Sir Frederick Barclay’s nephews sold the Ritz for “half the market price” after secretly recording conversations between the hotel’s billionaire co-owner and a Saudi investor offering £1.3bn for the London landmark, the high court has heard.
Barclay, 85, and his daughter Amanda are suing three of his twin brother Sir David Barclay’s sons - Alistair, Aidan and Howard - and Aidan’s son Andrew over 1,000 conversations secretly recorded over several months.
The high court has previously heard that the “elaborate system of covert recording” came to light in January when Alistair was filmed on CCTV “handling the bug placed in the conservatory at the Ritz”, where Frederick was known to “smoke a cigar” and hold meetings.
At a further preliminary hearing, conducted remotely on Wednesday, Mr Justice Warby heard that the recording of the conversations was “commercial espionage on a vast scale”.
The legal action alleges misuse of private information, breach of confidence and breach of data protection laws.
The claimants state in documents that there was a second recording device, a wifi bug, supplied by the private investigations firm Quest Global, which invoiced for 405 hours of time to listen to and transcribe the recordings.
The firm is chaired by the former Metropolitan police commissioner John Stevens, who has conducted inquiries into security breaches in Northern Ireland and the death of Diana, Princess of Wales.
The claimants state that among 94 hours of recordings were discussions about an offer for the Ritz hotel for potentially as much as £1.3bn from the Saudi Arabian-based Sidra Capital.
The 114-year-old hotel was sold by David’s side of the family in March for significantly less, to Abdulhadi Mana al-Hajri, a Qatari businessman who is the brother-in-law of the Gulf state’s rulers, despite a threat from Frederick and Amanda Barclay of legal action if it was sold for less than £1bn.
Hefin Rees QC, representing Frederick and Amanda, said in a written submission that the defendants heard “Sir Frederick’s conversations with Sidra Capital, which at the time had made an initial offer of some £1.3bn for the acquisition of the Ritz hotel”. He added: “Despite this, the defendants sold the Ritz hotel to another buyer from Qatar at a price that appears to be half the market price. One is left to speculate why.”
He said material previously disclosed to his clients “reveals beyond doubt that the defendants derived significant financial and commercial advantage from the unlawful use of the recordings”.
Rees also argued that the recordings allowed the defendants “to anticipate the claimants’ every move in advance, plan their business strategy around that, including knowing what legal advice the claimants were seeking and getting at this crucial time when their business and personal relationships had broken down, and the respective interests of the claimants and the defendants were in conflict”.
Financial pressure on the Barclay brothers’ businesses has prompted the sale of the Ritz and potentially other assets including the Telegraph, the delivery business Yodel and the online retailer Very Group (previously known as Shop Direct and before that Littlewoods).
In February, private business and family affairs of David and Frederick Barclay were made public in the most dramatic fashion in a high court action following several years of disagreement over the future of their empire.
In December David strengthened his family’s grip on the businesses, appointing Aidan and Howard as “persons with significant control” of Ellerman Holdings, the holding company for the Barclays’ UK assets. Each was given “more than 25% but not more than 50% of the share ownership and voting rights”.
Frederick and David are no longer beneficiaries of the family trust, and Amanda has been left with a 25% share and no power to block David’s side of the family in any big decisions.
At the hearing in February, Heather Rogers QC, representing all five defendants, argued there was “a lot of information that would have been in the possession of my clients … which they have got completely free of the recordings”.
She added that her clients had “ample opportunity” to “spread it about before an injunction” was granted, but there was “no evidence of dissemination”.
