Bugging the Ritz, Private Investigators and Billionaires at War

(Bloomberg) -- The secretive world of British billionaire twins Frederick and David Barclay started to unravel with a hidden camera, and a discrete taping system.

In a video released by Frederick this week, one of David’s sons, Alistair Barclay, is allegedly shown hiding a listening device in the conservatory of the Ritz Hotel to capture private discussions between Frederick and his daughter, Amanda, who were negotiating the sale of the historic hotel near Buckingham Palace. But Frederick was worried that someone had been listening to their conversations, and got hotel security to install a hidden camera that captured the footage.

The brothers, who spent decades avoiding media attention by isolating themselves on an island in the middle of the English Channel, are now front-page news due to the latest part of the family’s multi-generational legal dispute over the sale of the Ritz. They handed the family business to the next generation, but Frederick’s lawyers told a London court that David’s three sons are freezing out his daughter, Amanda. The case offers a glimpse of the divisions in one of the country’s richest clans, which owns the Daily Telegraph newspaper and other businesses at the heart of the U.K. establishment.

“Unfortunately this is a classic example of how family enterprises self-destruct," said Irina Curbelo, co-founder of family business consulting firm Percheron Advisory. “The Barclays need to remember that 60% of family business failure is because of a lack of open communication and trust. Without rebuilding this, all their businesses, a large part of the family wealth, and the family bonds themselves, will be gone.”

Bugging the Ritz, Private Investigators and Billionaires at War

Hefin Rees, Frederick and Amanda’s lawyer, told a London court at a preliminary hearing earlier this month that the factions’ interests were already “in conflict.’’ By listening in, the cousins were able to anticipate Frederick and Amanda’s “every move in advance, plan their business strategy around that” including legal advice they were getting “at this crucial time when their business and personal relationships had broken down,’’ the attorney said.

“He is a man who is now left to contemplate his nephews’ betrayal and a father who has witnessed the prejudicial treatment of his daughter by her cousins,” Rees told the court, arguing that “this was commercial espionage on a vast scale.”

While the case has been winding its way through the London courts since Frederick and Amanda sued David’s three sons, Alistair, Aidan and Howard, and Aidan’s son Andrew in January, the CCTV footage has given it a new prominence. 

Alistair, casual in his Harvard sweatshirt, is seen allegedly searching for a place for an electric plug adapter which is said to hold the bug. He leans down and allegedly plugs it in next to a cream-colored chair where Frederick would frequently sit to smoke a cigar while talking business with Amanda, who would take her place on the flower-print sofa. Alistair appears to look directly at the camera before walking over to touch it. 

The recording device captured 94 hours of audio recordings and 1,000 separate conversations over several months, including Frederick and Amanda’s private conversations with their lawyers, trustees, bankers and businesspeople, as well as negotiations with prospective buyers of the Ritz, the pair’s lawyers said in court filings.

Bugging the Ritz, Private Investigators and Billionaires at War

The family was already divided over the sale of the five-star hotel, which the identical twins bought for 75 million pounds ($92 million) in 1995.

When Alistair allegedly planted the device in January, the two sides were conducting separate negotiations. Because of the recordings, the cousins were able to learn that Saudi Arabia-based Sidra Capital had made an initial offer of 1.3 billion pounds to Frederick and Amanda as well as an unnamed acquisition being discussed between Frederick, Amanda and a Russian businessman, the pair’s lawyers said.

David's sons refuted this in a statement Friday. It's "simply untrue" that any bidder made any formal offer of anything close to that sum, a spokesman for the family's holding company said. Frederick has not been directly involved in running the family businesses for almost 30 years and has risked disrupting the Ritz sale process, they said.

Frederick "has for some time been conducting uninformed conversations with a range of third parties about sensitive commercial matters," they said in the statement. "These activities were clearly inappropriate and had the potential to be disruptive and damaging to the family's business interests."

The cousins lawyer, Heather Rogers, said that they accepted that Frederick and Amanda were recorded without their knowledge or consent and that some of the recordings’ transcripts were shared between the cousins, who haven’t filed a defense. She criticized Frederick and Amanda’s written submissions for being purposefully “eye-catching and emotive” and using “heavy spin.” 

“This is a dispute about family members and from the defendants’ point of view it is unfortunate that they are being canvassed in public rather than resolved in the family,” she said at the remote court hearing earlier this month.

A spokesman for Frederick and Amanda declined to comment beyond their earlier statements. 

Mystery Businessman

This month’s court hearing also revealed that David’s sons hired Quest Global Ltd., a private investigation firm with offices in London and Qatar, which supplied a separate bug, Rees, Frederick’s attorney, said in written submissions. Quest charged for 405 hours for listening and transcribing the recordings, which were then shared with the cousins, Rees told the court.

Quest, chaired and at least partially owned by the former London police chief John Stevens, is most well known for its work on sports investigations. It operates from an address just across the park from the Ritz, and boasts of its extensive experience in surveillance and long-term monitoring of staff and buildings. A representative for Quest declined to comment.

In court, Rees said the recordings captured extensive discussions between Frederick, Amanda and a mystery Russian businessman relating to an unnamed acquisition that didn’t go through after the cousins’ attorneys intervened. He said Quest delivered a report into the Russian businessman in November last year, apparently prepared for Ellerman Holdings.

Billionaire Twins

The 85-year-old twins are among Britain’s most discreet billionaires, known for a family compound on a tiny island off the U.K.’s southern coast.

Born to Scottish parents — just 10 minutes apart — they grew up in a west London household so close to a railroad that trains would rattle the windows. After leaving school at 16, the twins joined the accounts department of General Electric Co., according to “The Twin Enigma,” a 2016 book by Vivienne Lewin.

They teamed up in the 1960s to turn old boarding houses into hotels and moved into breweries and casinos, marking the beginning of their business empire. Their holdings include delivery service Yodel and online retailer The Very Group.

Frederick is also in court with his estranged wife, Hiroko Barclay. A judge who oversaw the divorce’s preliminary hearing placed limits on what can be reported, but the case may eventually shed light on the Barclay family’s finances if it reaches a public decision.

Ritz Sale

Public filings show hints of the Barclay family’s fallout even before start of the court case, and how the Ritz’s new owner snapped up one of the Barclays’ most valuable assets.

Aidan and Howard Barclay replaced Amanda and one of her associates as directors across the Ritz companies a week after Alistair Barclay was recorded handling the bug. The brothers secured a deal with Qatari businessman Abdulhadi Mana Al-Hajri for the Ritz for around 800 million pounds in March, with Frederick and Amanda finding out through press reports, despite Amanda holding a 25% stake in the hotel.

“We are surprised and perturbed by the announcement that the Ritz hotel has allegedly been sold,” a spokesman for Frederick said at the time. “We have neither consulted nor have we approved this sale.”

Al-Hajri, the 40-year-old brother-in-law of Qatar’s ruler, is following the style of the Barclays’ stewardship of the Ritz by keeping a low profile. In addition to the London hotel, his real estate holdings include Turkey’s most expensive home and a $50 million Miami mansion, according to local media. 

Another of Frederick and Amanda’s lawyers, Desmond Browne, summarized the ongoing family feud in court earlier this year.

“We all remember Tolstoy saying ‘each unhappy family is unhappy in its own way’,” he said. “Here, the children of Sir Frederick and Sir David have been at odds…concerning the family trusts, and cousin, sadly, has been pitched against cousin.”

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