Fayeds yield in battle against DTI: European Court of Human Rights rejects brothers' attempt to overturn report on House of Fraser takeover

MOHAMED AL-FAYED, chairman of Harrods, yesterday conceded defeat in a legal battle to overturn a Department of Trade and Industry inspectors' report on the takeover of the House of Fraser stores group in 1985.

The report accused him and his brothers of dishonestly representing their origins, wealth and business interests to the Government and to shareholders in Fraser.

A decision by the European Court of Human Rights, rejecting the Fayeds' complaint that the inspection procedure was unfair, is likely to come as a relief to the Government after its weekend defeat by the European Commission on Human Rights over a separate complaint by Ernest Saunders, the former Guinness chief executive.

The commission acts as a filter for cases that go to the court.

Although Mr Fayed and his advisers accepted there were no further legal avenues to explore after a rebuff from the European Court of Human Rights, he claimed the system was dictatorial.

Mr Fayed accused the inspectors of writing a report based on false information from 'Tiny' Rowland, joint chief executive of Lonrho, with whom he declared a much-publicised truce late last year. He was speaking in the food hall of Harrods after failing to appear at a press conference.

Instead Lord Lester, Mr Fayed's counsel in the court case, gave the press conference while Mr Fayed was in meetings with his finance director. But his advisers agreed to let him be photographed beside a banana stall, where he began by discussing the latest revelations from Brussels about standardisation of the banana before turning to the alleged injustices against him.

'If you can't get justice in this country you have to go somewhere else,' he said.

The brothers Mohamed, Ali and Salah al-Fayed, said that a report by the Department of Trade and Industry published in 1990 ruined their reputation and had not been subject to appeal. The nine- member court said it 'held unanimously that there had been no violation . . . of the European Convention of Human Rights'.

The court accepted that 'the limits of acceptable criticism were wider with regard to businessmen actively involved in the affairs of large public companies than with regard to private individuals, and that the risk of some uncompensated damage to reputation was inevitable if independent investigators . . . were to have the necessary freedom to report without fear, not only to the authorities but also in the final resort to the public'.

It went on: 'The court was satisfied that the functions performed by the (British) inspectors were . . . essentially investigative. It could not be said that the inspectors' inquiry had 'determined' the applicants' civil right to a good reputation or that its result was directly decisive for that right.'

The court said judicial review would have been available had there not been safeguards to ensure the report was drawn up by 'fair procedure and the reliability of finding of fact'.

'(But) a reading of the inspectors' report showed that the applicants were made aware of the information required of them and were given every reasonable opportunity to respond.'

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