They fought for Brexit and were kingmakers for Boris Johnson, but at their moment of glory, things are getting ugly for the secretive businessmen and their families

Why this story? Is there a better example than this of the widening divide between the powerful and the powerless? The Barclay brothers, self-made Londoners, have built a business empire which includes The Ritz hotel and The Telegraph newspaper. Through their newspaper, they have reshaped Britain – championing Brexit and pulling off the astonishing feat of seeing one of their own highly-paid columnists installed as prime minister. Men of extraordinary influence, the powerbrokers of Brexit live offshore and appear to avoid a lot of tax. When Tortoise launched, one of our motivations was to report on the power gap between those who wield influence and those who feel locked out. We believe in responsibility. And it is simply unsustainable to practice both press ownership and personal secrecy. So three months ago, we asked Jane Martinson, professor of financial journalism at City University, to try to unravel the complex knot of the Barclays’ business interests, following the flow of money on and off shore, trying to understand what motivates them and reaching people who have done business with them. It is a world mostly obscured from view, but a picture emerges of an empire in crisis. David Taylor, editor

Barclay v Barclay 50'00 Your browser does not support the audio element.

On Brexit morning, January 31 2020, the Daily Telegraph celebrated. It published a special edition, hailing its part in Britain’s departure from the European Union: “How the Telegraph stood up to the establishment elite to reflect and push forward the views of the silent majority.” It noted happily that its own columnist, Boris Johnson, is now Prime Minister. And, just as in 1992 when Rupert Murdoch’s tabloid claimed to have held off Labour and secured John Major’s Conservative Party an unlikely win in the General Election – “It was the Sun wot won it” – the newspaper boasted: “It’s Telegraph readers wot won it!”

But the moment of the Brexit triumph has coincided with a remarkable unfolding crisis for the Telegraph’s owners, the Barclay brothers.

Family feuds, financial strain and an expensive folly on a rocky island in the English Channel is the untold story of the most influential press barons of Brexit Britain.

Born 10 minutes apart, David and Frederick have been inseparable for much of their lives. Now 85, they have fallen out, live separately, and no longer see eye to eye over the future of the eclectic empire they built from scratch or how it should be left to their children.

At the same time, the fiercely private twin brothers are witnessing their family life spill dramatically into public view. Known for their frequent use of lawyers to get their own way in business, one half of the family is now using the law against the other. Last week, a previously secret legal fight burst into plain sight – at its heart the stunning revelation that David’s sons had bugged their uncle and cousin with a listening device in the conservatory of their flagship property The Ritz hotel.

Barclay v Barclay is no longer a subject of speculation and gossip, it is a matter of legal fact, playing out at the Royal Courts of Justice in the Strand.

Alistair Barclay, youngest son of David, was caught on camera fiddling with the listening bug in the hotel conservatory on 13 January. And on 30 January, just as the Daily Telegraph was putting the finishing touches to its triumphant ‘BREXIT DAY’ supplement, the Barclay v Barclay legal action started.

What lies behind the family feud? Control, power, betrayal, and inevitably, money.

As Desmond Browne QC, representing Frederick and Amanda Barclay, said in court last Monday: “We all remember Tolstoy saying ‘each unhappy family is unhappy in its own way’.

“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.”

In his initial judgment, Mr Justice Warby found that the dispute had arisen between “different elements of the family over the governance and direction of the group businesses”.

The family spies drama is not the only trouble besetting the Barclays, however. The empire itself, built up over half a century, looks to be in financial difficulty.

Sir Frederick is getting divorced from his wife of more than 40 years, Hiroko, who has employed the services of one of London’s best-known divorce lawyers, Fiona Shackleton. Any financial settlement is likely to be increasing pressure on him to at least clarify, if not realise, some assets on behalf of their only child, Amanda.

Lady Hiroko Barclay (left) leaves the High Court in London with her lawyer Fiona Shackleton

But the Barclay family dispute long predated both the news of the divorce and the strategic review of their businesses confirmed last October. Four years ago, a new headstone was placed on the grave of the twins’ father, but as revealed in the FT, only two of his children put their names on the new stone, Sir David and his brother Andrew. Sir Frederick’s name is absent.

The twins are understood to have had limited contact in recent times, through text and written notes.

Matters have come to a head over the possible sale of The Ritz, the jewel in their corporate crown, which is the most likely to be sold after potential purchasers have expressed an interest. The Telegraph could be next. But why?

Some of their main businesses, notably the jubilant newspaper, are worth a fraction of what they once were. Their earnings are down. They have debts coming due. Lenders, nervous of negative cash flows from their companies, are ratcheting up the cost of borrowing. The Barclays are looking to raise money. The Sunday Times calculates the Barclay brothers are worth £8bn, but analysts can’t figure out how.

