Al-Fayed and The Observer

A Tale of Tabloid Politics

Every day, thousands shop at Harrods. The luxury department store is a magnet for the super-rich and voyeuristic tourists.

Mohamed Al-Fayed (1929-2023)

Of course, real Londoners avoid Knightsbridge most of the time. It’s a playground for free-spending elites.

The Victoria & Albert Museum is the best thing about this part of town. Yet Harrods still draws people here.

Its former owner, Mohamed Al-Fayed, who died last week, once said he wanted his embalmed corpse displayed in the store.

Thankfully, the Qatari royal family, the House of Al-Thani, who bought the store from Al-Fayed in 2010, would not do such a thing.

However, the shipping magnate was a trailblazer for Arab investment in Europe and attracted constant scrutiny for his activities.

But some of it was due to Al-Fayed’s preference for luxury icons. The UK press had a field day with his 1984 takeover of Harrods.

Few retailers define the excesses of the country’s elites more than its shamelessly classist lifestyle wares.

That someone from the Middle East had become the store’s new owner was a shock to the system for Britons still mourning their withdrawal from the region.

Few of his obituaries have touched upon The Observer’s campaign to expose Al Fayed’s lies, partly fuelled by one man’s vendetta.

But the story of The Observer’s role in this is worth remembering because it was a turning point in the decline of a great newspaper.

Press Feud

It’s hard not to think of Mohamed Al-Fayed as a swivel-eyed crank after he claimed the security services and the British royal family plotted to kill his son and Diana Spencer.

Al-Fayed’s attempts to prove the House of Windsor had a hand in that tragic car crash in Paris were widely ridiculed at the time.

British newspapers ran countless headlines mocking him, often alongside photos of the billionaire looking unhinged.

It wasn’t the first time the press had a go at Al-Fayed.

His Harrods purchase the decade before, which ran £615 million, generated enormous tabloid chatter about his wealth and where it came from.

Mohamed Al-Fayed had powerful and wealthy connections, including Arab and Asian royalty.

For example, he was so close to the Brunei Sultan Hassanal Bolkiah that he held power of attorney over some of his key assets.

The British government approved the Harrods deal after Al-Fayed helped persuade the Sultan of Brunei to keep $10 billion in UK banks – rather than move his funds to the US.

Some still believe Al-Fayed used such connections to procure the funds to buy Harrods, including Lonrho CEO Tiny Rowland. Al-Fayed had served on the mining giant’s board.

However, Rowland had been trying to buy Harrod’s owner, House of Fraser, since 1977. He had been blocked at every turn.

Rowland was widely seen as corrupt for his business dealings with African governments. Prime Minister Ted Heath once condemned him as “the unpleasant and unacceptable face of capitalism”.

Tiny Rowland already had 30% of House of Fraser but hoped to buy Harrods in full. He sold some of his shares to Al-Fayed as a holding action while battling with the UK competition authorities over his goal of purchasing the store.

Once Rowland had sold them his shares, Al-Fayed and his brothers raised £615 million to buy the remaining 70% of the company. Rowland was enraged and would launch a campaign against the man he called ‘Tootsie’.

The prestige of owning the luxury store was worth the enormous price tag, but the British establishment was suspicious of Rowland.

Lonrho had faced three investigations when Rowland tried to buy Harrods, while Al-Fayed’s bid was quickly approved.

Rowland on Sunday

Tiny Rowland had bought The Observer in 1981 and set out to wield it against his enemies.

Now at the top of the list was Mohamed Al-Fayed, but also the Thatcher government for approving the 1984 deal.

He found a valuable ally in Melvyn Marckus, City editor at The Observer.

That’s one way of putting it. Long-time Observer journalist Anthony Howard would later describe Marckus as Rowland’s “stooge”.

According to Howard, Marckus would have supper with Rowland every Wednesday at the tycoon’s luxurious house in Chester Square, Belgravia.

Editor Donald Trelford would later confirm they held meetings with Rowland to discuss coverage.

