Sheik Down

How to lose $14 million

Libyan Dictator Muammar Gaddafi may have wanted to acquire nuclear technology. Lebanese Businessman Anthony Tannoury seemed anxious to make a lot of quick bucks. Neither succeeded, but those were the elements of what seems to have been an unusually audacious swindle.

The intrigue began when Tannoury, 37, a Paris-based entrepreneur, told Saudi Sheik Mezan Pharaon that Gaddafi had offered $1 billion to anyone who could supply certain "strategic materials," presumably parts for an atomic reactor. Tannoury said he could obtain the materials through Venezuelan associates, but that he first needed to come up with a $33 million down payment. For approximately $14 million in cash, Tannoury said, Pharaon could share in the profits of the operation. A short while later, the sheik gave Tannoury the $14 million.

A few weeks later, Tannoury approached Pharaon again, explaining that the Venezuelans had demanded more money. At that point, Philippe Espitalier, a French adviser to Pharaon, became suspicious and cautioned him to pay no more money and to obtain collateral for the $14 million. It was too late. Tannoury returned with news that the Venezuelans had pulled out of the deal, and that he and Pharaon had lost their $33 million down payment.

Pharaon persuaded Swiss authorities to file a criminal indictment for fraud against Tannoury. Pharaon's advisers suspect that the Gaddafi "offer" and the Venezuelan connection were a hoax. Moreover, they believe Tannoury probably never matched Pharaon's investment and may have simply pocketed the sheik's $14 million.

Tannoury insisted to TIME last week that the Libyan offer was genuine. He admitted that he "has made an arrangement" to pay Pharaon at least $14 million, which would seem to cover the sheik's investment. The dispute, Tannoury claimed, had resulted only from a misunderstanding between his and Pharaon's subordinates. Pharaon was not talking, and last week his lawyers said that he would not press legal charges against Tannoury. The victim seemed as worried about his reputation as his money, and with good reason. His brother Ghaith is a prominent Middle Eastern financier, and their father Rashad is a senior adviser to King Fahd of Saudi Arabia. - This file is automatically generated by a robot program, so viewer discretion is required.