Since the brothers fell out several years ago, tensions have mounted between their children, tension which has been building for years and which exploded in court last week. A notoriously secretive family, the “vexed litigation” mentioned in court comes after almost a year of semi-public signs of a generational shift for the Barclays’ business empire. The children – and their children’s children – are swapping directorships, taking on different parts of the family business. A succession drama is unfolding in which the personalities are mostly unknown, the prize is unclear, and, we now know, the tactics deployed include the dark arts of espionage.

Amanda Barclay photographed with Anton Du Beke at a film premiere at the Ritz in 2009

At the heart of the spying allegations are growing concerns over not just the fiendishly complicated ownership structure – with a network of trusts and offshore companies – but also the finances of the businesses themselves.

Offshore funds and family trusts are typically used to avoid tax, as well as too much exposure. But what happens when arrangements become so complicated that even members of the family don’t know where the money is, or how much they’re worth?

This is what is happening to the next generations of the Barclay family, set to inherit a group of businesses linked to a spider’s web of offshore trusts and accounts.

The surprise is that the saga concerns two men who not only built an empire from scratch, but were so inseparable they lived together and had their home furnishings monogrammed with the initials D and F.

The feud has resulted from a difference of opinion not just over the future of the businesses, but of how their children and grandchildren are provided for. The two men have five children: on one side, David, the eldest, with his four sons; on the other, Frederick, who has one daughter.

The empire is not believed to have been divided equally between either the men or their children, with Aidan, the eldest son, long seen as the “first among equals” in managing the business, while Duncan, the third and least known son, is understood to have few directorships or indeed beneficial interests in the family firm. Instead, he is involved with a number of Christian charities.

Amanda has been left with a 25% share of the family trust, which leaves her unable to challenge her cousins on any of the big decisions.

This division between the family also makes a sale of part of the business to any outside investor more difficult as few would buy into a privately-owned business in which 75% is owned by sons of one of the founders. Sir Frederick is understood to have talked to other media barons such as Rupert Murdoch about the sale of his daughter’s stake in the Telegraph, for example, but neither Murdoch nor Jeff Bezos, who owns the Washington Post, are thought to be keen on a part share in a newspaper in which another family owns the majority.

Amanda is not a director of B.UK, which is based in Bermuda and oversees The Ritz and The Telegraph. Her cousins, Aidan and Howard and their closest aide Philip Peters are all directors of the Bermuda company. All three men were named as part of the operation to bug The Ritz.

Aidan Barclay, left, and brother Howard, right with Bahrain's Crown Prince Salman bin Hamad bin Isa Al Khalifa

Filings in Companies House show that Aidan and Howard were also named as persons with significant control of Ellerman Holdings Ltd, UK parent of The Ritz last December, a few weeks after Ellerman Investments Ltd ceased having any control.

Having previously run Sir Frederick’s charitable efforts and set up a school for special needs children, his daughter Amanda had little to do with the St James’ Street head office presided over by her eldest cousin Aidan. Her father and uncle had long placed the day-to-day running of the business in Aidan’s hands, management which, in the past four years, has seen a rapid increase in the amount of debt taken on by the UK businesses.

Concern over the debts taken on board by some of the businesses, notably Shop Direct, the online retailer, is understood to have led Amanda to take more of an interest in the business. Her father, who in the 1990s, had joined his brother in fighting Sark’s laws of primogeniture which would have left everything to the eldest son, is understood to have spent recent years fighting for his only child and making sure her share of the fortune is honoured.

Last June, Amanda and Fardokht Aghevli, a trusted employee who ran Sir Frederick’s charitable trust, were installed as directors of The Ritz. Their tenure was terminated in January after the two women found evidence that Sir David’s youngest son, Alistair, was bugging an area of the hotel used by Sir Frederick to smoke cigars and talk to his daughter. The two women were replaced by Aidan and Howard Barclay, prompting the legal action in which Sir Frederick and Amanda have accused her cousins of a breach of confidence, misuse of private information and a breach of data protection rights.

The Palm Court, which serves 'Tea at the Ritz'

Details revealed in court suggest the surveillance operation had been going on since early November 2019 and that transcripts of bugged conversations had been shared amongst Frederick’s nephews and discussed over WhatsApp.

Given how litigious this family is, legal experts have said there is a high chance of further courtroom drama pitting Barclay against Barclay.

For a family seemingly obsessed with privacy – almost no pictures exist of the Barclay brothers – it is hard to over-estimate the strength of shockwaves sent by news of the legal action. Most national newspapers have covered the legal action and feud since it came out last Monday – with the exception of the Telegraph, which can be relied upon to ignore stories about its owners.

