Forstmann, Princess Di monitored by governments

Ted Forstmann, the founder of Forstmann Little & Co., a pioneer firm in the private equity industry, and his relationship with England’s Princess Diana, was the subject of American secret service observation before her death in 1997, according to London’s The Evening Standard newspaper.

Lord Stevens, the former head of London’s Metropolitan Police, is expected to publish information regarding US intelligence agencies monitoring Princess Diana’s phone conversations on the night of her death, The Evening Standard and other London papers have reported.

Known for such investments as health club chain 24 Hour Fitness, soft drink company Dr. Pepper and publishing company Ziff Davis Publishing, as well as for being a short-lived contender in the bid RJR Nabisco, Forstmann and the princess were linked romantically when her marriage to Prince Charles had become rocky. Diana had plans to vacation with her sons, Prince William and Prince Henry, at Forstmann’s home in the Hamptons in the summer of 1997, The Evening Standard reported. British security services had reservations about the plans and discouraged the princess from making the trip. The reasons for these concerns are not clear from the report but reportedly involved security concerns around Forstmann’s home.

Cancelling the trip to the Hamptons led to a change of plans, according to the report. Diana instead went to the South of France with Dodi Fayed, the son of Mohamed Fayed, the owner the world famous London department store Harrods. That vacation included a visit to Paris, where the princess and the younger Fayed died in a car accident on August 31, 1997.

The Evening Standard also reported that it has information about the US secret service keeping files on Diana and her “closest associates”. “The documents on the princess seem to have arisen because of the company she kept rather than through any attempt to target her,” The Evening Standard reported.

Forstmann pledged to shut down his firm in 2004, and he has sold off a number of the firm’s portfolio companies in the following months. The firm invested in McLeod USA and XO Communications during the telecom craze. Those investments resulted in losses of more than $1.5 billion for the firm. In an interview with The New York Times in 2004, Forstmann said he would shut down his firm as early as 2006 and even possibly release his limited partners of their remaining capital commitments before that time. At that time, Forstmann Little had just spent $15 million settling a lawsuit with Connecticut’s state pension, which had charged the firm with a breach in its partnership agreement by investing in McLeod and XO.

Forstmann Little backed fashion tradeshow company ENK International in April. The firm sold The Yankee Candle Company for approximately $1.7 billion to Chicago, Illinois-based buyout firm Madison Dearborn Partners.