Adnan Khashoggi – arms dealer

The life of Adnan Khashoggi, who has died aged 81, did not imitate art but prompted it. The sybaritic Saudi middleman inspired the image of the influential fixer who spent his days arranging huge arms deals and meeting presidents and tycoons, and his nights partying with beautiful women aboard yachts and planes or in palatial homes.

He was the model for Harold Robbins’ bestseller The Pirate, published in 1974, though he was a rather less glamorous figure than the protagonist Baydr al Fay. The title of a 1986 book by Ronald Kessler referred to Khashoggi as The Richest Man in the World. That claim was as fictional as Robbins’ hero. Khashoggi only spent like the world’s richest man: 12 homes, 1,000 suits, $70m on his third yacht and $40m on a customised Douglas DC-8 described as a flying Las Vegas discotheque. With Khashoggi – who loathed being described as an arms dealer – more was always more.

But by the mid-1980s his influence had waned. His Triad business empire was bleeding cash. The only thing not in decline was his spending. Being Adnan Khashoggi still cost $250,000 a day. The planes, like the yachts and homes, soon went to pay creditors.

Born in Mecca, Adnan was the eldest son of the personal physician to King Ibn Saud, founder of Saudi Arabia’s ruling dynasty. After attending Victoria college, Alexandria, the Eton of Egypt, he was sent to study engineering at Chico State College (now part of California State University). While there he saw opportunities for linking American companies with fast-growing Saudi oil riches.

Khashoggi established an import business, and Mohamed Al Fayed worked for him and married his sister Samira, mother of Dodi Fayed. Both relationships failed. Khashoggi later sold information, some of it fabricated, to Fayed’s Harrods rival “Tiny” Rowland for a $7m loan that he did not repay.

Khashoggi imported Kenworth heavy trucks into Saudi Arabia: one of his first customers was the Bin Laden family’s construction group. The entrepreneur keenly embraced every aspect of American culture that Osama bin Laden later violently rejected. Two half brothers of the future King Saud became his business partners. Khashoggi moved into the arms business in 1962, helping to supply neighbouring Yemen, under attack from Egyptian-backed rebels. He became the agent for Rolls Royce, Marconi, Westland and BAC (British Aircraft Corporation, later British Aerospace/BAe). The rising oil price combined with Arab humiliation in the six-day war of 1967 sent the Saudis on a defence spending spree. Khashoggi was soon the agent for Raytheon’s Hawk missiles, Lockheed’s C-130 cargo planes and Northrop F-5 fighters.

His commissions grew from 2% to 15%. “If you offer money to a government to influence it, that is corruption. But if someone receives money for services rendered afterwards, that is a commission,” Khashoggi explained. However, US regulators did not see it that way. A 1975 US Senate inquiry revealed that Khashoggi had been paid $106m by Lockheed, $54m by Northrop and $23m by Raytheon. The French paid him $45m for a tank deal and the British $7m for helicopters. Lockheed later paid Khashoggi another $100m and Northrop a further $31m.

In feudal Saudi society, Khashoggi, like all agents, was allowed to enrich himself only so long as he paid a large slice of these commissions into the Swiss bank accounts of his royal patrons and provided other services. Khashoggi was always accompanied by his “pleasure wives”, the “flowers on the table” – expensive call girls, models and starlets flown in from around the world. They constituted a currency with which Khashoggi also paid his debts to his Saudi masters and indebted those with whom he did business. “My ability is to understand those with whom I deal,” he said. But publicity about the payments and Khashoggi’s role began the erosion of his influence in Saudi Arabia with the future King Fahd and Prince Sultan, the defence minister. His high profile and profligacy became an embarrassment.

Delays in commission payments and a fall in oil prices also undermined Khashoggi’s poorly managed business empire, which included hotels in Fiji, cattle in Brazil, a Paris fashion house and Californian banks. Khashoggi knew how to party, but little about how to run a business. Instant gratification was his thing.

Ill-judged projects such as a $500m glass pyramid hotel scheme at Giza, a $1bn property play in Salt Lake City and a bid to grab a share of Sudan’s oil worsened his cash crisis. A self-described “merchant statesman”, Khashoggi insinuated himself into Middle East politics with similarly grandiose and abortive schemes to solve the Palestinian problem with Saudi cash and overthrow the Khomeini regime in Iran.

But he did facilitate the 1986 Iran-Contra scandal, which saw 1,500 US missiles sold to Iran through Israel in a failed bid to free US hostages in Lebanon and millions illegally diverted to finance the Contra rebels in Nicaragua. Khashoggi put together Iranian and Israeli arms dealers and provided $25m bridging finance. Desperate for payment and out of pocket on the deal, Khashoggi helped blow the cover of the covert operation through his dealings with the CIA. Iran-Contra further diminished him as a figure of influence.

Dropped by clients because he could no longer deliver lucrative Saudi business, Khashoggi spent the rest of his life pursued by creditors, regulators and prosecutors. In 1989, he was extradited from Switzerland to New York on charges of helping to hide more than $300m in Manhattan properties and valuable paintings – part of the pillaging of the Philippines by Ferdinand Marcos. Khashoggi and Imelda Marcos were acquitted in 1990. Khashoggi’s net worth was now $8m. One bank account contained just 47 cents. He owed $88m.

Ever more desperate efforts at money-making saw Khashoggi accused of bank fraud in Thailand and involved in a series of stock market scams. He was banned from being a company director as part of a 2010 civil settlement with US regulators over an alleged $130m share ramping fraud that also resulted in a US court awarding a creditor $40m. The debt went uncollected.

Apart from The Pirate, Khashoggi’s legacy is the US 1977 Foreign Corrupt Practices Act, which outlawed bribing foreign politicians or officials – in part a result of the disclosure of his activities on behalf of US companies. He spent his final years between Saudi Arabia and Monaco.

In 1961, Khashoggi married Sandra Daly, born in Leicester, who became Soraya. They had four sons and a daughter, and divorced in 1974. Four years later he married an Italian, Laura Biancolini, later Lamia, and they had a son. In 1991 he took an additional wife, the Iranian Shahpari Zanganeh, and they had a son and daughter before the marriage was dissolved. He is survived by Lamia and his eight children.

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