On March 13th Britain’s government said that it will introduce a new law to prevent foreign governments from owning British newspapers and periodicals. The law will take a “broad definition” of what counts as state influence. Foreign officials will be excluded, even if they are using their own wealth. Only small passive stakes will be allowed.

The legislation is all about the Spectator and the Telegraph, two pillars of Britain’s right-wing press. They are up for sale because last year Lloyds Banking Group threatened to bankrupt the companies controlling them, over debts worth about £1.1bn ($1.4bn). The Barclay family, which is the ultimate owner, refinanced these loans with funds from RedBird IMI, an American outfit backed by sovereign money from the United Arab Emirates. The second stage of the deal envisaged the business being taken over by its white knight, raising the prospect of the Spectator and the Telegraph belonging to an Arab government.

Those plans are now in disarray. RedBird IMI may settle for a minority stake; or, more likely, it will walk away. If so, a range of bidders could be interested, including the owners of the Daily Mail, the Murdoch-owned News Corp, or Sir Paul Marshall, a hedge-fund boss and big shareholder in GB News, a right-leaning television channel. A bid from any of these could lead to another investigation. As the process drags on, the Barclays will remain on the scene. The great irony, we have found, is that Sir Frederick and Sir David Barclay, who bought the Spectator and the Telegraph without any impediment two decades ago, also deserved a proper inquiry of their own.

The Economist has investigated the twin brothers and their businesses, drawing on over 10,000 pages of documents, including official papers unsealed between 2003 and 2018 under the government’s secrecy rules. Our investigation goes back to an episode in the 1970s, when Sir Frederick, who is 89, and his twin, Sir David, who died in 2021, were on the verge of insolvency. At the time, the brothers faced personal ruin, because almost all their companies were unlimited—meaning that they had no protection from their creditors. If they were to survive they needed to resort to desperate measures.

A 50-year-old deal is ancient history. However, there are several reasons why it is still relevant today. The Barclays are best known in Britain for their media interests, but they also own property and an online retailer. Thanks to these assets, they feature in the Sunday Times’s latest rich list in 27th place, with a fortune put at £6.42bn ($8.16bn). They got rich by trading assets paid for with borrowed money. Had they gone spectacularly bankrupt in the 1970s, nobody would have been willing to lend them the cash they needed to buy the Telegraph Group in 2004. Without that deal in the 1970s, today’s billion-pound, international conglomerate would never have existed.

Another reason to delve into history is that the 1970s was also the last moment in which an outsider can gain any understanding of the workings of one of Britain’s highest-profile business groups. This transaction transferred a lot of Barclays assets offshore. After it, the family empire became increasingly complex and impenetrable. Our work provides a unique insight into the complexity and subtlety with which the brothers have juggled their assets.

It also reveals how secrecy has gone hand in glove with an aptitude for knowing the right people. At the start of their careers the brothers worked with business associates who could help them raise capital and find lucrative deals. Later, as their right-wing media interests show, their connections involved Tory politics, too. In 1991, within a year of resigning as prime minister, Margaret Thatcher moved into a house in Chester Square in London recently vacated by Sir David. She lived there until her last months, when she moved into the Ritz hotel, which was then owned by the Barclays.

A third reason our investigation matters is that we have found strong grounds to believe that this ancient deal may have involved fraud. We have also found grounds to suspect the brothers of avoiding or even evading taxes on profits worth tens of millions of pounds in today’s money. And Sir Frederick concealed assets from a bankruptcy court, a crime that is also subject to imprisonment. Over the years, many journalists have dug into Sir Frederick and Sir David. So far as we know, our investigation is the first to ask whether the brothers committed a criminal offence that would have been punishable by prison.

The business that the Barclay twins built has since passed to their children. Aidan, Sir David’s oldest son and the head of the family today, was a director of one of the family’s companies involved in the transactions we have investigated. Although that gave him a legal responsibility for the business, there is no suggestion that he was aware of its role.

We put our findings to Sir Frederick and to members of the Barclay family. They offered no comment. However, given that the rules governing who is a fit and proper newspaper owner are once again under debate, our questions about the Barclays are more relevant than ever.

The story of the near bankruptcy of Sir Frederick and Sir David revolves around three transactions in the 1970s. At the time, no questions were raised about these deals. However, the evidence we have uncovered during our investigation suggests that the twin brothers may have been dealing with themselves illegally, and concealing the fact with an elaborate façade of Potemkin companies.

On the face of it, the deal to save the Barclays is highly complex. Stripped to its bare bones, it is beautifully simple. Here we set out the three transactions that restored their fortunes and created the foundations for their business empire.

