The sprawling al Fassi mansion, which once scandalized this usually unflappable city with its nude, flesh-colored statues and garish arrangements of plastic flowers, today lies in ruins, the burnt-out hulk left from a New Year's Day fire.

But while the al Fassis and their outlandish living quarters may be gone from the Southern California scene, serious questions remain about dealings between the family, led by 52-year-old Sheik Shamsuddin Abdullah al Fassi and his son Mohammed, and a billion-dollar Los Angeles-based operations in Saudi Arabia, the al Fassi homeland.

The publicity surrounding the Beverly Hills mansion and its statuary as well as the press reports chronicling the al Fassis' drinking, womanizing and spendthrift ways reportedly embarrassed the Saudi royal family enough to force the 1978 resignation of the al Fassis' royal in-law and patron, the former Saudi deputy minister of defense and aviation, Prince Turki ibn Abdel Aziz.

Now the royal family's displeasure with the al Fassis may be heightened by a Securities and Exchange Commission inquiry. The SEC, which oversees the operations of publicly owned corporations, is looking into the relationship between the al Fassis and the Los Angeles-based Whittaker Corp., a maker of metal, chemical and high technology products.

In 1974, Whittaker won a contract to manage hospitals in Saudi Arabia for the Saudi armed forces. This contract now accounts for nearly one-third of the company's total earnings.

On Friday, Whittaker President Joseph Alibrandi is scheduled to appear at an SEC hearing in Los Angeles. The terms of the hospital contract, as well as Whittaker's links to the controversial sheik and his family, will be on the agenda. The SEC wants to know the precise nature of the dealings between the company and the Saudis, and whether federal laws requiring disclosure of the dealings to stockholders were violated.

The extent to which Whittaker tolerated the demands and exceesed of the al Fassis, apparently to ensure the renewal of the Saudi hospital contract, so crucial to the company's profit picture, reveals how far some American corporations have been willing to go to do business in the oil-rich Middle East. Like American motorists stewing in gasoline lines, some top Whittaker executives reportedly felt themselves forced to pay an exhorbitant price to carry on with their commercial activities -- not in money, but in the form of degrading favors for a handful of people they held in total contempt.

"Whittaker didn't really want to deal with the al Fassis, but the powerful prince [Turki] was in the middle," explained one source. "They [Whittaker] didn't want to hurt the prince. The prince forced Alibrandi to take care of the [al Fassis'] problems as a gesture of goodwill."

After a month-long investigation into the business affairs of the al Fassis both here and abroad, The Washington Post has learned from well-informed sources and from documents about a series of questionable dealings between Whittaker executives and the family from 1977 to 1979.

Sources at the SEC said that Whittaker's dealings with the al Fassis could be civil violations of the disclosure provisions of federal securities law.

These Whittaker actions, some of them soon to be the object of SEC attention, typify the corporation's relationship with the al Fassis:

In 1977, according to telexes and canceled checks, Whittaker granted two unsecurred, interest-free-loans totaling $60,000 to the al Fassi Trading Corp. to prop up the company after the family's spending habits had nearly bankrupted it. These loans, according to a member of Whittaker's board of directors who also serves as a top management official of the company, were never discussed before the corporation's full board of directors. c

In 1978, Whittaker helped Mohammed al Fassi secure a $500,000 loan for the redecoration of the Beverly Hills mansion from Security Pacific National Bank, Whittaker's top corporate lender. Alibrandi, according to several sources, arranged a meeting for al Fassi aides with a loan officer at Security Pacific National Bank in Los Angeles. "We were asked to look at it [the loan], by our good friends at Whittaker," confirmed Max Lyle, the Security Pacific officer who handled the al Fassi loan. "One of the persons over there [at Whittaker] asked us to see if we could help the al Fassis out. They said they had some business with them in Saudi Arabia."

In April 1978, Whittaker appointed the al Fassi Trading Corp. as its "sole source" for pharmaceuticals and medical supplies for the three hospitals it managed in Saudi Arabia. This deal was reportedly consumated at the urging of Prince Turki, and despite the al Fassis' complete lack of experience in the medical supply field. "Whittaker -- they had no choice," a source said. "If they said no, they would be out of the country."

In the summer of 1978, after the al Fassis departed from California with a tangled skein of legal and financial matters in their wake -- the sheik, among other problems, has two personal assault suits pending against him in Los Angeles -- Whittaker officials recommended a Beverly Hills law firm to oversee their affairs. Over the course of the following year, members of the firm, Whittaker executives and a Whittaker accountant reportedly reviewed the disbursements made from a trust fund set up by the firm for the al Fassis.