Unlike the Murdochs, who have for decades been subject to media scrutiny, and made no public complaint about the award-winning mini-series Succession which appeared loosely based on a version of their own family, the Barclay brothers are press barons who work hard to deter press coverage. Family members are rarely, if ever, interviewed.

What we do know about the brothers is that they are tax exiles who run their businesses through a web of offshore vehicles. They are secretive, operating an opaque corporate culture without much recourse to public fundraising. One former close associate has described them as the “CIA” of the business world. Their reclusiveness has, until now, been the thing that’s best known about them. But in 2020, the realities of their struggling companies and the complexities of an extended family business are set to be thrust into the spotlight.

They are also extremely litigious, so that any journalist who embarks on an investigation into their affairs knows they risk running into the Barclays’ lawyers.

They sued BBC journalist John Sweeney in a French court for something he said in an interview on BBC Radio Guernsey radio in 1996, though not for the BBC Panorama documentary he made in 2012 which highlighted how little tax they paid. “One of the things that gets my goat is their hypocrisy,” says Sweeney now. “If you own a newspaper you have ticked the publicity box. Rupert Murdoch understands that. He gets that he is in the public eye, it’s part of the game. The Barclay twins own a newspaper, which is more and more partisan, and hide behind thickets of libel lawyers.”

Just last summer, Sir David was ordered to pay damages and costs of €56,000 to a little-known French playwright who staged an absurdist farce about two billionaire twins in a 150-seat theatre.

The defence documents accused Sir David of having “excessive sensitivity” and an “exacerbated taste for secrecy”.

Very few people will talk on the record about the Barclays. A former business associate, once close, said: “They are complex people and they have structured the company in a very complex way. It’s tax efficient, which is why it’s confusing. Nobody knows where the money flows to.”

The disagreement between the brothers and the positioning of their children has added a new layer of complexity. Any money placed in trusts, which avoids inheritance tax, requires a greater level of agreement from other family members than the two men are used to. Adult children who have remained entirely out of the public eye are coming forward to manage assets on Sark and in London.

“They used to hold each others’ hands and that’s all ended. Nobody’s talking, it’s all a big punch up,” said the former business associate. “There’s a lot of complexity and a lot to unpick.”

Boris Johnson with Howard & Aidan Barclay at the Spectator Magazine 180th Anniversary Party

The story of the Barclays and their business empire is in a way the story of our age. Feted for their poor beginnings and financial success, they have been able to create an empire so complicated and secretive that no one can really say for sure where all the money is. A former adviser to high net worth individuals called the financial structure of businesses with so many offshore parents “like knitting fog”.

Although not overtly political, their hatred of taxation and twin use of the law is confounding. “They want more than Brexit and Boris,” said one former executive. “It may sound far fetched but what they really want is a sort of Singapore-on-the-Thames with deregulation and no corporation and personal tax.”

Their newspaper pushed for an EU referendum, campaigned for Brexit and now enjoys the fact that their own columnist is installed in 10 Downing Street. They were given knighthoods for their services to charity. Their friendship with Margaret Thatcher was such that she spent her last days in The Ritz. Yet strangely little is known about them given the part they play in British public life.

David Barclay once told the Telegraph that their desire for privacy “stems from our philosophy of not talking about ourselves, or claiming how clever we are, or boasting about how successful we have been. We would, anyway, claim that we have been more fortunate than many others.”

In 2004, in a relative slew of newspaper comments attending the purchase of the Telegraph, Sir David’s son, Aidan Barclay told Bloomberg: “We do not consider our financial, business or charitable affairs to be of public interest as we are not answerable to shareholders, or indeed members of the public. We would prefer if you did not write about us at all.”

Of course, not everyone agrees. It is hard to sustain an argument that you are not answerable to the public, whilst using your media organisation to fundamentally change Britain.

And it is notable that in court, words such as “untrustworthy” and “improper” have been used of the family members linked to the bugging operation.

Frank Field, former Labour MP for Birkenhead, where many people still work for Barclays’ firm Very, said: “I think the Telegraph’s policy that people in public life should be open ought to apply to the owners of the Telegraph.”

Labour’s Margaret Hodge, who chairs the Public Accounts Committee and has been a vocal critic of companies and individuals who practice tax avoidance, told us: “‘If the Barclay Brothers are avoiding tax then they must be held to account. It simply beggars belief that billionaire businessmen that make their money in the UK continue to shift their profits offshore. These businesses rely on UK infrastructure and our public services to operate, so they should pay their fair share back into the public coffers.”

Little may be known about the Barclay brothers but their beginnings are folkloric. When they were knighted, Sir David used the opportunity to say their investiture was “a great example of what can be achieved in this country from whatever background or education or humble beginnings.”

