The Monaco bank account through which arms merchant Adnan Khashoggi funneled cash used in White House-sanctioned arms deals with Iran has been seized by London business magnate Roland (Tiny) Rowland in a dispute over debts, The Times has learned.
The legal action freezes assets in Khashoggi's personal account at the Bank of Credit and Commerce International--assets that "amount to very little," conceded a Rowland aide who confirmed the action Thursday.
However, for more than a year--beginning in August, 1985--that account was the focal point of secret financial arrangements supporting covert American arms deals with Iran. Estimates are that well over $20 million may have passed through the account, including funds diverted to a Swiss bank account controlled by former White House aide Oliver L. North.
"That's all gone now," said Paul Spicer, an executive with Rowland-controlled Lonrho Ltd., an international mining and development conglomerate based in Britain. Spicer called prospects of recovering significant cash from the Monaco bank account "virtually nil," but said Rowland and Lonrho were pursuing all means to protect their investments with Khashoggi.
Earlier, Rowland had attached Khashoggi's interest in his luxuriously outfitted DC-8 jetliner and in a New York penthouse apartment on 5th Avenue.
Friends of Khashoggi say that the Saudi Arabian businessman is "most troubled" by the grounding of his $30-million DC-8.
"It means more to him than his yacht, more than his penthouse, his estate in Marbella, more than anything. He's dying to get it back," a close associate of Khashoggi said.
Khashoggi, once described as "the richest man in the world," has been in financial difficulty for some time. Rowland called him "the great un-billionaire" in a recent interview. Much of Khashoggi's property is heavily mortgaged and he faces mounting litigation over financial problems with some of his companies.
Various sources have told The Times that Khashoggi owes Rowland and his company more than $7 million for debts ranging from personal loans to mortgages. The Times also was told that Khashoggi has failed to honor some checks for gambling losses at Rowland-owned gaming casinos. Spicer refused to discuss those reports.
The financial dispute between Rowland and Khashoggi, at one time good friends and business associates, hinges on a $2.5-million personal loan issued by Rowland to Khashoggi in August, 1985--the month that the U.S.-Iran arms deals began.
Asked for a Loan
According to sources close to both Khashoggi and Rowland, the Saudi businessman--who needed cash to underwrite the original shipment of U.S.-made anti-tank missiles to Iran from Israel--asked Rowland for a loan to be secured by a promissory note. It was unclear whether Rowland was aware of Khashoggi's role as a middleman in the covert arms operation at that time.
"Tiny said, 'take whatever you need,' and Adnan filled in the numbers on the check," the source told The Times.
Because of a "cross default clause" in the terms of that loan agreement, however, Khashoggi's subsequent failure to honor the debt has triggered defaults on other loans as well. Among them are the Rowland-financed $4-million mortgage on Khashoggi's smaller DC-9 aircraft and a $1-million loan secured by Khashoggi's interest in a Kenya ranch.