(One of the largest expenses paid out of the trust account was over $55,000 for the care and feeding of Mohammed's collection of 50 dogs, left behind at local kennels after his departure from the country. In an Aug. 15, 1978, letter to Alibrandi Mohammed expressed his "desire that you have the dogs shipped immediately" to Saudi Arabia, as had been "agreed upon when I saw you in Saudi Arabia many weeks ago." The Whittaker president subsequently involved himself in an unsuccessful attempt to ship the dogs to the Middle East, informed sources say, but the effort collapsed and the dogs were later sold off locally.)

Top Whittaker executives, including President Alibrandi, aided in the arrangement of numerous other favors for the al Fassis that reportedly included the storage of their limousines and security for the Beverly Hills mansion.

Whittaker acknowledged in a press release Feb. 12 the existence of the SEC inquiry into its al Fassi connections. However, the statement noted only that an al Fassi company "provides medical supplies to Whittaker in Saudi Arabia," and that unnamed Whittaker executives "have provided advice" for al Fassi family members while they were out of the country.

Alibrandi has refused to comment on his company's involvement with the al Fassis despite repeated requests by phone and letter to do so. Similarly, every member of the Whittaker board of directors has failed to respond to Post inquiries concerning the al Fassis, except for Whittaker executives vice president and director Joseph Kleiman.

"The al Fassi situation has never been discussed on the board," Kleiman told The Post. "I don't know what happened between Whittaker and the al Fassi family," he said, adding that he was confident there was no wrongdoing by Whittaker or any of its executives in the matter.

("After reflecting upon conversation," Kleiman later wrote to The Post, "I concluded and then advised Mr. Alibrandi that your approach to the 'al Fassi story' was biased and that your efforts to interview him were apparently not motivated by a sincere desire to elicit the facts." In a Feb. 12 letter to The Post, Whittaker senior vice president Alan Jacobson expressed his "concern" about The Post's "objectivity" and said he believed The Post's report on the Whittaker-al Fassi relationship "may well be founded on gross misinformation." He said the nature of four questions The Post had put in writing to Whitaker "eliminated the possibility" for "a meaningful exchange" with company officials.)

What led Whittaker into its close relationship with the al Fassis, according to several well-placed sources, was the influence the sheik and his son had with Prince Turki through his marriage six years ago to the Sheik's strong-willed daughter Hend. Turki and his six full brothers, led by Crown Prince Fahd, make up a powerful grouping within the royal family, which has an especially privileged position in business conducted by overseas interests in Saudi Arabia.

"Saudi Arabia is nothing but the royal family," said one authority on Saudi affairs. "If you don't go through prince so-and-so, you'll never get any business approved."

Saudi sources familiar with the operations of American, European and Japanese companies in Saudi Arabia suggested that the pattern of Whittaker's operations there and the coporation's ties to the al Fassis were not unusual.

It was only through the notoriety the al Fassis gained in the American press, and the embarrassment that they caused the royal family, that the al Fassis -- and their Whittaker dealings -- took on any importance. The royal family acted to separate itself from the al Fassis image last year by removing Prince Turki, their sponsor, from the cabinet.

The Saudi government, recently shaken by an attack on the Islamic shrine at the Grand Mosque in Mecca by Moslem fundamentalists, is increasingly sensitive to charges of corruption within the royal family. Thus al Fassis, who would otherwise be of minor concern, are a serious embarrassment for the 2,000 or more royal princess who make up "the family."

Members of the royal family, including the now-ailing King Khalid, are said to have objected to Turki's marriage to Hend al Fassis from the beginning.

The royal family's growing distress over the Hend marriage and the al Fassis influence led them at one point to consider hiring an Islamic mystic to break a "magic" spell that they believed Sheik al Fassis cast over Turki to insure his total devotion to Hend. Prince Solmon, Turki's full brother, once reportedly threatened to kill the al Fassis "with his bare hands" because of the scandal they had brought upon the royal family, said one informed source.

Hend, described as intelligent, attractive and strong-willed by several who know her, was able to thwart the efforts of the royal family for years. But by mid-1978 news of the al Fassis' escapades forced the royal family to issue an ultimatum forcing Turki to chose between his connnections with the al Fassis and his government post, according to informed sources.