David Rowat and Frederick Hugh were born on October 27, 1934 in Hammersmith, west London to Scottish parents, Beatrice and Frederick Hugh. They already had three children and would go on to have three more. Their home was said to be so close to the railroad that the trains rattled their windows. When the twins were 12, their travelling salesman father died. At 16, the brothers started work, together, in the accounts department of GEC.

Former model Zoe Newton with her new-born baby and husband, David Barclay in 1956

By the time he married his first wife, model Zoe Newton, David was an interior decorator. Within 10 years the two brothers were buying old boarding houses, and by the 1970s, they owned such London landmarks as the Lowndes Hotel, near Harrods department store, according to the UK’s Land Registry. They were even reported to be considering a public listing.

Yet debts run up with the Crown Agents, a government agency, almost led to ruin in 1974 when the Barclays defaulted on the loan. They were spared repayment, but a subsequent government inquiry was critical of the way the Crown Agents had used public money. From then on, when they wanted to raise significant amounts of money, the Barclays stuck to a small group of lenders.

Most of their big deals, from the early 1980s to the purchase of the Telegraph in 2004, were financed from borrowing from a small group of lenders including HBOS, the Edinburgh-based bank which collapsed during the credit crisis of 2008. The bank, led by the since discredited banker Peter Cummings, provided debt finance for the Telegraph acquisition and, in 2002, the £750m acquisition of Littlewoods.

The 1980s were really the breakthrough years for the brothers, when their ability to buy companies cheap, develop the property and sell off parts, came good. Their first big break came when they bought the shipping and brewing group, Ellerman Lines, for just £45m, from the family scion’s widow. They sold just the brewing division five years later for £240m.

During this time, they also became favourites of Prime Minister Margaret Thatcher.

Not long after their mother died in 1989, they bought a yacht and called it Lady Beatrice. The 1990s saw them buy glitzy properties (The Ritz in 1995 for £75m), their own island (Brecqhou for £2.3m), and an elite address on Monaco’s Avenue de Grande Bretagne. They became known for their ballroom dancing success.

Monaco where the Barclays have a residence on Avenue de Grande Bretagne

An attraction to homes in jurisdictions with hardly any personal taxation has tended to be matched by corporate engineering which lawfully reduced their payments to the British exchequer. In the first 17 years of their ownership of The Ritz, for example, they paid no corporation tax whatsoever in connection with the famous hotel.

They became more philanthropic during the last decade of the 20th Century, giving a reported £40m to charities and medical research. By the time they bought the Telegraph their fortune was estimated at £650m. When knighted for “charitable services” in 2000, Sir Frederick said: “Giving to charity is an important part of our life. It’s an obligation to society.” This philanthropy has continued. In 2010, his daughter, Amanda, set up a school for children with special needs, Frederick Hugh House, in London.

There has always been a clear distinction between the Barclays’ view of taxation, which they seek to avoid, and charity, which they endorse. Former employees talk of individual acts of kindness – they were hugely supportive when the baby son of a former senior journalist Frank Kane became ill, for example – and the Barclays, while fighting taxation for decades in Sark tended to make a distinction if it was to support those in need (as opposed to having to fund general medical services or education, for example).

Sir David Barclay (L) and his twin brother Sir Frederick after receiving their knighthoods

When the possible break up of the businesses was first mooted, Sir Frederick’s impending divorce was said to be largely to blame. But a sale would also raise funds to pay off debts too.

Three of their main companies – Very, the Telegraph and notably Yodel – have either performed so poorly or been hit by such unexpected losses that corporate filings show the Barclays have had to inject £390m of their own money in the 18 months to the end of 2019 – rather than borrow more, at unattractive rates.

The Barclays’ main businesses – the Ritz, Press Acquisitions (which owns the Telegraph), Very (the online retailer and consumer finance business) and delivery group Yodel are all privately held, but their annual accounts show that their ultimate owners are all offshore, based in several different jurisdictions including Jersey, Bermuda and the British Virgin Islands.

To understand how the Barclays move around money, you have to understand how they use offshore accounts. It is neither illegal nor uncommon for corporations to use offshore holding companies to reduce the tax bill of UK-based businesses.

It is the extent of the obfuscation in the Barclays’ empire which is unusual.

For a start, there is the sheer number of on and off shore companies. We have, so far, found a total of at least 150 companies listed in the UK – 69 of them active – where the children and at least one grandson of the Barclays holds a directorship.

The family likes to hand out directorships. Of the 69 active British companies connected to the Barclays, Aidan has 42 directorships, Alistair 13, Andrew nine and Amanda four.

There are more companies in other offshore jurisdictions including Jersey and the British Virgin Islands. The immediate parent company of Press Acquisitions Ltd, which owns Telegraph Media group, for example, is the Jersey-based May Corporation but accounts show this is “ultimately controlled by Sir David and Sir Frederick Family Settlements”.