The first transaction, in October 1976, staved off bankruptcy using a pair of frontmen to buy out the Barclays’ biggest creditor at a steep discount. As part of this transaction, the Barclay brothers signed statutory declarations, a formal oath taken before a solicitor under a legally binding pledge. We have seen a civil servant’s account of this pledge, which records that the brothers vowed they were in a “state of massive personal insolvency” and “had no present or future interest in the equity” in the buyer of the debt. Although we do not have the original statutory declarations, this description is accurate and complete and we can think of no reason why it might not be.

Although the brothers were near bankruptcy, they were still solvent enough to borrow the money they needed to buy their own debt through a shell company in secret. The evidence shows that the brothers controlled the shell company and if they did then they were breaching the terms of the statutory declarations—at least as it was described by the civil servant. This, he reported, asserted that the Barclays had no “present” interest in ownership of the buyer. If the brothers were lying in their statutory declarations, it would count as a criminal offence.

In the third transaction the twins openly bought the original shell company off the Jersey company, which received a huge premium on the sale. In effect, the original deeply discounted debt had been restored to its full value, or thereabouts. That gain in value had been crystallised as a taxable profit in the books of the Jersey company.

The story begins in 1973, during a scandalous lending spree as the Crown Agents strayed far beyond its original remit of financing British colonies doing business in the United Kingdom. Thanks to an implicit state guarantee, the Crown Agents could raise cheap funds and lend them on at a handsome margin. This became known as an easy way for property speculators to borrow (see our investigation into the Crown Agents). After property prices crashed during the first oil crisis at the end of 1973, a huge hole appeared in the Crown Agents’ balance-sheet. In 1974 the government appointed new managers to clear up the mess and recoup as much money as possible. The crisis eventually cost British taxpayers around £1.1bn in today’s money*.

Among the property speculators who latched on to the Crown Agents were the Barclays. Born in 1934, the twins had left school early and run various modest businesses during the 1950s. When a tobacconist and confectioners failed in 1960, Frederick and his younger brother, Douglas, were declared bankrupt. While his brothers were disqualified from serving as company directors, David set up an estate agency and a property-dealing business. In 1964, he diversified by buying boarding houses in west London and converting them into a hotel. He added two more hotels in the 1960s, including one in 1968 with money from the Crown Agents.

That connection was to provide the capital the twin brothers needed to enter a different league. The vehicle was a deal in 1970 to buy the Londonderry Hotel on Park Lane in the West End of London. To prepare for this, the brothers disentangled the ownership of their hotels—perhaps because the Crown Agents insisted, perhaps because Sir Frederick wanted a legal claim to his stake. The agreement, which dates to 1970, inadvertently revealed that Sir Frederick had been the beneficial owner of two hotel companies along with his brothers and an associate for several years, even though the legal ownership had been with Sir David.

There is nothing especially unusual in a company’s legal owner being different from its beneficial owner. However, Sir Frederick had recently been pursued by his creditors. His discharge from bankruptcy had not been until 1966. It had been delayed by three months, partly because the bankruptcy judge said that he had not properly accounted for all his assets. Hiding assets from creditors in bankruptcy is a crime. The use of nominees was a tactic that the Barclays were to repeat on a far grander scale when they faced ruin a few years later.

Thanks to the Crown Agents’ largesse, the brothers managed to raise funds on very good terms even as the property crisis was under way. This included a loan of £64.8m to buy the Kensington Palace Hotel as late as December 1973 that was initially unsecured. However, as the economy worsened so the Barclays fell behind on their interest payments. By 1976 the Barclays’ debts to the Crown Agents were growing by £963,000 a month. They peaked at £105.2m and the pressure to call in the receivers was becoming impossible to resist.

“The brothers were close to going broke, but they were cleverer than me,” recalled Ramon Greene, a bankrupted developer who also borrowed from Crown Agents, in 2004. “I don’t know how they managed it.” It appears that the Barclays survived by a deal that looks like fraud.

In August 1976 a British-registered company called Trenport Investments offered to buy the Barclays’ £105.2m debts off the Crown Agents for £27.4m. On paper Trenport belonged to the brothers Leslie and Harold Bolsom, two entrepreneurs who had made money as owners of the British franchise for Carmen Curlers, which were designed to let women treat their hair at home (see our investigation into the Bolsoms). Trenport borrowed the money for this purchase from First National Bank of Boston, which has now become part of UBS. We do not know how the Barclays and Bolsoms first met, but both owned or had owned hotels in Bayswater in west London.

It was a highly successful deal for Trenport and the Barclays, who thereby remained solvent. By mid-1978, the Barclays had sold two London hotels on which the Crown Agents had originally lent money—the Kensington Palace and the Cadogan—and one on which Trenport had loaned money—the Lowndes—for a total of £70.5m. They still owned their single most valuable property, the Londonderry Hotel. This raised enough money for the Barclays to give Trenport the money it needed to repay First Boston and still have £8.2m cash in the bank.

