Inside the Barclay family feud that could end an empire

The famously private Barclay brothers were renowned for being tight‑knit and spent decades building their $13 billion fortune. But with a spying scandal and a looming divorce, is their family's vast organisation about to fall? Oliver Shah reports.

On October 27, 1989, Aidan Barclay gave his uncle Frederick a hand-engraved cigarette case. Frederick Barclay and his brother David, Aidan's father, had clawed their way up from running small property and retailing interests in west London and spent the go-go decade of the 1980s blazing a trail of eye-catching takeovers — amusing and frustrating the press along the way with their almost self-parodic love of privacy.

The identical twins, then in their fifties, had taken Aidan under their wing as they bought and sold breweries, hotels, shipping lines and oil and gas fields, making hundreds of millions of pounds. David's favoured son, then 33, seemed to have enjoyed the ride. "FB," Aidan wrote in the engraved message, "in recognition of and thanks for many years of much fun, laughter, aggravation and experience. To those that were caught and those that got away." He then listed a long line of deals.

For the next three decades the tight-knit Barclay family amassed an empire valued at £7 billion ($13.43 billion) in this year's Sunday Times Rich List, buying the Ritz hotel, Littlewoods and the Telegraph newspapers. They built a mock-gothic castle on the Channel Island of Brecqhou, sometimes terrorising the residents of neighbouring Sark with their attempts to shake up its constitution. They enjoyed the ear of successive prime ministers, putting up Margaret Thatcher in Belgravia after she left 10 Downing Street, sending book recommendations to Gordon Brown, texting with David Cameron and paying Boris Johnson £275,000 ($528,000) a year as a weekly columnist. Their titles campaigned for Brexit, proclaiming this year: "It's Telegraph readers wot won it."

All the while they operated from behind a wall of silence. Their business interests are owned via a network of offshore companies in Jersey, Bermuda and the British Virgin Islands. Few heard the gravelly London accents of the neatly suited patriarchs. Sir David and Sir Frederick, who were knighted in the first "double dubbing" in 2000, almost never spoke to the press. Nor did Aidan, who runs their companies on a day-to-day basis with his younger brother Howard.

The Barclay family was seen as a homogeneous entity — eccentric and ruthless, with a complicated take on the British establishment: fond of tradition yet pushing for a low-tax, low-regulation model along the lines of Monaco or Singapore. Above all it was seen as united. Until now.

Court papers filed for Frederick and Amanda said that his nephews had recorded more than 1,000 conversations — at least 94 hours' worth — since November. Claiming that Alistair, 30, and Aidan, now 64, had referred to the tapes as "podcasts" in WhatsApp messages, the papers described Frederick, 85, as "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".

They said the spying had taken place at a time of "significant ongoing commercial disputes" between the two sides of the family, including over a sale of the Ritz, the financial state of the empire, Amanda's stake in it and Frederick's divorce, which started last October. That allegedly allowed David's sons to "anticipate the claimants' every move in advance" and "plan their business strategy around that, including knowing what legal advice the claimants were seeking and getting".

Frederick later released security camera footage appearing to show Alistair, wearing a Harvard hoodie and tracksuit bottoms, installing a bug in the Ritz conservatory. The defendants admitted he had bought an "off-the-shelf recording device" and put it there, but said he had done so because he was "very troubled about what seemed to him to be a remarkable change" in Frederick and Amanda's behaviour, not because he wanted to do them financial harm. The defence papers said the operation was instigated by Alistair, with Aidan and Peters "the least involved".

The case threatens to expose a far deeper schism in the family and shine a light on the Barclay companies — dogged in recent years by rumours of deteriorating financial performance and huge debts.

Amanda, 42, an artist and photographer who does not take a close interest in business, is understood to have long distrusted and disliked her cousins, whom she is said to view as grasping. Although it was always assumed that the Barclay twins owned their empire 50:50, some 30 years ago it was put into trust for the next generation. Frederick agreed that Amanda would have 25 per cent and David's sons could have 75 per cent — a decision he now privately describes as the biggest mistake of his life. Amanda has been increasingly concerned that David's side of the family — in particular Aidan — want to cut her out of the remaining 25 per cent.

"She has always believed they would like to have the entire lot and she would wake up one day and find that somehow, through clever structures, she doesn't even have 25 per cent," said a friend. "They're greedy. They're always wanting, wanting, wanting."

Frederick's side has even speculated that to destabilise him and distract him from the impending legal battle, Aidan and Howard may have encouraged Frederick's wife, Hiroko, 77, to divorce him — a theory dismissed by sources close to Aidan.

"This is a world of unbelievable, horrible, very dark complexities," said an insider. "It's extraordinary."

In other words, the affection contained in Aidan's cigarette-case message to his uncle 31 years ago has comprehensively dissipated. The enmity has escalated to such a level that Frederick and Amanda have increased their personal security, unnerved by what they see as a pattern of coincidences and events. That said, there is still the outside chance the two sides could settle out of court to avoid the sheer embarrassment of the family's dirty laundry being emptied out and picked over for years.