Between those stages there are other offshore holding companies, some with very similar names – including B.UK Ltd, BI Ltd and B Overseas Ltd, three separate concerns.

The Barclays have had at least 150 companies listed in the UK…

Four of these make up the Barclays’ main British businesses: the Ritz Hotel, the online retailer Very, Press Acquisitions (including The Telegraph) and delivery firm Yodel

Each one has an offshore holding company registered in Jersey

These Jersey based companies are in turn linked to a bigger network of offshore companies, such as B.UK in Bermuda.

Ultimate control rests with Sir David and Sir Frederick Barclay Family Settlements, registered in an unknown offshore location

For as long as the brothers have owned these businesses, profits made in the UK have disappeared offshore, in an entirely legal process in which the UK business uses its cash to make interest-free, unsecured loans to parent companies, often operating in low tax regimes. Meanwhile, the UK businesses borrow money from banks and their lower profits lead to tax relief in the UK. This is largely how The Ritz avoided paying any corporation tax for 17 years, for example.

It also means that profitable businesses like The Ritz can be used to prop up loss-makers by making huge loans to the parent company which can then use the tax free money as it sees fit. One forensic accountant described this as “robbing Peter to pay Paul, when you own both of them”. All entirely within corporate rules.

It is interesting to note here that although the Barclays structure their companies to avoid tax, they employ experts to help them claim as much tax relief as they possibly can. Just after the purchase of Littlewoods in 2002, they calculated that the company had been paying too much Value Added Tax all the way back to 1973, long before the takeover. They secured a £472m payment from the HMRC for the overpayment plus simple interest but decided to fight for a compound rate too – interest on the interest. Thus began a legal battle with the HMRC which they took to the European Court of Justice and which lasted over 10 years. Eventually, in 2017, the Supreme Court ruled against their claim, which would have seen the British taxpayer left with a bill for £1.25bn for two men who live in Monaco and Brecqhou.

The brothers have weathered tough financial periods before, often using debt financing to shelter from temporary storms. However, there have been signs over the past two years that banks and those owed money by their companies are beginning to feel overexposed.

Very is probably the best barometer of this. Like so many Barclays’ businesses, Very has been subject to many name changes. Until January called Shop Direct, Very is an online retailer and consumer finance business which has its roots in the mail order and football pools companies of northern England, Littlewoods and Great Universal Stores.

After a successful move online, the business has been a largely profitable one for the Barclays. It reported its first pre-tax profit for a decade in 2013.

The company typically offers loans to low income consumers who use the “never-never” to buy essentials and Christmas presents despite interest rates which can be as high as 39% or twice the standard rate for a credit card bill. These rates would suggest that some of these consumers are struggling to qualify for normal credit cards.

A pioneer in this kind of financing, Very has been successful in repositioning itself as an online, not catalogue, business. Banks and other investors have been willing to date to lend the business almost £2bn. Most of this is made up of a £1.3bn loan securitised on the back of the repackaged customers debt, while a further £550m was raised via a high yield bond in 2017. The Barclays had wanted to raise £700m but settled for less. Both the securitised debt facility and the high yield bond are due to expire before the end of 2022 which means that they would have to be repaid or renegotiated.

Signs that external lenders are becoming nervous about the amount of debt came last autumn when Very announced worse than expected costs to settle historic claims brought by consumers who had been mis-sold payment protection insurance.

The announcement of an additional £241m hole in the accounts raised concerns among external investors. The riskier this debt is deemed to be, the higher the cost of borrowing – or yield in this case. Following last summer’s PPI announcement, the yield on the Shop Direct bond almost doubled to 14%. This made any chance of raising more cash extremely unlikely. By October, when the Barclays announced that a further £150m in PPI compensation was needed, they had to contribute half of it themselves. The company’s auditors, Deloitte, raised a red flag with a note about “material uncertainty”. On Friday the company confirmed that it had extended the securitisation debt by £50m and paid a further £25m from offshore funds. The Barclays’ cash injection helped calm nerves and the yield is now below 10% but obviously at some cost.

One market analyst said that the real audience for the Barclays’ subsequent announcement of a review of their businesses and possible sale were these investors, who needed to feel that there was real value in the complicated set of companies.

Similar concerns were raised in the past over sale processes for Shop Direct, for example, which came to nought but which had the effect of making the company seem more valuable.

Not only were the PPI debts worse than expected, but Very faces increased competition. Other retailers, notably market favourite Next, started to offer 0% finance to customers amid signs of a slowdown in the run up to Christmas 2019. James Yacoub, retail analyst at Global Data, said that this increased competition has put pressure on Very to invest more.

