Fayed claimed, and why else would the Government's policy have changed other than through a bribe?

To try to get concrete evidence for his claims, Mr Fayed held a series of meetings at his Harrods HQ in 1994-95 with Mr Rowland, after the two had reconciled, which were secretly videotaped. In an edited version of the tapes sent to Sir Gordon, Mr Rowland is seen making some statements which on first reading might suggest that he is agreeing he paid a bribe. At one point, Mr Rowland says: "Michael Howard's got a million, a million and a half or whatever it is."

However, Sir Gordon dismisses the allegation and refutes all the supposed "evidence". He says that the fuller version of the videotapes, obtained with some difficulty from Mr Fayed, show that Mr Rowland rejects on numerous occasions suggestions from Mr Fayed that a bribe was paid to Mr Howard.

Sir Gordon also investigated Mr Howard's bank accounts dating from the start of the Eighties, and found nothing untoward. He concludes: "I have no reason to think that Mr Al Fayed is not telling the truth as he sees it. But in this case, at least, it is a version of the truth which appears to have been distorted by emotion."

Reports which reject complaints are not normally published. Sir Gordon asked the Committee on Standards and Privileges to publish it because he sought to "authoritatively and publicly dismiss" the allegations.