The collapse of the Barclays into war has astonished those who know them well. Even judged against the standards of the great family feuds — such as the Johnson & Johnson inheritance row and the squabbling among the Moores, who owned Littlewoods — the Barclay saga stands out. It makes the HBO drama Succession look like a Disney cartoon. "This is the event against which I would have bet more than I could afford," said a former lieutenant. "The brothers were such a harmonious unit. I viewed them as a two-headed beast, a Hydra. They were so bonded and the business was so disciplined."

A property developer who fought fiercely with the Barclays in recent years said: "It's all gone wrong for them, sadly. Jesus, it's a mess. They were thick as thieves and here they are, killing each other, taping each other."

Tragedy struck in 1947, when the boys were 12. Their father, who had never recovered from being gassed during the First World War, died aged 54 from a reaction to an anaesthetic during an appendectomy — leaving their mother, Beatrice Cecilia Barclay, as the dominant parental influence. The twins, who had eight other siblings, none of whom would go on to anything like their meteoric heights, went to work in the accounts department of General Electric, then struck out on their own. Frederick and a younger brother, Douglas, ran Candy Corner, a confectioners and tobacconist near Kensington. In 1960, after being let down by a sublessor, they found themselves owing the landlord several hundred pounds and were made bankrupt.

While Frederick tried to recover, David, who had married Zoe Newton, a model who became the National Dairy Council's "drinka pinta milka day" girl, opened Hillgate Estate Agents in 1962. He paid off his brother's creditors and Frederick joined him on the board in 1968. The takeover boom of the 1980s presented rich pickings for two men with a taste for debt and speculation. They made their first fortune in 1983 with a swoop on Ellerman Lines, a brewing and shipping company. The Barclays broke it up and later sold the brewing business alone for £240 million ($460 million).

The deals rolled in: the Gotaas-Larsen shipping line in 1988; The European newspaper, previously part of Robert Maxwell's empire, in 1992; the Ritz and The Scotsman newspaper in 1995; the retail conglomerate Sears in 1999; the Littlewoods fashion chain and catalogue in 2002; the mail-order business of Greater Universal Stores in 2003; and the Telegraph newspapers in 2004. They sealed the latter for a toppy £665m — but not before trying to strike a private arrangement with Conrad Black, the disgraced media tycoon who controlled the voting shares of Hollinger International, the papers' Canadian parent group, which might have disadvantaged other shareholders. A Delaware judge blocked that deal and observed that the Barclays "chose a pragmatic course of action that they knew was less than fully candid" and had "remained silent" while Black misled Hollinger International's board.

Legend has it that a young David once took his mother to tea at the Ritz and promised her he would own it one day. She did not live to see the day: Beatrice died in 1989, aged 83. Nor did she see the grand home her sons built in the Channel Islands.

In 1993 the twins paid £2.3 million ($4.4 million) for Brecqhou, a rock to the west of Sark. Over coffee at the Dorchester hotel on Park Lane, Frederick sketched out on an envelope his vision for a neo-gothic castle, complete with four turrets, and handed it to the architect Quinlan Terry. The builders said it would take five years; Frederick wanted it done in 18 months. They settled on two years. In December 1996 the Barclays ate their Christmas goose in the newly finished dining room.

The £98 million ($188 million), blue-gray Spanish granite castle came with monogrammed drainpipes and a working gun battery. When the twins' old dealmaker friend Sir Philip Green turned 50 in 2002 — years before they spectacularly fell out with him — they filmed themselves firing a six-gun salute.

And from their rocky perch the Barclays aimed salvo after salvo at Sark, a crown dependency run until recently under a feudal system, where cars, street lights and income tax are banned. They spent most of the 1990s arguing, without success, that Brecqhou did not belong to Sark, then overturned the rule of primogeniture and the "treizième", an archaic arrangement that gave the seigneur, the head of the island, an 8 per cent cut of property transactions.

In 2008, under pressure from the Barclays, Europe's last feudal state held its first free election. David and Frederick published a "Manifesto for Sark" that proposed turning it into a luxury tourist destination, with a funicular railway and a helipad. Islanders voted against seven of the nine candidates endorsed by the Sark News, a primitive pamphlet printed by the Barclays' estate manager, and elected nine of the 12 candidates it had blacklisted. The next day, the manager, Kevin Delaney, closed the Barclays' businesses on Sark, putting 130 people — almost a quarter of the population — out of work two weeks before Christmas. The businesses eventually reopened. Two years later, David offered the seigneur £2 million ($3.8 million) for his title and the island's lease. He was rebuffed.

Visitors to Brecqhou are greeted by the Barclays' motto, "Aut agere aut mori" — "Do or die" — above the door. On either side are shields emblazoned with the family crest, ships and Celtic crosses. A huge painting of the brothers hangs in the entrance hall, in which they are looking at each other fondly. But for the past four years, David and his second wife, Reyna Oropeza, have lived on the island alone.