Despite being saddled with so much external debt, Shop Direct Holdings (the owner of Very) has nonetheless made a very generous interest-free loan of £718m to its offshore parent company.

The front door to The Ritz

A similar pattern emerges at The Ritz, where the company took out a bank loan of £265m in the year to the end of 2018 with a 3.8% pa interest rate, repayable in 2023. At the same time, the offshore parent company owes The Ritz group some £224.5m via an interest-free debt with no fixed repayment terms. If the parent company had paid that back, then The Ritz would incur a higher tax bill.

This on and off shore money merry-go-round is all perfectly effective as a piece of financial engineering until the cash starts to run out across the board, leaving little scope to raise more finance.

Although the ownership is fiendishly complicated and mostly obscured from view offshore, the accounts which have to be filed by law in the UK provide enough information to show a fascinating picture of interwoven corporate interest. Companies belonging to the Barclay brothers may be generating lots of revenue, but they are not producing lots of cash. Very lost £179m in cash in the year to 30 June 2019. It took on an £180m increase in debt in the period, with the company both drawing down £55m from £1.3bn securitised debt facility plus taking £125m from cash in the bank.

Parcel business Yodel has been haemorrhaging cash for years and its latest set of results make grim reading, with an operating loss of £109m in the year to 30 June 2018 and a cash outflow of £113m. The Barclays injected £115m in equity capital in the period. Intense competition from the likes of Parcelforce and weak customer service darkens the outlook.

The Barclays’ newspaper assets, most notably the Telegraph but also the Spectator, have in the past made more money than their media rivals. But, in an industry beset by falling advertising and circulation revenue, this is a low bar. Press Acquisitions’ operating profits before exceptionals of £8.1m in 2018 (less than half the previous year’s £20m), fell to a post tax loss of £9.7m, although the company is still producing £3 million of cash a year.

Typically companies which swap bank debt for their own funds suggest nervousness among lenders about a deteriorating outlook. This could explain why the Barclays used their own equity finance, or rather that of parent company Jersey-based May Corporation, to reduce Press Acquisitions’s bank debt by £100m to just under £80m. The remaining £80m has a relatively high 5% interest and is due for repayment at the end of this year.

These concerns have led to hundreds of millions of pounds flowing from their offshore accounts into the UK businesses, reversing the usual direction of travel.

Anyone trying to value the businesses supposedly put up for sale by the Barclays would have to strip out external debts of £2.4bn (with the large chunk owed by Very).

Once these debts are discounted, a sale of all four UK businesses – which between them, employ almost 10,000 people – would make the Barclays about £2bn, using generous valuations:

Very could be valued at £1.2bn if it was compared with Next;

Using a £6m-a-room valuation, The Ritz would be worth about £546m once debts were stripped out;

Yodel, post debt, has an equity value of some £60m.

The net book value of the Telegraph in Press Acquisitions, its UK parent, is just £164.9m although interested parties suggest a price of £200m or more could be possible for a trophy hunter.

If the rich list valuation of the twins’ worth is correct, this leaves some £6bn sitting in offshore funds. The only significant sale they have made in recent years is their 60% stake in three luxury hotels, including the Connaught, worth over £1bn in 2015.

They do however seem to have done a deal to provide for the bulk of the old Littlewoods pension fund after questions were asked in the House of Commons about the security of the pension fund and the assets that underpin them.

All of these figures must make the advisory role difficult. Although Ken Costa, a veteran City deal-maker, is understood to be working for the Barclays on the strategic review, the possible sale of The Ritz involves another family member. Richard Faber, a lawyer and the ex-husband of Sir Frederick’s daughter, Amanda, is advising on The Ritz deal, along with US commercial property services group JLL. (Faber has contacts outside his former family having advised the Barclays on the deal to buy the Beaumont hotel with Wafic Said, whose son went to Eton with Faber).

The mooted sale of The Ritz for the £800m asking price, will of course provide immediate financial comfort, if it happens. At this price, not only would the buyer, reported to be a Saudi investor, be paying twice the going rate, but more than 10 times the £75m the twins paid for the hotel in 1995. But there is the matter of the £265m external debt to consider.

The operating performance on its own would not justify such a high asking price. The Ritz generated an operating profit of just £14.9m in the year to December 2018 on revenues of £47m. This is trumpeted as “the most successful financial year in its history” and yet the profit was flattered by an annual rent payment by the Ritz Casino of £3m for use of the basement. The Casino is loss-making, losing £10m in the same period and bringing the total profit to just £5m.

When debt is cheap, companies like to saddle the most profitable bits of the business with debts. And yet, on a cash flow basis, The Ritz is essentially breaking even with cash flow after paying interest and capital expenditure of just £140,000 in the year to 31 December 2018.

