The King's former aide could face charges related to the cash for honours scandal after police handed evidence to the Crown Prosecution Service.
It is expected that prosecutors will decide before Christmas if charges will be brought after King Charles, who was then the Prince of Wales, personally presented Mahfouz Marei Mubarak bin Mahfouz a CBE after donations to royal causes worth £1.5 million, according to The Sunday Times.
It is claimed that Michael Fawcett, 59, the former valet to the King, helped to secure the honour for the wealthy Saudi businessman.
The private investiture ceremony was held at Buckingham Palace and not recorded on the Court Circular.
Mr Fawcett began working for the Royal family in 1981, first as a junior footman to the Queen and then as a personal valet to her eldest son. He rose through the ranks and in 2018 was made the chief executive of The Prince's Foundation.
Last November, Mr Fawcett resigned amid accusations that he helped to secure the award.
Mr Mahfouz not accused of any wrongdoing
It came after a letter from 2017 emerged in which Mr Fawcett allegedly told the Saudi billionaire that he could help secure him an honour and citizenship.
The letter, allegedly written to Mahfouz Marei Mubarak bin Mahfouz, said: "In light of the ongoing and most recent generosity of His Excellency Sheikh Mahfouz Marei Mubarak bin Mahfouz, I am happy to confirm to you, in confidence, that we are willing and happy to support and contribute to the application for citizenship.
"I can further confirm we are willing to make an application to increase His Excellency's honour from Honorary CBE to that of KBE in accordance with Her Majesty's Honours Committee."
Mr Mahfouz, who is listed as a supporter on The Prince's Foundation website, donated large sums to restoration projects of particular interest to Prince Charles, specifically Dumfries House and the Castle of Mey in Scotland.
Sources close to the Prince have always strenuously denied that he was aware of any link between donations to his charity and the awarding of the honour.
It has also emerged that Mr Fawcett received a five-figure payoff when he resigned from the foundation.
Mr Mahfouz is not accused of any wrongdoing.
On Sunday night, Buckingham Palace said it would not comment on an ongoing police inquiry.