Of course, no meeting is ever just for its own sake in journalism. And Rowland wasn’t just offering Marckus a hot meal.

Tiny Rowland would feed Marckus stories, especially those flattering to his interests.

Not only was Rowland convinced Mohamed Al-Fayed had bought the store with someone else’s money.

He was adamant that Al-Fayed had lied about his background.

Trelford would later write:

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.

The investigation went as far as bribing government officials in Brunei, Egypt and the UAE to procure documents.

He even had Al-Fayed under surveillance with illegal bugging devices.

Rowland put all the material he found at the disposal of The Observer. Even though it was driven by vengeance, Trelford and Marckus saw covering the allegations against Al-Fayed as a matter of public interest.

Furthermore, Rowland was willing to cover the legal costs of libel writs and any other challenges from Al-Fayed. So The Observer campaigned for a full inquiry into the Harrods deal.

The Sunday newspaper ran headline after headline against Al-Fayed for over two years. Finally, the Thatcher government launched an inquiry and a report was drafted in 1988.

Investigators found that Al-Fayed had misrepresented his wealth and background to secure Harrods.

“Lies became the truth and the truth became a lie,” the report concluded. However, it did not find the Sultan of Brunei’s money was used in the purchase.

There was insufficient evidence for the claim. Nevertheless, The Observer editors felt vindicated and drafted a special edition entitled “The Phoney Pharaoh”.

Of course, this was embarrassing for the Conservatives.

The Thatcher government tried to use an injunction to block the full story from being published, but it was eventually published in 1990.

Many journalists first saw it as a great scoop, but Trelford soon came under harsh criticism for serving Rowland’s commercial interests.

It damaged his reputation and, ultimately, the reputation of The Observer as well.

Lost Prestige

Once upon a time, The Observer was one of the leading Sunday newspapers in the UK. It was the rival to The Sunday Times for many years. This started to change with The Sunday Telegraph in the 1960s and then the Mail on Sunday in the 1980s.

It’s easy to forget that The Observer published some of the legends of British journalism. George Orwell wrote for it and was close friends with its illustrious editor, David Astor.

Astor defined The Observer for three decades. He was a unique figure on Fleet Street, playing the dual role of editor and proprietor from 1948 to 1975 – eventually selling the paper to an oil company in 1977.

The Astor era was the golden age of The Observer in many ways.

It was a liberal centre-left newspaper that championed Indian independence, campaigned against the death penalty and opposed apartheid.

In 1980, The Observer had a daily circulation of 973,000 copies. By 1987, The Observer’s circulation had fallen to 722,000 copies.

The Rowland era seriously affected the paper’s credibility among readers.

A decade later, The Observer had a circulation of just below 500,000 copies.

Today, the Sunday paper has stopped reporting its circulation – but the last figure was 136,000 in 2021.

Once a significant publication, The Observer became just another Sunday newspaper under Rowland.

Many progressive readers decided to buy the now-defunct The Independent on Sunday instead, while conservative readers were even less likely to pick it up.

Tiny Rowland finally gave up his dream of being a press baron in 1993. The Observer was sold to The Guardian after an ambitious bid by The Independent.

Trelford was quickly moved on, while Marckus took a job at The Times.

The newspaper was now back in the hands of serious newspapermen and women, and an editorial command structure was soon restored.

No more stooges. No more supper stories in Belgravia. But the damage was done.

Much like Harrods, The Observer was the object of a rich man’s vanity. Rowland’s feud with Al-Fayed cost the newspaper more than the department store. It was no longer the same paper that Astor made great.

Today, the Sunday paper fills its opinion pages with centrist bilge.

Many of its columnists love taking swipes at the left and penning right-wing talking points about trans rights.

The Observer is the last of the liberal centre-left Sunday papers, but it is a shadow of its past.

At this point, The Guardian might as well rebrand it The Guardian on Sunday and be done with it.

Photograph courtesy of Patrick Stam. Published under a Creative Commons license.