These financials may not matter so much to investors looking for a trophy asset in post-Brexit Britain. Hence, the mention of Saudi interest in The Ritz and Abu Dhabi interest in the Telegraph. Newspapers, casinos and luxury hotels still attract prestige-hungry buyers looking for something more than annual returns.

The restaurant of the Ritz Hotel in 1963

The inspiration for the 1927 Irving Berlin song, a hotel synonymous with old-time glamour, The Ritz is the one asset few people thought the Barclays would sell.

The family legal drama exposed this week put The Ritz at the heart of an unsavoury scandal but that seemed to have little instant impact on the cucumber sandwich set enjoying afternoon tea in The Palm Court last week, and will be unlikely to tarnish the institution at 150 Piccadilly which promises a direct link to a gilded age with its invitation to “step into a five star world of luxury”.

Several “indicative” offers are said to have been made for the hotel.

One former employee found it hard to believe this “very British family” would sell off their crown jewels to foreign states which had never been allies, failing to remember that their last hotel sale in 2015 was to the Qatari sovereign funds.

The idea of the Telegraph, a very British title, read by retired colonels in shires, being owned by oil-rich sheiks, would seem inconceivable to great former editors and fans. Yet the paper has already changed in many ways.

Selling to new owners from a country in which press freedom does not exist, would follow the scandal over the Telegraph’s failure to cover travails at HSBC, which had extensive commercial dealings with the newspaper’s owners, which prompted the departure of veteran journalist Peter Oborne and grief for many former journalists. “It was for middle England, now they are white-knuckled gammon,” said one former marketing executive.

What are the Barclays brothers really like? Ask anyone who has met the twins, from former newspaper editors to business associates, and the most common word used is “odd”. Some say “weird”. It is hard to say how much of this is due to the unusual nature of identical twins running a global business empire (they can only be told apart by the way they part the hair – David on the right, Frederick on the left) and how much by their demeanour and behaviour.

Few can say that the Barclays scrimped on their own private hideaway. After buying Brecqhou for £2.3m they demolished the existing house and appointed the architect favourite of Prince Charles, Quinlan Terry, to build a neo-classical block, complete with turrets, to look out over the English Channel. Architects note external, if modern, similarities with the Royal palaces at Windsor and Balmoral.

The home of David and Frederick Barclay on the island of Brecqhou

With two swimming pools and a helipad, they completely recontoured the landscape, providing shelter for an estimated 190,000 trees, an olive grove, vineyard and a carp pond with a bridge modelled on Monet’s garden at Giverney.

In the ornate setting of their mock gothic castle, waiters wearing monogrammed white jackets and gloves served drinks in cups and glasses engraved with the initials, D and F.

Paul Armorgie, an hotelier on Sark, speaks of the strangeness of a meeting he had on Brecqhou years ago. “One of them would start the conversation and the other would finish it.”

“All the Barclays are odd, somewhat comical really,” said one former editor. “They wear the same clothes…I’ve never met people like them,” said another.

Often formal, at 11am every day, they would have a butler light cigars for them, typically a huge Churchillian one for Sir David, sometimes a smaller cheroot for his brother. They spent tens of millions on their castle, with one of the main halls painted bright canary yellow with 30ft-high ceilings and Corinthian columns. Pictures of the identical twins with Nelson Mandela and Margaret Thatcher were nestled beneath a life-size painting of Wellington.

Given their status and longevity, it is highly unusual that there are hardly any photos of them. Most date from their investiture when they wore matching tails and purple silk ties. They are nearly always seen in suits, often pin-stripe, even by a pool at lunchtime.

It is easy to detect an element of snobbery in some of the attitudes towards them. Several people I spoke to, from all walks of life, mention their voice: “They speak in a weird way. Like Americans trying a cockney accent.”

In 2012 when the BBC documentary was aired, the twins said they had nothing to do with the running of the UK companies since they retired to Monaco more than 20 years before. “We have not attended office, management or board meetings in the UK since leaving the country,” Sir David Barclay said in a statement at the time. “My brother and I have no editorial, political or economic power in the UK.”

Already 70 when they bought the Telegraph, the twins had started to hand over more of the running of the business to Sir David’s oldest son, Aidan.

Aidan Barclay, now 64, is the oldest of the twins’ five children. Despite calling his first yacht, Enigma, he is still the best known, mainly because he has taken a more hands-on approach running the various UK companies, notably as chairman of the Telegraph Media group. Aidan’s huge house, is described as a “mini Buckingham Palace” flying a Scottish Saltire flag in the heart of St James’s. He lives there with his wife, known as Fizzy, a well-known London socialite. Aidan and his brother Howard are also known to have homes in the Swiss ski resort of Gstaad.

