Judge Sets $10-Million Bail for Khashoggi

A federal judge set $10-million bail Tuesday for Adnan Khashoggi, whose wealth once was legendary, and ordered him to wear unaccustomed jewelry--”an unremovable electronic bracelet”--to monitor his whereabouts.

Although Khashoggi’s financial affairs have been in turmoil in recent years, associates said there was little doubt his family soon would be able to raise the funds. However, bail had not been posted by Tuesday night.

A Khashoggi associate said a substantial portion of the bail could come from British tycoon Roland W. (Tiny) Rowland, a longtime associate and sometime rival of Khashoggi, who agreed to an undisclosed business arrangement with the Saudi financier after meetings in the Swiss jail where Khashoggi was held until his extradition to New York last week.

Fear He Would Flee

Federal prosecutors, however, had hoped to keep Khashoggi in custody, arguing that due to his wealth he might be willing to forfeit bail and flee U.S. jurisdiction.

As government lawyers hurried to prepare briefs for the U.S. Court of Appeals, Khashoggi’s lawyer tried to complete bail arrangements before the court could meet. The Appeals Court is not in session this week, but a judge is on emergency standby.

The bail race was the latest chapter in the tangled saga of the businessman who was a key middleman in secret White House arms sales to Iran during 1985-86 and who was extradited to New York from Switzerland last week to face charges he helped Ferdinand and Imelda Marcos loot millions in Philippine national assets.

Khashoggi, 53, is charged with fraud and obstruction of justice. He could face up to $500,000 in fines and 10 years in prison. Since his arraignment he has been at the Metropolitan Correctional Center in lower Manhattan.

U.S. District Judge John Keenan said that the $10-million bail was to be secured by $5 million in cash. The remainder was to be secured by real estate or a bond signed by two “financially secure” co-signers, one of whom is to be his brother, Essam Khashoggi.

If he posts bail, Khashoggi not only will have to surrender his passport, but he will be forbidden to leave metropolitan New York. Bail terms also will require that he report to court officials in person twice a week and telephone daily. Federal marshals will monitor his movements electronically.

Keenan acknowledged the concerns of federal prosecutors in his ruling when he wrote:

“The court recognizes that no precautions . . . ever conclusively guarantees a defendant’s presence at trial. Nevertheless, the court believes that a substantial bail coupled with significant restrictions on the defendant’s freedom will reasonably assure this defendant’s presence at trial.”

Keenan also said Khashoggi was unlikely to flee because it would have a “ruinous impact upon his ability to conduct business.”

The judge said Khashoggi had provided the court with a list of companies he owns and a list of his investments and assets.

“It appears from these tallies that the defendant receives all of his income from investment activity,” the judge said.

Court sources said that Assistant U.S. Atty. Charles LaBella had asked Keenan to stay his order releasing the financier, but the judge had refused. The prosecutor quickly contacted the U.S. Court of Appeals for the 2nd Circuit, notifying the judges he would file papers the first thing this morning requesting a stay.