The Attack on Sleaze: Battle centres on two versions of 'truth'

The spectacle yesterday was one of two powerful men each insisting he was telling the truth in the face of newspaper headlines asking who was the liar.

One of them, Jonathan Aitken, Chief Secretary to the Treasury, stood before his peers in the House of Commons and denied allowing a wealthy Arab businessman to pay for a two-night stay at the Paris Ritz. He was fighting to stave off attacks that threaten his political career.

The other, Mohamed al-Fayed, chairman of Harrods and owner of the hotel, produced evidence that apparently contradicted Mr Aitken's version of events. For Mr Fayed, the fight was, and has always been, to preserve what was left of his reputation after a Department of Trade and Industry report was highly critical of his takeover of Harrods.

The controversy surrounds a visit to Paris by Mr Aitken in September 1993 where he says he met his wife, Lolicia, and daughter, Victoria, who was moving to a new school there. He stayed in a single room and later insisted he was alone except when he met his family. However, also spotted at the hotel that weekend was Said Mohammed Ayas, a friend of the Saudi royal family and a director until 1992 of Al Bilad (UK), an investment company founded by Mohamed Bin Fahd, son of the Saudi King Fahd.

Arguably more embarrassing, Wafic Said, a Syrian-born arms dealer and Saudi representative linked with the controversial Al Yamamah weapons contract, in which Mark Thatcher is rumoured to have been involved, was also at the hotel. Mr Said owns one-third of Aitken Hume, the financial services company set up by Mr Aitken. Thirdly, Dr Fahad Somait, another Al Bilad (UK) director, was staying at the hotel.

At the time, Mr Aitken, who was also a director of Al Bilad (UK) until 1992, was Minister of State for Procurement at the Ministry of Defence. He denied meeting any of the men when asked about the visit by Peter Preston, editor of the Guardian, earlier this year. However, he did say he met his daughter's godfather, who happens to be Mr Ayas. Mr Ayas independently confirmed he had been with Mr Aitken.

Sir Robin Butler, the Cabinet Secretary, was asked by Mr Major to investigate Mr Aitken's trip because two new pieces of evidence had been released by Mr Fayed.

First, Mr Aitken's hotel bill for 8,010 francs was produced, apparently showing that the full amount had been charged to Mr Ayas. Mr Aitken's initial defence was that his wife, who had not stayed at the hotel, had paid his bill in cash.

To back this up, he sent Sir Robin extracts of a letter from Frank Klein, the hotel manager, giving details of how the bill was paid. Mr Klein's letter, dated 28 February 1994 says that a cashier did remember an occasion the previous September when a 'brunette lady of European aspect speaking French (a fair description of Mrs Aitken) paid the cash sum of Fr4,257 in favour of the account of M. Ayas'.

This, however, is now the basis for the latest controversy because the copy sent by Mr Aitken to Sir Robin was edited to exclude everything after the word 'sum'. Therefore, the correspondence seen by the Cabinet Secretary gave no indication that the sum paid was only Fr4,257 - just half the bill. The question is, who paid the other half? Last night, a copy of Mr Ayas's bill emerged which showed clearly that the FF8,010 bill relating to Mr Aitken's room was debited to Mr Ayas's account. It also shows that half that sum was credited to his account following a payment - presumably by Mr Aitken's wife.

The question still remains, however, who paid the other half? Yesterday, Sir Robin said he was satisfied Mr Aitken had not misled him or done anything wrong, despite the new evidence. He wrote to Mr Preston: 'For the record I do not regard Jonathan Aitken as having lied to me or misled me . . . I am satisfied that, despite the discrepancies in the billing to which you have devoted so much attention, Mr Aitken and his wife paid their bill at the Ritz in full.'

During Treasury questions in the House, Mr Aitken described Sir Robin's letter as 'repudiating and denying the scurrilous allegation . . . to the effect that I had lied to the Cabinet Secretary'.

Mr Fayed has been leaking documents and information embarrassing to the Government ever since his attempt in the European Court to overturn the DTI report on Harrods failed last month.

Last night he issued a statement which seemed to challenge the minister's version of events directly. It said: 'I note with interest that Mr Aitken is maintaining that he and his wife settled his bill at L'Hotel Ritz - she was not a guest. I note with interest that the Secretary of the Cabinet has accepted his explanation in spite of the fact that his whole bill was put on to the account of a Saudi businessman.'