BERN, Switzerland -- Saudi Arabian businessman Adnan Khashoggi, once among the wealthiest men in the world, was arrested Tuesday on a warrant charging him with illegal real estate dealings in New York with former Philippine president Ferdinand Marcos, the Justice Ministry announced.
Khashoggi, also a key figure in the Iran-Contra scandal, was arrested on the basis of an international warrant issued by the United States and was being held in prison pending hearings on an expected U.S. extradition request, ministry spokesman Joerg Kistler said.
The U.S. District Court in Manhattan charged Khashoggi, 53, March 9 with criminal actions involving Marcos's New York real estate holdings.
An international arrest warrant for Khashoggi, a flamboyant, jet-setting arms dealer, was issued March 24 by Magistrate Naomi Buchwald.
He was arrested in a hotel in Bern, the Swiss capital, Tuesday morning on orders of the Federal Police Bureau, which was acting on the U.S. warrant, Kistler said.
Marcos, his wife, Imelda, Khashoggi, five other people and a California bank were indicted Oct. 21, 1988, in a quarter-billion dollar racketeering scheme, accused of using embezzled Philippines public funds to buy prime Manhattan properties between 1972 and 1978.
They are accused of transferring $103 million in illegally obtained funds into the United States to purchase four buildings in New York and 'defrauding U.S. financial institutions of $165 million' in buying the midtown and downtown buildings, which were listed at the time of the indictments at $300 million.
Khashoggi allegedly helped to conceal the Marcos's interest in the real estate by using false documents. Khashoggi faces as much as 65 years in prison and fines of $1.5 million.
Khashoggi has 10 days in which to ask for release from provisional detention while the United States has 60 days in which to make a formal extradition request, the ministry statement said.
The Justice Ministry expects to receive a formal U.S. extradition request 'pretty quickly,' Kistler said. 'We assume that he will appeal all the way to the (Swiss) Supreme Court against extradition.'
Under Swiss law, Khashoggi must address his first request for release to the Federal Police Bureau. 'After that he can keep sending requests for release to the Supreme Court but only with Police Bureau agreement,' Kistler said.
It appeared unlikely that he would be released before a decision on the expected extradition request, Kistler said.
'Normally a person remains in detention until an extradition case is setled,' he said.
Extradition is decided by the Federal Police Bureau and, if it is agreed, Khashoggi can appeal to the Swiss Federal Court, or Supreme Court, in Lausanne.
The Justice Ministry said the allegations also concerned valuable paintings that disappeared from the Metropolitan Museum in Manila in February 1986 after Marcos was ousted in the Philippines.
Swiss officials said 11 especially valuable paintings were among those that the Manila government charges were taken by Marcos and his wife Imelda when they fled to exile in Hawaii.
The paintings included two by Franz Hals and one each by Greco and Rubens, and the Philippine government is demanding their return.
Khashoggi said he bought the paintings from Marcos and then resold them through a company called Inteconsult, the Swiss officials said, according to U.S. charges.
The Philippines has charged that Khashoggi acted as a middleman for Marcos and his wife.
Khashoggi also emerged as a key middleman in the Iran-Contra scandal -- the secret 1985-86 U.S. arms sales to Iran and the private airlift to resupply the Nicaraguan Contra rebels at a time when Congress had banned official U.S. aid. It was the most serious political scandal of the Reagan administration.
Khashoggi allegedly put up collateral for the initial U.S. arms sales to Iran but later complained the Reagan administration reneged on its promise to repay him and fellow investors. He was reported to have been left $10 million short.
Considered among the world's richest men, he had homes in London, New York, Geneva and Riyadh, Saudi Arabia, and kept both Arab and Western wardrobes in each.
Khashoggi's life was chronicled in the business pages and the gossip columns of newspapers, including his highly publicized 1974 divorce from his wife, Soraya, who wanted $2.5 billion, which she said was half his worth. She ended up settling for $3 million.
Among his possessions were two Boeing jets, one of which was outfitted as a flying home and office at a cost of more than $4 million. One of his two yachts, the Nabila, was estimated to be worth $50 million. The boat, now owned by New York real estate magnate Donald Trump, has onyx lavatories, a dining table in marble and gold, seven luxurious guest suites, a theater, hairdressing salon and hospital.
Khashoggi's friends explained his great wealth and power by saying he was the right man at the right time in Saudi Arabia's transition from feudalism to its status as a leading nation of the Middle East and an important ally of the United States.
Khashoggi, who was educated at a British school in Cairo and Chico State University in California, started his fortune by investing in a trucking company in California. From there, he moved into dealing arms, banking, real estate, development, fashion, aviation and other fields.
His fortunes dipped in January 1987 when a New York court seized his Fifth Avenue apartment after he allegedly failed to repay $2.2 million owed the British mining and trading conglomerate Lonrho PLC.