Under pressure, Turki resigned his post with the defense ministry and left the country in disgrace during the summer of 1978. For the ensuing year and a half, Turki and Hend traveled around the world, sometimes in the company of the al Fassis, gambling and spending freely at various international resorts.

Financed and protected by their royal connections, the al Fassis started their business in 1976 in an opulently furnished office in the Century City corporate complex in West Los Angeles. They hired a prominent local Egyptian-born businessman to direct their operations and installed thousands of dollars worth of sophisticated electronic equipment in their high-rise headquarters.

Despite the elegance of their office, however, the al Fassis, according to sources familiar with their company's operations, spent little time attending to business, preferring instead to lavish company funds on their free-wheeling habits.

The minutiae of business and finance, those familiar with the trading company's operations say, were only of passing interest to the sheik and his son. In three years, according to sources, they spent nearly $12 million in funds allegedly paid out from the royal exchequer, most of it on personal pleasures. Father and son tossed money around with abandon, often piling up enormous credit card bills and imperiling their sudden cash wealth.

The al Fassi firm, described in its supply agreement with Whittaker as "an experienced trading company" that could help with customs problems in Saudi Arabia has, in reality, been little more than a corporate funnel to provide funds for the personal use of the al Fassi family, according to sources familiar with the company.

"There's nothing to run in the company, and there's nothing ever done in the company," said one source. "All the company does is take care of the personal affairs of the al Fassis."

The trading company, according to financial documents describing its operations, paid for everything from a private apartment rented by Mohammed at the Marine City Club in Los Angeles and the care of his prized collection of more than 50 dogs to an extraordinarily lavish 1978 party at the al Fassi mansion and Mohammed's five-figure and six-figure American Express credit card bills.

(Sometimes, however, even the al Fassis couldn't buy everything they wanted. Mohammed once told an aide to buy the Goodyear blimp and have it moored at the Beverly Hills estate to flash the al Fassi name across the Southern California sky. The aide knew the blimp purchase was a ludicrous impossibility and did nothing.)

Sheik al Fassi, according to former family associates, is a heavy drinker with little business experience. "The old man was not capable of discussing business because he was never sober enough to discuss it," one former aide recalled.

Al Fassi visited the Los Angeles office infrequently, preferring instead to issue directives from Jeddah, London or any one of a number of European capitals where he could live luxuriously and surround himself with retainers, former aides say.

Son Mohammed, who could usually be found in Los Angeles from the time of the trading company's inception until the summer of 1978, reportedly went to the office only on occasion to "play" with the computerized office equipment. His real interests, former aides report, were young women, his kennel of 50 dogs, expensive cars and furnishings for the $2.4 million Beverly Hills mansion he purchased in 1978.

(An unpredictable cast of mind is said to plague Mohammed. In 1978 he fell deeply in love with Victoria Sosa, an aspiring actress from Los Angeles' Hispanic east side, although he was married at the time to an Italian-born woman living in London. Mohammed and Sosa married in April of that year. Then, unexpectedly, according to a former al Fassi aide, Mohammed turned on Sosa and held her a virtual prisoner at the Beverly Hills Hotel. Sosa, in a lawsuit since dropped, claimed Mohammed abused and assaulted her, "biting [her] about her entire body." Attorneys for the al Fassis have refused to comment on the Sosa suit or any other litigation pending against them. "These cases have been slanted in the press and all against our clients," said Howard Kaplan, one of several lawyers representing the various al Fassi interests. "The al Fassis have been painted as the worst bastards in the world. Some of it may be true," Kaplan said.)

Yet despite their erratic and often bizarre behavior, the al Fassis' royal connections assured them the respectful attention of top officials at Whittaker. The sheik according to aides, expected upper-echelon Whittaker executives to concern themselves with his affairs at all times.

"It's a simple relationship that took Whittaker through Prince Turki to business -- they have no choice," explained one source formely close to the al Fassis. "The old man [Sheik al Fassi] used to say, "This is one of the biggest companies in the world and I control it. [Whittaker President] Joe Alibrandi is my employe.'"

Whittaker a billion-dollar concern and the 280th largest industrial corporation in the country, has been deeply involved in Saudi Arabia since 1974 when Whittaker signed a $100 million contract with the Ministry of Defense and Aviation to manage three military hospitals in the Middle Eastern country.

