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It was the creation of an image. The 18-year-old student began brokering sales for a Seattle truck manufacturer. Soon all kinds of businessmen, assuming he was influential in Saudi Arabia, began offering him deals. "My life-style was my only way of making important contacts. I had put together a track record. But that was not enough. I would spend money in order to justify my request to be on prize society and business guest lists. In a few years everybody wanted to be on my guest lists."
Khashoggi left Chico after only three semesters; wheeling and dealing would provide the rest of his education. In 1956 Khashoggi garnered a contract to supply trucks for the Saudi army. The pattern was set: the deal, the commission, the party, more contacts and contracts. By 1962 Khashoggi was the sales agent in Saudi Arabia for Chrysler, Fiat, Westland Helicopters Ltd. and Rolls-Royce. "One association," he says, "led to another, one business to another." For Western companies, Khashoggi was the man to know in Saudi Arabia.
Throughout his life he has played up his closeness to the Saudi royal family. Lately there have been rumors that Khashoggi is out of favor in Riyadh, but he adamantly denies them. "Having heard so much revolutionary rhetoric, I can really appreciate what the Saudi government did for its people," he says. "King Fahd is the real revolutionary, after all. It takes a revolutionary to rule by common sense and compassion in the midst of turmoil."
When Fahd's half-brother King Faisal took the Saudi throne in 1964 and set the country on a course of close cooperation with the U.S., Khashoggi positioned himself to be the middleman between American arms manufacturers and the Saudi Defense Ministry. At Khashoggi's instigation, the Saudis commissioned the U.S. to study their defense needs and make recommendations as to what they should buy. As a result, Khashoggi had the inside track and locked up sales-agency rights with such U.S. firms as Lockheed, Raytheon and Northrop. He eventually won exclusive commissions on 80% of all U.S. military sales to Saudi Arabia.
After the Arab-Israeli war of 1973, the Arab states were eager to expand their arsenals. Moreover, the rise in oil prices gave them billions to spend on whatever weapons they desired. "That's when the middlemen like Khashoggi really started to make their killings," says one Middle Eastern arms dealer. "It was the gold rush of the 20th century. Every con man in the world was in Arabia." Between 1970 and 1975, Lockheed alone paid Khashoggi $106 million in commissions. During this same period, he is said to have collected hundreds of millions from other corporations. Khashoggi, says Max Helzel, then vice president of Lockheed's international marketing, "became for all practical purposes a marketing arm of Lockheed. Adnan would provide not only an entree but strategy, constant advice, and analysis." His commissions started at 2.5% + and eventually rose to as much as 15%.