Aidan Barclay and his wife Fizzy at an NSPCC event at the Royal Albert Hall

Like his father before him, Aidan is relatively short and has a fondness for cigars; with his red braces, he cuts an old-fashioned figure in today’s media and financial worlds. He says “nah” for no and rivals on the other side of a potential takeover tell of having smoke puffed into their faces during meetings. “He must have enjoyed a relatively privileged upbringing and yet he models himself on Del Boy,” said one former editor.

His friends in the past have included retail entrepreneur Philip Green and multi-millionaire property developer Poju Zabludowicz.

Yet he has won the respect of several former business associates and journalists. Smart and quick-witted, “He is definitely not a lucky sperm”, says one businessman who knows him.

His appearance in front of the Leveson inquiry into newspaper malpractice was one of the rare excursions into the public arena for the older family members. At one point in a testimony in which his eyes glint and hands rub together, Aidan Barclay denies telling former Telegraph editor Dominic Lawson to leave the then home secretary alone because he was “a very important man”. “That’s not the way I think,” he told the inquiry. “That’s what newspapers do all the time.”

In written evidence to the enquiry, he stressed his advice to CEOs was always to follow the ethical guidelines fit for a public company: “I expect the highest standards of governance and of ethical behaviour, as would be required in a public company.” Such words may come back to haunt him now in the wake of the bugging scandal.

According to several people close to the group, Aidan is the one in charge of trying to sort out how to handle the business. “Aidan is left to unravel it,” said one former friend. Which is fine as long as everyone agrees.

Someone close to the process said: “Aidan has run the business for the last 15-20 years, running a business has been pretty aligned, but [the brothers] now have slightly different views which makes it very difficult for the person running it day to day. Within the broader family, everyone has different priorities and objectives.”

No one appears yet to have come up with a better plan than to see whether there are any particularly wealthy buyers willing to pay big for a trophy asset, although the younger and less well known members of the family are understood to want to have a say at least.

The timing is not ideal. One former associate said: “Aidan and Howard [his younger brother] should have acted to carve up the business they wanted five or six years ago. They have overshot the timing.”

Aidan is understood to have a good relationship with Howard, with whom he sits on most of the family boards. Howard is said to be affable and charming, but not known for his business acumen.

Duncan, at 59 the youngest son of Sir David’s first wife, Zoe, contents himself largely with the family’s various property concerns and is not part of this action brought by his uncle. His own stake in the future of the business is unknown.

Then there is Alistair – the fourth son, but really a generation apart from his step-brothers. It was Alistair, one-time racing driver, who was caught on camera fiddling with the surveillance device in The Ritz conservatory. Alistair, 30, is the son of Sir David and Reyna Oropeza, his Mexican-born current wife.

When Sir Frederick married Japanese heiress Hiroko Asada in the 1970s, she had a son Ko Asada Barclay, who has gone on to run a business in the UK and donate to UKIP, a rare family member to appear on a party register.

The couple then had a daughter, Amanda Rica Barclay, who was born in 1978. Although she ran the now closed Ritz jewellery business, few advisers had heard of her in January this year, eight months after she had replaced her cousins Aidan and Howard on the board of The Ritz. The move suggested that Frederick’s only daughter was being groomed for a bigger role in the company.

Sir Frederick Barclay (left) leaves the High Court in London, following a preliminary hearing related to his estranged wife Lady Hiroko Barclay

Then, in January 2020, she left the board, along with Fardokht Aghevli, a former director of Ritz jewellery who also runs the Frederick Hugh Trust. The two women left the board to make way for the old guard of Aidan and Howard again, just after the spying scandal emerged. We now know that the women were sacked. Amanda Barclay and Aghevli declined to comment.

There are further acts to go in this family drama. The defence in the bugging case, due back in court in April, is expected to include allegations that Sir Frederick was overheard talking to different people in The Ritz and disclosing commercially sensitive information. Sir Frederick’s divorce is also set to return to court.

A spokesperson for Sir David’s family declined to comment for this article when given six days to respond to a detailed set of questions.

Since becoming rich men, the story of the Barclay brothers can be told through their use of lawyers. Sir David’s most recent lawsuit last summer was against a little-known French playwright who wrote a farce about two brothers and their desire to allow a daughter to inherit. The last lawsuit of Sir Frederick is in support of his own daughter against a spying operation by her own cousins.

As Sir Frederick said in a witness statement in 2012: “Our business is large, but it is a family business.”

Events in The Ritz and in the Royal Courts of Justice might test that implied family loyalty to destruction.

Credits Lead writer and reporter: Jane Martinson Reporter: Tom Goulding Data visualisation: Chris Newell Editor: David Taylor Picture editor: Joe Mee Design: Jon Hill

Photographs Getty Images, Press Association, Shutterstock, Alamy Images