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‘ ‘y 140: - Age 60-2 month from Lockheed, for ex- ‘ample—plus * a fee on many sales. Being, for one, paid him 2% on the ‘five 737 jetliners he helped sell to Mo- rocco. But Khashoggi’s wide-ranging world investments now overshadow his con- sulting business. He is stitching to- _ gether an unlikely patchwork of indus- trial and financial involvements that constitute a rare bird: an Arab mul- tinational company. Khashoggi’s investments are grouped under a Luxembourg umbrella called Triad Holding Corp., whose oper- ations are based in Beirut. Triad’s structure is as tortuous as the passage- ways in an Arab bazaar, comprising no less than 58 corporate entities. Most subsidiaries include the name “Triad,” eoined because Khashoggi and two younger brothers, Adil, 35, and Essam, 33, founded and own the group. For’ ex: ample, a branch in Los Altos, Calif.,— Triad Pacific Corp.—manages invest- ments in the Western Hemisphere and Indonesia. Khashoggi has surrounded himself with a team of lawyers and managers including 14 Americans led by Morton P. MacLeod, a California lawyer who has worked with Khashoggi for 15 years and is credited with engineering much of Triad’s investment strategy. Khashoggi’s executives idolize him. “He has charjsma, and he’s got guts,” Says Louis J. Laule., + cuiaei s0cn- heed executive who is vice-president of Triad’s management subsidiary. “He’s- got an intuitive grasp of where the money is in a deal.” Mystery man. To others, though, Kha- shoggi has long been something of a _ mystery man. His defense-industry clients are reluctant to discuss their ties with him. A partner of a major in-. ternational investment banking house . recently advised his nephew to turn down a job offer because the banker could find no information on Triad. And in Triad’s Paris office—two floors in a swank office building on Avenue Montaigne—there are no signs, phones are unlisted, and a husky concierge turns away unwanted visitors. But most businessmen who know Kha- shoggi praise him. The influential French banker, Louis Dreyfus, told a client recently: “Khashoggi is the only man in the Middle East you can trust.” Khashoggi has the entrepreneurial zeal of an early American capitalist. Indeed, he acquired his taste for wheel- ing and dealing in the U.S. After high school in Egypt, he came to the U.S. in 1953 planning to study petroleum engi- neering at Colorado School of Mines. But when he arrived in New York, the .cold weather depressed him, and friends warned him Colorado would be even colder. He sought out a warmer campus, ending up at Chico State col- BUSINESS WEEK: August 11, 1973 lege in California. After two semesters there he wandered to the coast and took up economi¢s briefly at Stanford University. He grew fascinated with California business, and built valuable friendships with young Bank of America branch officers in Palo Alto, who have since risen to top bank jobs. The Bank of America lent him most of the $15-mil- lion he paid for the two Walnut Creek banks and its weight was crucial in lur- ing Merrill Lynch and Britain’s Schro- ders into the new Saudi oil proposal. Khashoggi returned to Saudi Arabia in 1954 and got his first big business break when the Saudi government granted him a 50-year concession to build a gypsum plant. That was the basis for the fortune he has built stead- ‘He’s got an intuitive grasp of where the money is in a deal,’ says an associate ily since then. However, the gypsum plant “took all my savings,” Khashoggi recalls,.“and I quickly found that my ambitious plans to industrialize Saudi Arabia overnight weren’t going to be as easy as I thought. The capital simply wasn’t available,” Khashoggi Says. thjs discovery led im ana i«: two U.8.-trained younger brothers to look outside the country, hoping to build a solid international reputation that could one day lure de- velopment capital to Saudi.Arabia. AK-1. With wealth has come a penchant for high Jiving and lavish entertaining. Khashoggi maintains residences in Beirut, London, Paris, and the two Saudi cities.of Jidda and Riyadh. He flies in a private DC-9, keeps a yacht moored off the French coast at Cannes, and cruises London streets in a Rolls- Royce licensed “AK-1.” Khashoggi is an active jet-setter, and top entertainers often drop in on parties at his Bejrut hillside villa, Kha- . shoggi also knows President Nixon, whom he met while Nixon practiced law in the early 1960s. The White House calls Khashoggi “an acquaint- ance, not a personal friend” of the President. And Khashoggi denies ru- mors that he contributed to Nixon’s campaigns, which is illegal for a for- eigner. Though cagey businessmen, the brothers often operate on impulse. Gille Raysse, president of France’s Jungle Jap, recalls that when Essam: Khashoggi dropped by last year to dis- cuss Triad’s proposed $500,000 equity investment in the cash-strapped firm, “I showed him my balance sheet, and with practically no questions he - smacked my hand and said, ‘OK, you’ve got it.’ I could see he just had the feel- ing it would be a good investment.” Critics complain that many of Kha- shoggi’s schemes for industrializing the third world are pie-in-the-sky oper- ations, possibly thrust on him by “drea- mers” among his American staff. More- over, a Washington source suggests that Khashoggi’s influence at the source of his power, Saudi Arabia, may be waning. “He has made enemies at the top of the kingdom,” the source says. “That means King Faisal.” The Saudi reaction to Khashoggi’s vs pending oil proposal * may provide a-..”- good test of his continuing clout back home. More deals. Meanwhile, Khashoggi wants Triad to grow much larger. It is: currently financing, through a syndi- - “ cate led by Continental Iilinois Bank, ° construction of $80-million worth of ° small tankers for Indonesia’s state oil company. Triad hopes to own and oper- ate its own tankers eventually. In Bra- zil, Triad’s joint venture with the big Ufiia group will enter cattle feeding shortly. He is even financing a movie || extravaganza on the Koran, which is’ . being filmed in Morocco. “Everything I - do is an experiment,” he says. Khashoggi pays well for what he wants. Rep. Fortney H. Stark (D- Calif.), who sold Security National Bank to Khashoggi, still marvels at the |‘, price he got. “They -ought my bank at $29 a share when a group of New York consultants said the stock was worth $16 and when it was trading over-the- counter at $10-$12.” Stark. wonders pri- vately “What Khashoggi wanted with the banks.” Khashoggi says he plans to acquire banking expertise that can be trans- ferred to Saudi Arabia. “I want to train people in the banks to benefit our country,” he says. More than that, though, some associates feel Khashoggi bought the banks to build “credibility” , with big U.S. financial institutions. Se- - curity Bank would be one of four part- ners—with Bank of America, Merrill Lynch and Schroders—in financing ‘Khashoggi’s proposed Saudi oil deal, dubbed “Petrosat.” Moving in such highblown financial circles certainly would increase Security Bank’s—and Khashoggi’s—clout. A Saudi patriot, Khashoggi insists that his investments bear some even- tual relationship to Saudi ecdnomic de- ‘velopment. But specific connections of- ten seem tenuous. He justifies the investment in the new California steak house as an experiment that could lead to a later entry into the Middle East- — ern restaurant business. As for the Paris fashion house, it is apparently the plaything of brother Essam. But Khashoggi insists nonetheless that “in Saudi Arabia we’ll have dressmaking one day—why not?” = NAMES & FACES