The Saudi contract came at a time when Whittaker was just recovering from a severe financial crisis brought on by its purchase of more then 140 firms in the later 1960s. In 1974 Whittaker was heavily in debt, and in the midst of a massive reorganization which had forced it to sell off some 30 subsidiaries the previous four years to raise much-needed cash.

To help turn the company around, Whittaker's board of directors in 1970 recruited a new president -- Joe Alibrandi, formerly a vice president of Raytheon Corp. in charge of its missile system division. Alibrandi, a highly respected executive who later served as chairman of the Federal Reserve Bank in San Francisco, moved quickly to trim Whittaker's unprofitable operation and shore up its weak balance sheet.

One of Alibrandi's most successful efforts, according the securities analysts and other sources, was his parlaying of contracts he had in Saudi Arabia into the hospital contract for Whittaker.

Alibrandi had developed his connections to the Saudi royal family, including Prince Turki, while working on the installation of a Hawk missile system in Saudi Arabia for Raytheon in the 1960s, according to numerous sources.

Arranging the Hawk deal on the Saudi end were Prince Turki and a Saudi entrepreneur then just getting started in the arms business. Unknown then but shortly to become glamorous enough a figure to serve as the model for the protagonist in a Harold Robbins novel, "The Pirate," and the best known of the flashy middlemen in the Middle East, it was Adnan Khashoggi.

While Whittaker had virtually no experience in hospital services, the firm nonetheless reportedly approached the Saudis with a management proposal in the early 1970s. The Saudis, in turn, decided to put the hospital contract out for competitive bid, but in July of 1974 Whittaker landed the deal although its bid was reportedly not the lowest submitted and may in fact have been the highest. (A market letter published by the research department of a Los Angeles brokerage house reported that while the Whittaker bid was far from the lowest submitted to the Saudis, it was the "broadest in scope" and the most ambitious in its preventive medicine proposals.)

The contract -- Alibrandi's most important success as Whittaker's chief executive officer -- was subsequently renewed and expanded twice in the late 1970s for an additional $650 million.

In the course of its Saudi dealings, Whittaker also entered into business relationships with at least two Saudi corporate executives. Since 1974 the company has paid from 3 to 5 percent of its cash receipts from some of its Saudi business to "entities" controlled by one-time Khashoggi associate Khalid bin Abdullah bin Abdulrah man al Saud, according to a Whittaker filing with the SEC.

Khalid a member of the Saudi royal family and a full brother of Prince Turki, subsequently became a 30 percent owner of Whittaker's Saudi Arabian subsidiary. Another Saudi businessman, Suliman Olayan, last year acquired stock and convertible notes worth over 13 percent of Whittaker's outstanding common shares according to company disclosures to the SEC.

Also, Whittaker had admitted privately to the SEC that in 1974 and 1975 it paid over $2 million in "commissions" to Khashoggi -- he apparently played a role in the hospital deal -- according to knowledgeable sources at the SEC. Whittaker stockholders, however, were never informed of either the payments or the company's acknowledgement of them to the SEC. (In 1976, according to SEC sources, the commisson wanted to question Whittaker about its dealings with Khashoggi but was at the time inundated with foreign bribe cases involving U.S. corporations and devoted little attention to the Whittaker-Khashoggi relationship. To the extent it cared about Khashoggi, the SEC was then far more interested in his ties to Northrop Corp.)

Whittaker did reveal publicly in 1976 that over the previous six years one of its executives had made questionable payments to an unnamed "entity" overseas totaling $126,000 to avoid paying foreign income taxes in an unidentified country. Whittaker claimed at the time that these and other similar payments had been stopped.

What Whittaker has never disclosed, publicly or in SEC filings, is of Saudi nationals -- the al Fassis.

Last month, in an apparent show of royal unity at a time of crisis for the entire Middle East, Prince Turki returned home. Sheik al Fassi is, reportedly, also back in Saudi Arabia, far from the army of creditors and lawyers anxious for him to appear in various Los Angeles courtrooms.

Mohammed, meanwhile, is said to be still indulging his extravagant personal style, traveling with his first wife between London, Geneva and other European cities.

The al Fassi office in Century City, still leased to the trading company though seldom used, is a silent reminder of the al Fassis' brief but tumultuous appearance in Southern California business and social circles.

Sources close to the family, however, report that new al Fassi employes are preparing to travel to Los Angeles to reopen the trading company's offices. With Turki back in Saudi Arabia and perhaps returned to royal power and former influence, family associates speculate, this city -- and the Whittaker Corp. -- may not have seen the last of the al Fassis.