However, selling the Barclays’ debt was a terrible deal for the taxpayer. Of the Barclays’ other creditors, National Westminster Bank, the Norfolk Capital Group and City and Country Properties all received full payment on loans totalling £17.4m. Keyser Ullmann, a bank, received an estimated 85-90 pence in the pound for its loans of £48.5m. The Crown Agents received just 26 pence in the pound.

One reason the Crown Agents’ new managers so undervalued the Barclays’ debt may have been that they were in a rush to clean up their books. But the Barclays also had an incentive to talk down the value of the debt. They were the real owners of Trenport. The less they paid for the debt, the more money they stood to make.

Official filings do indeed suggest that the Barclays had concealed the debt’s true value. Three months before the Trenport deal was completed the brothers bought out NatWest’s debt. That had the effect of making the Barclays companies less likely to go bankrupt. If the Barclays had been trying to persuade the Crown Agents not to bring in the receivers, you would have expected them to make a lot of the improvement in their circumstances. But the Crown Agents’ records make clear that this change of circumstances was not brought up.

Unfortunately for the taxpayer, the Crown Agents appear to have taken comfort from the Barclays’ statutory declarations. With good grounds to believe that Trenport was indeed owned by the Bolsoms, they proceeded with the sale of the Barclays’ debt at a huge discount. In fact, the evidence suggests that Trenport was owned by the Barclays.

For a start, the Barclays ran it. Trenport’s initial source of finance, First Boston, repeatedly lent money to the Barclays. Trenport paid no fees for that loan. Instead, the bill turned up in the accounts of the Barclays’ hotel group, even though it had raised no third-party bank debt in that year. Trenport also paid almost no legal fees, although it had employed Theodore Goddard to advise it on what was a complex transaction. Theodore Goddard had routinely advised the Barclays since at least 1971 and remained with the family for many years. Broomfield Secretarial Services, which handled corporate administration for Barclays companies and had been founded by Stuart Brummer (see our investigation into Stuart Brummer and his associates), also acted for Trenport while it was still ostensibly entirely separate from the Barclays.

If you look closely, it is not credible that the Bolsoms were owners of Trenport. They were directors of at least 25 companies in 1948-89. We have examined the Company House filings of 14 of these businesses. In almost every case they used Bright Grahame Murray to do their books and make their company filings. The only exceptions were a company Harold Bolsom bought for his daughter (which already had its own auditor) and the Carmen Curler company (when an institutional investor insisted on a better-known auditor). If the Bolsoms had owned and run Trenport, then they ditched their usual advisers and chose Theodore Goddard, Brummer and First Boston by sheer coincidence.

Trenport was also quite unlike anything else the Bolsoms did, before or after. Trenport’s accounts show that its total expenses, apart from payments to directors and auditors, and one-off fees, were only £7,300-15,900 a year. Clearly, it was a shell company without staff that was being administered remotely. The Bolsoms had never operated a shell company. And they had never built their businesses using high levels of borrowing.

What is more, if the Bolsoms owned Trenport then the second transaction, with the Jersey-based company, makes no sense. This took place, a little over two years later, in December 1978, when an offshore company, called Russet Investments, paid £3.7m for 499,998 new shares issued by Trenport. Later accounts make clear that the Bolsoms continued to be the beneficial owners of just their original two “£1” Trenport shares and no more. At the time, Trenport had £8.2m of cash on its balance-sheet, as well as the Barclays’ remaining debts, which had cost 26 pence in the pound but now stood every chance of being repaid in full.

If the Bolsoms were really Trenport’s owners, why would they sell their claim to assets worth many tens of millions of pounds for just £3.7m? The answer is that they had no choice. Trenport had an “irrevocable” option requiring the new shares to be issued. On that basis, the Bolsoms were not the true owners of Trenport.

Supporting this, the accounts for 1978 make clear that £2.6m of dividends that Trenport had awarded to the Bolsoms had still not been paid out to them before the deal with Russet. After the share issuance, the Bolsoms lost their claim on that money, too. We do not have access to their bank accounts, but the money had an obvious use. These unpaid dividends could have been the ultimate source of much of the cash that Russet used to buy the Trenport shares. If we are right, that would have suited the Barclays well, because nobody could trace their money to the purchase of Trenport shares. And the Barclays may have wished to maintain their anonymity because of the statutory declarations.

The transaction between Trenport and Russet also bears the Barclays fingerprints. Trenport’s filing to Companies House which records the issuance of the shares to Russet is in distinctive handwriting. A graphologist who undertakes handwriting analysis for British courts affirms to The Economist that the evidence “points rather strongly” towards this writing being from an employee in Brummer’s business-services company. Russet’s registered office had the same address as the Jersey offices of Theodore Goddard, the lawyers involved in Trenport’s original acquisition of the Barclays’ debts. This, remember, was when the Barclays on paper had nothing to do with the ownership of either Trenport or Russet. This multiplicity of connections would be most unlikely to arise by chance.

