Tracking the elusive partners

KEVIN SCANLON December 22 1986

Tracking the elusive partners

KEVIN SCANLON December 22 1986

Tracking the elusive partners

On a visit to Toronto in October, 1984, local businessmen and politicians treated Saudi billionaire Adnan Khashoggi to a series of glittering dinners with prominent Canadians, including former prime minister Pierre Trudeau and singer Paul Anka. Khashoggi was also the guest of high-flying entrepreneurs Peter Munk and David Gilmour, his associates in numerous ventures.

But last week, as revelations surfaced of Canadian involvement in a controversial arms deal with Iran, some of Khashoggi’s connections appeared anxious to distance themselves from the jetsetting arms dealer. Last Friday, Toronto-based American Barrick Resources Corp., of which Munk and Gilmour are directors holding controlling interest, issued a statement declaring that “neither Peter Munk nor any of his companies have had any involvement with transactions related to arms shipments to Iran.”

The gold-mining company’s statement added that Khashoggi “is not and has never been” one of its shareholders or directors.

In fact, the names that surfaced in connection with the arms-for-Iran deal were not those of such prominent Khashoggi associates as Munk and Gilmour, but of two less well-known Toronto entrepreneurs. They were Donald William Russell Fraser, 42, a chartered accountant, and Walter Ernest Miller,

55, a real estate developer. In Washington congressional sources revealed that Fraser and Miller had been named in secret testimony by Roy Furmark, a U.S. business

associate of Khashoggi’s, as the two Canadians involved in financing the Iranian arms deal. According to a Wall Street Journal report, they had loaned Khashoggi $52 million early this year. Shortly after, Khashoggi appointed Fraser president and chief executive officer of his Utah-based Triad America Corp.

And at week’s end, the Toronto Globe and Mail reported that more than $24 million had passed last year through Miller’s bank in Toronto’s Chinatown district.

Khashoggi made it clear last week that he had helped to initiate six shipments of U.S. arms to Iran in 1985 and 1986. And there were indications that he may have brought the Canadians in to finance one of the deals because of serious cash-flow problems at Triad America, a unit of his Cayman Islands-based Triad Group. Still, Khashoggi’s biographer, Ronald Kessler, dismissed the possibility that Khashoggi needed Canadian backing for the Iranian arms deal. Calling the idea of a Canadian connection “a red herring, a smokescreen,” Kessler said Khashoggi had concocted the story to hide the fact that the arms deal was carried out on behalf of the Saudi Arabian government. “It’s just foolishness to imagine that some Canadians came forward and asked to invest in this thing,” said Kessler. And in New York, Gregory Brown, the president of Houston-based Tangent Oil and Gas Co., which is partly owned by Khashoggi, claimed to agree. The Canadian connection was “all nonsense,” he said, and “the biggest joke around here.”

Although he is often described as the richest man in the world, Khashoggi may have suffered serious financial setbacks recently. The billionaire arms merchant is still able to maintain a fabulous lifestyle aboard a fleet of customized jets and yachts. But the worldwide Triad Group, which Khashoggi had controlled with his two brothers, reportedly

faces serious cash-flow problems. Essam, one of Khashoggi’s brothers, has attributed the financial squeeze to deferred commission payments from the Saudi government and falling oil prices. As a result, in Salt Lake City, Utah, where Triad America has been based since 1974, the corporation now faces 53 lawsuits from creditors who are seeking more than $195 million.

Fraser and Miller became prominent in Triad America’s affairs in March of this year after Vertex Finances, S.A., the Cayman Islands company which they control, loaned $52 million to Triad America. At that point,

Fraser became president and chief executive officer and Miller a director of Triad. A former executive of Triad who recently left the company told Maclean's last week that after Fraser and Miller arrived in Salt Lake City it soon became clear to him that they were “liquidator types.” Indeed, last week a lawyer for a company seeking $10 million from Triad protested in U.S. district court that Triad officials are stripping off company assets to protect them from creditors. The executive added:

“They were tough-minded businessmen. They have a style that

is certainly not my style.” He -

also said that Miller, who owns the Black Hawk Motor Inn in Richmond Hill, 16 km north of Toronto, spent much of his time in Canada. The perpetually suntanned, immaculately dressed Fraser apparently jetted between Salt Lake City, Monte Carlo, where he has an apartment, and the Cayman Islands. For his part, Fraser told the Salt Lake City Tribune last month: “We have made some very good progress with the company. I am very positive. Once we consolidate the company’s position so there is not a negative cash flow, we can move ahead.”

In Canada the two men have interests in several companies, including Skyhigh Resources Ltd., a Vancouver computer software company. Last July,

Adnan Khashoggi became chairman of the company. Skyhigh’s stock has lived up to the company name—share prices went to more than $15 last month from 68 cents early in the year. But last week trading in Skyhigh stock and that of another Khashoggi-related company, Tangent Oil, was halted on the Vancouver Stock Exchange pending news releases which

had still not appeared late Saturday.

Neither Fraser nor Miller could be reached for comment last week. Outside Le Mantegna, the modern seven-storey beige stucco building in Monte Carlo where Fraser maintains a second-floor apartment overlooking the Mediterranean, reporters and photographers waited in vain for him to turn up. Maclean's

London Bureau Chief Ross Laver reported that the apartment block stands at the foot of 90foot cliffs, below Prince Rainier’s palace, and is protected by a closed-circuit TV security system. Khashoggi himself flew into Monaco on Thursday, but there was no sign of his elusive Canadian associate. Nor did Miller appear at his sprawling two-storey wood-and-brick home in a subdivision of million-dollar houses in the village of Whitchurch, 48 km north of Toronto. From behind a closed door, a man with a British accent said that Miller was not at home. Then he told Maclean's Senior Writer Rae Corelli, “You had better leave now, because I am going to release the guard dogs.” At Miller’s Black Hawk Motor Inn, manager Dilip Patel said that he had not seen his employer for “three or four months.” Another Khashoggi associate in Canada was also difficult to find. Timothy Khan, a 30-year-old Toronto entrepreneur, played a part in establishing some of the Saudi billionaire’s interests in Canada. Khan orchestrated the whirlwind three-day visit in 1984. At the time, Ontario Minister of Industry and Trade Frank Miller noted, “It is not difficult

to get people to come to dinner

with Adnan Khashoggi.” Through the Akhana International Consulting Corp., of which he was president, Khan performed various duties, from organizing a black-tie 22nd birthday party at Toronto’s King Edward Hotel for Khashoggi’s eldest son, Mohammed, on Oct. 1, 1985, to running a $1.5-billion offshore money management fund in the Channel Islands.

Early last Friday a spokesman for Timothy Khan and Associates—Khan left Akhana two months ago—said that he was departing for Europe within an hour. Later, Reid Bailey, who handles Khan’s public relations, said that he could not be reached for 10 days. Late Friday night a hall porter at Market Square Residences, a plush Toronto condominium complex, told Maclean's Assistant Editor Andrew Bilski that Khan had packed all of his belongings earlier in the week and left the country—he believed for the Middle East. The porter added, “All I can tell you is we’ve never seen anyone leave in such a hurry.” Such elusiveness seemed to be characteristic of everyone involved in the intriguing Canadian connection.