Adnan Khashoggi, a Saudi Arabian arms dealer linked to the Iran-Contra scandal - and who is said to have financial ties to Osama bin Laden - may be behind a Bermuda-based company which is now under examination by the US Securities and Exchange Commission (SEC).

Mr. Khashoggi gained notoriety, according to the New York Observer, in the Iran-Contra scandal with his loan of $10 million - money that had been borrowed from another source - to Oliver North for a load of guns for Iran.

The Wall Street Journal reported yesterday that Mr. Khashoggi - through his Bermuda holding company Ultimate Holdings Ltd. - is a major stakeholder in a California-based interactive marketing concern called GenesisIntermedia Inc., which is the subject of the SEC investigation.

GenesisIntermedia is reportedly under SEC investigation, in relation to certain transactions, including some with major shareholder Ultimate Holdings Ltd., of Bermuda.

Mr. Khashoggi is named as signatory for Ultimate Holdings Ltd. - in papers filed with the SEC by GenesisIntermedia. Mr. Khashoggi, was also reported this week, in Ireland's Sunday Business Post, as having financial ties to Osama bin Laden.

The Financial Times reported: "At a meeting in Paris, in 1998, international arms dealer Adnan Khashoggi was among a number of prominent Arab businessmen who agreed to continue what has been described by US intelligence officials as "protection payments" to bin Laden.

The Bermuda Registrar of Companies listed Ultimate Holdings Ltd. as existing at Milner House, 18 Parliament Street, Hamilton - the offices of the law firm Cox, Hallett and Wilkinson - with incorporation in 1997. The Registrar of Companies listed three names on the Memorandum of Association of Company limited by shares - Douglas Pullen, Marty Brandt and Ellie Dolding. The company is incorporated as a holding company, and to act as an investment company. Requests for information by The Royal Gazette to Cox, Hallett & Wilkinson revealed the company is a nominee company of Coson Company Ltd.

Both the Wall Street Journal and the New York Observer have cited Mr. Khashoggi as being behind Ultimate Holdings Ltd.

Bermuda Monetary Authority (BMA) chair Cheryl-Ann Lister told The Royal Gazette the BMA had not received anything on an investigation by the SEC, but she did say the BMA "will cooperate fully in any investigation".

When asked how a businessman like Adnan Khashoggi would be allowed to set up a company in Bermuda, Mrs. Lister said the BMA does screen businesses although she would not confirm or deny if Mr. Khashoggi does or does not have a company here.

She said further: "We would like to think this (screening) works 100 percent of the time, but in some cases, it does not."

Mrs. Lister reiterated: "We are not at liberty to confirm beneficial ownership of this company." Mrs. Lister would also not comment on what action might be taken if Mr. Khashoggi was found to be the beneficiary of Bermuda-based Ultimate Holdings Ltd. Mr. Khashoggi - through Ultimate Holdings Ltd. - is said to have put $44.6 million in to GenesisIntermedia since 1999. It was following this cash injection, that GenesisIntermedia's share price soared, in July, to $25 per share.

Christopher Byron, in the New York Observer, wrote that GenesisIntermedia generated $12.5 million in revenues for the quarter ending March 31. But, the company also reported $16 million in operating expenses, $3.6 million of cash-burn and nearly $8 million in net losses.

"With only $225,000 of cash on its books, no working capital and a negative net worth on the balance sheet of nearly $15 million, this is a company that shouldn't be worth anything at all. And basically speaking it wasn't, until Adnan Khashoggi came along. Now the company has become one of the fastest rising stocks of the year on the Nasdaq," Mr. Byron writes.

The company's share price hit a 52-week high of $25 in late June, but the Nasdaq halted the company's trading on September 25 - with market officials seeking unspecified extra information about the company - as shares dropped below $6.

In exchange for his $44.6 million, Mr. Khashoggi, according to the New York Observer, "got back warrants to acquire enough of the company's stock so that, by last May, he had become its largest single shareholder, with nearly 9.7 million shares - or 45.3 percent of the total - under his thumb via an offshore shell company he's got in Bermuda called Ultimate Holdings Ltd".

Mr. Khashoggi, through Ultimate Holdings Ltd., exercised warrants to acquire 2.1 million shares against his $44.6 million loan to the company, at $2.33 per share.

This breaks down to a total payment of $4.9 million for stock that were, at the time, worth 30 times that - or $157 million, according to the New York Observer. He also acquired further shares in open-market transactions. Mr. Byron reported the SEC investigation was sparked by the "short swing" rule, which prohibits anyone who owns ten percent or more of a company's stock from profiting from buying and then selling any shares in the company's stock during a six-month period.

Mr. Khashoggi became a ten plus per cent shareholder in June, 2000. According to an SEC filing in July, Ultimate Holdings Ltd. had to hand over profits from numerous trades in GenesisIntermedia stock over the past year. The Wall Street Journal reports that in July, Mr. Khashoggi - via Ultimate Holdings Ltd. - reduced its ownership stake in GenesisIntermedia from 43.1 percent to 38.4 percent.