The twins may look indistinguishable — although David parts his hair on the left, Frederick on the right — but they are different in temperament. David's critics say he is aggressive and bullish, while Frederick is calmer and more methodical. David's defenders see him as the powerhouse who built the empire while Frederick took a back seat. "To make it work, one was almost reliant on what the other had," said a relative.

Their relationship appears to have changed gradually as David's eldest son grew in confidence and experience, moving from understudy to lead role. Despite Aidan's expensive education at St John's boarding school in Surrey, he adopted his father and uncle's accent, wearing red braces and chomping on fat cigars. "He likes to give the impression of someone who's street smart, who's happy rolling his sleeves up and doing deals with the world's toughest operators," said a former associate. "He doesn't want anyone to think he's a privately educated softie who's going to be rolled over."

When the Barclays backed Sir Philip Green to break up Sears in 1999 — a deal that yielded £300 million ($55 million) — it was Aidan who represented their interests. Aidan also led the Telegraph bid and oversaw the sale of the Littlewoods stores chain to Primark when the Barclays merged the catalogue business into Shop Direct, now called Very. Married to Fizzy, a London socialite, Aidan acquired the trappings of a tycoon, buying a private jet and a superyacht.

According to a family insider, David instilled arrogance and entitlement in his sons from a young age: "He was always on about, 'The sun shines on my sons and they are the kings of kings.' You'd think, 'How can your son be a king? Don't be so ridiculous — he's a child.'"

A source close to Aidan and David denied that this was the case.

Aidan and Howard were regular visitors to No 6, where Frederick lived with his wife, Hiroko, their daughter, Amanda, and Hiroko's son from a previous marriage, Ko Asada. Hiroko would often cook while Frederick bantered with his nephews. Although they viewed their uncle as a second father, according to the family insider there was an edge to the way they played with him. "There was this pattern of, whatever Frederick might have achieved — whether he'd bought a car or done a deal, from the smaller things to the bigger things — somehow they'd end up with it. They'd say, 'Oh, Uncle Freddie, can we have it?' And he would say, 'Sure, I'll get another one.' He would come home with an entire cake and they'd say, 'Actually, can we have all of it?' And he would say, 'Fine.'"

Several sources said this dynamic crystallised around 1990. David had been in and out of illness, complaining of heart palpitations linked to ME. One night, Reyna asked Frederick to see David in his cabin at the back of Lady Beatrice, the 197ft superyacht named after their mother.

According to family lore, David said he was sure he wouldn't live long and asked Frederick to agree on the 25:75 division of the empire between the children — with 75 per cent going to Aidan, Howard and Duncan (another son, who was later switched out of the trust in favour of Alistair). Frederick said yes. Amanda, more than 20 years Aidan's junior, was always suspicious of her cousin and thought he would try to take her 25 per cent.

As David's health surprisingly held out for years, Frederick told friends he had been "a bloody fool". According to another family insider, the twins almost came to blows in a blazing row at Brecqhou four years ago when David asked for a further change to the trust arrangements and Frederick confronted him over the inequity of the 25:75 split. Frederick left Brecqhou and never returned.

Their relationship is said to have been "completely severed". Amanda, meanwhile, wants to liquidate her 25 per cent stake and never see David's side of the family again.

Frederick has another headache. Last October, after more than 40 years of marriage, Hiroko said she was going out for coffee and never came back. That afternoon, Frederick was served with divorce papers. They had already been filed at the High Court. Hiroko had hired Fiona Shackleton, the divorce lawyer known as the Steel Magnolia. People close to them were surprised at the sudden hostility — especially given that Frederick, having put all his assets into trust for the children, in effect has none of the Barclay fortune.

Amanda was suspicious: during seven months on the board of the Ritz, before she was sacked in January, she had discovered that Shackleton, 64, was among a select group of individuals with long-standing discounted rates at the hotel. She had asked who had authorised it and was told "head office" — meaning the family management company, Ellerman, run by Aidan.

There is no evidence to substantiate the extraordinary idea that Aidan or David's side of the family encouraged Hiroko to divorce Frederick. A source close to Aidan denied any involvement. What is certain is the effect it has had on the 85-year-old who signed over a crucial 25 per cent chunk of the empire 30 years ago. "The divorce is the one thing that gets to him," said someone close to him. "He's an extremely stoic man and it's the only part where things do emotionally break down. It's extremely cruel, and the bigger picture — how everyone has behaved — is chilling."

The question now is whether the Barclays, with their billions and their brains, ultimately decide that a ceasefire and legal settlement are preferable to years of internecine bloodshed in the courts and newspapers. While the wounds inflicted on both sides are unlikely ever to heal fully, they may pay heed to the family motto and realise that — in this case at least — doing is preferable to dying.

Written by: Oliver Shah
© The Times of London