Lonrho

At the end of July this year the struggle between Lonrho and the Al-Fayed family over the Al-Fayed purchase of the House of Fraser made the front page, lead story, of the Guardian (July 30 1988: see also Independent 1 August 1988). The occasion was the leaking of some reports, legal advice from Sir David Tudor-Price QC to the Director of Public Prosecutions, on the pros and cons of prosecuting Lonrho. We were sent a copy of these documents by a lawyer connected to the Al-Fayed side of the dispute. Reluctant though we are to be used in this kind of faction fight, these documents deserve publication. Reproduced here, reduced from A4, is one of them.

Re: Lonrho Limited

Report of the Department of Trade and Industry Inspectors.

ADVICE

  1. On 11th May 1976 Mr. David Cox and I together with Mr. Whitfield from the Department of the Director of Public Prosecutions attended a consultation with her Majesty’s Solicitor General. The Solicitor-General inter alia sought our views upon the possible effects of publication of the Report upon the forthcoming enquiry by officers of the Company Fraud Squad and upon any Criminal proceedings which may be instituted as a result of that enquiry. I was asked to provide a short advice in writing upon this topic confined, of course, to prosecuting considerations.
  2. It seems inevitable that whichever course is taken, (i.e. publication or with-holding publication,) that course will attract criticism in some quarters. But it is my firm opinion that from the point of view of a prosecuting authority the arguments in favour of with-holding publication greatly outweigh those in favour of publication.
  3. If the Report of the Inspectors is withheld it may be said in some quarters that wrong doing is being covered up. It may also be learnt (or have been learnt already) by the Press that representations have been made to the D.T.I. by the Directors of Lonrho who are seeking to persuade the D.T.I. that publication would damage national and vested interests. It will then be said that the powerful and rich are able to suppress this Report and prevent the public learning the truth of misconduct within this company. It would also be unfortunate if this Report were withheld from publication for a very protracted period and then in the end no criminal proceedings were undertaken. This would mean that the Report would be very stale when eventually published and the delay in publication would be the subject of much criticism.
  4. On the other hand if the Report were published now there can be no doubt that it would attract a blaze of publicity. There would then develop a public debate as to whether or not there should be a prosecution. In my opinion the Law Officers and the Director would be put under considerable pressures through questions in the House of Commons and from other quarters. Although the Inspectors have largely avoided pointing out the criminal provisions of the Companies Acts they have recited facts and made findings which, if they are correct, show that a number of Directors of Lonrho have committed criminal offences. In this context they have on many occasions concluded that the conduct of particular persons merits severe criticism.
  5. The form which a public debate would take cannot be exactly forecast. But I would expect some would be clamouring for the Director to bring proceedings and asking why he was not doing so immediately. Others, (although a smaller number,) might rally to the defence of Mr. Rowland, in particular, and advance an argument that “bending the rules” in piratical ventures in Africa could be excused if the result of such ventures was profit and advantage to the national economy.
    1. In my opinion such a public debate would be unfair to any person who was later charged with an offence. The involvement of a member of the Royal family and former Cabinet Minister is bound to fix the matter firmly in public memory. If in the end there was a trial by jury the members of the jury would be bound to recollect some of the facts and comments thereon and might have formed strong personal views upon the matter.
    2. The publicity might also make the task of the company fraud squad both more difficult and more damaging to the company’s interest. All at Lonrho would be likely to be more defensive end less co-operative and the news of a Fraud Squad investigation would confirm and increase loss of confidence in the company.
    3. The public debate might possibly create difficulties in the exercise of a normal prosecuting discretion in relation to those persons who are not central figures and whose involvement was more marginal.
  7. It is my opinion that there is a high probability that when the police enquiry has been completed we will be able to advise that evidence has become available to prove serious breaches of the Companies Acts and that there will be a reasonable prospect of conviction of some, at least, of the persons named in my original advice. This makes the present situation unlike that which existed in the case of the Vehicle and General Insurance Company Report.The offences which the present Report reveals are not merely technical offences. The majority of them are offences in which the essence is improper concealment of information from share holders of a public company for the purpose of private enrichment.

    I have in mind the following possible charges:

    1. an offence against Section 84 of the Larceny Act 1861 in relation to the recommendation to shareholders in 1966 relating to new options being granted to Rowland.
    2. A conspiracy to defraud in relation to Nyaschere and the Shamrock mine of which the essence was personal enrichment of the principals.
    3. Offences against Section 19 of the Theft Act 1968 in relation to:
      1. the Wankel acquisition
      2. payment to Lord Duncan-Sandys
      3. “repayment” of the purchase price of Rowland’s house.
    4. An offence against Section 7 of the Exchange Control Act 1948 in relation to a payment of £75,000 in connection with Lord Duncan Sandys,
    5. a conspiracy to commit breaches of the Southern Rhodesia (United Nations Sanctions) Order 1968.
  8. Since attending upon the Solicitor-General I have had a short conversation with Detective Chief Superintendent Etteridge of the Company Fraud Squad which leads me to believe,
    1. that he shares my view that it may be possible to be in a position to commence proceedings within a relatively short period. He thinks that the figure which I gave to the Solicitor-General of within 9 months of May 11th 1976 is not an impossible target, and
    2. that it may be possible to prove a conspiracy to break sanctions from the documents already in possession of the D.T.I. without some of the difficulties which I had earlier envisaged arising.

D. Tudor Price

Queen Elizabeth Buildings
Temple E.C.4.May 19 1976

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