Fidelity may have to sell 10% Lonrho stake

FIDELITY, the Boston-based fund manager, may have to sell its 10 per cent holding in Lonrho following revelations that Roland 'Tiny' Rowland's controversial conglomerate has agreed a dollars 300m (pounds 157m) joint venture with the Libyan Arab Foreign Investment Company (Lafico).

The investment group has been under pressure to cut its holding since March, when Lafico paid pounds 178m for a 33 per cent stake in Lonrho's Metropole Hotels group.

Lonrho's two remaining City financial advisers, Charterhouse Bank and Societe Generale Strauss Turnbull, may also look to cut their links with Lonrho. A director of Charterhouse recently said the link was a liability as the bank often only discovered what Lonrho was doing when it saw it in the press.

The UK cut off diplomatic relations with Libya some years ago and there is an embargo on trade in arms or aviation goods with the country. The US has even stricter sanctions against Libya and it is understood Fidelity is concerned that these may have been breached. However, no one at the firm was available for comment yesterday.

Mr Rowland issued a statement, quoted in Lonrho's newspaper the Observer, defending the group's links with Libya. The statement coincided with an article in the Sunday Times quoting Omar Montasser, the Libyan Economy Minister, as saying that a deal had been struck between Lafico and Lonrho to combine their assets in Africa, including Lonrho's 45 per cent holding in the massive Ashanti gold mine in Ghana, in a joint venture company with capital of dollars 300m.

However Paul Spicer, Lonrho's deputy chairman, said nothing had been finalised. 'We have signed no agreement to sell Ashanti, nor have we signed any agreement to sell any of our other assets.'

Mr Rowland's statement said that UK and US companies were losing lucrative contracts because of their governments' attitude to Libya. 'I have always found the Libyan government courteous and correct in the 20 years I've known them,' he said.