The third transaction, early in 1979, also has wrinkles that add to the evidence for thinking the Barclays were behind both Trenport and Russet. One of their companies, called Gestplan Hotels, borrowed the money for the deal from First Boston. That makes good sense if they had been the bank’s clients all along. If not, it is just one more unlikely coincidence.

There is also an accounting oddity. When one company acquires another, a completion balance-sheet is drawn up at the date of the acquisition. This lets the acquirer distinguish the post-acquisition profits from the pre-acquisition profits, which is necessary to draw up the profit-and-loss account for the year. Gestplan bought Trenport off Russet on April 3rd 1979, but the completion balance-sheet was drawn up over three months earlier, on December 31st 1978.

December 31st happens to coincide with Trenport's accounting year-end. The Barclays may have chosen to have forgone an up-to-date completion balance-sheet because they did not want the expense of drawing up a new set of accounts when the material circumstances of Trenport, the underlying asset, had not changed much. Another reason could have been that Gestplan treated the profits of Trenport as its own because the Barclays had owned Russet all along.

Either way, the transaction created a large profit in Russet. It sold the shares in Trenport to Gestplan for £35.8m, almost ten times what it had paid for them just under four months earlier. We have looked into the tax status of the twin brothers and their wives, and we believe that they were likely to have been resident as UK taxpayers at the time (see our investigation into the Barclays’ tax status). If these offshore profits were indeed made by the Barclay brothers and not declared, they were guilty of tax evasion.

The question hanging over all this is, if the Bolsoms were acting as frontmen, what was in it for them? At the time of the initial Trenport deal they were more successful than the Barclays. Why would they take such a risk?

We have identified what looks like a pay-off. In early December 1976, barely a month after the Trenport deal to buy the Crown Agents’ debt, the Bolsoms became directors of a newly created company called Vitobel. The Bolsoms invested in two “£1” shares, giving them half of the business. The other half was owned by Mast Holdings (Jersey), which put in the same amount. The Barclays let Vitobel launch a club called Le Privé in their Mayfair hotel, the Londonderry, in 1977. It was the Bolsoms’ first night club and they dreamed of it becoming a rival to Annabel’s, a famous London nightspot.

The beneficial ownership of Mast Holdings was secret, but it too bears the Barclays’ fingerprints. The family initially had no representatives on Vitobel’s board. However, Goodman Jones, which audited Trenport, also handled Vitobel and Brummer was appointed as company secretary in June 1977. Most significant is that Barclays Hotels was the sole financier of Vitobel, pumping in a total of about £3.1m in 1977-78. There is nothing odd in the family owning and financing part of a business that operates in one of their hotels. However, the secrecy is odd.

Unfortunately, Le Privé bombed. By late 1978, just over a year after it opened, the club had lost around £1.8m and was being closed down. Fortunately for the Bolsoms, Gestplan, which was wholly owned by the Barclays, bought them out. Astonishingly, it paid £941,000 for Bolsom’s two “£1” shares—which cost them £7.38 each in today’s money. In other words, the Bolsoms each multiplied their initial investment 63,750 times.

This transaction also suggests that the Barclays had been the joint-owners of Vitobel all along. Naturally, as soon as Gestplan bought out the Bolsoms it took their two seats on Vitobel’s board. How to explain then that a third seat went to Aidan Barclay, Sir David’s oldest son, who was then in his early 20s? Indeed, the two “£1” shares held by Mast Holdings (Jersey) were transferred into the name of Aidan. If Mast Holdings had belonged to the Barclays all along, why had they not needed any representation on the board of Vitobel? The only plausible answer would seem to be that the twins already dominated the Bolsoms.

The Vitobel acquisition appears to have been the culmination of a remarkable feat of dealmaking—and subterfuge. Did the Barclays lie in their statutory declarations? Did they evade tax owing on Russet’s profits? Would they really have stooped to such dishonesty? We believe that Sir Frederick has a case to answer.

The Barclays went to great lengths to shelter their assets for the rest of their lives. In a ruling in 2022, over how to divide up Sir Frederick’s fortune after his divorce, the judge said that Sir Frederick and his brother had “an obsession with privacy, but also with avoiding tax, whether payable in their lifetime or on death”. He added that this “was the whole purpose of the very complicated structures which [they], with the assistance of their advisers, devised in various offshore jurisdictions”.

The judge observed coyly that he was not in any way suggesting that there was “any form of improper activity”. Would he be so sure today? ■

*The figures in this article have been converted to December 2023 prices, using a retail-price index