According to the News Of The World, the relative of Prince William's girlfriend met with reporters from the newspaper posing as business executives at his £5 million Ibiza home.
When one 'businessman' revealed that he lived in London, Goldsmith allegedly offered him drugs, saying: "I have a company that delivers to your door... and I can get cocaine to your door here, too."
He then attempted to give the disguised journalist the phone number of a local procurer. "Mention you know Gary from Cala Jondal. There's loads of Brazilian girls here."
Goldsmith also apparently let slip of what happened the first time he met Prince William.
He said: "My first words to Prince William were: 'Oi, you f**ker! Did you break my glass pyramids?' He and a pal had been throwing balls around and broke all these ornamental pyramids I had - loads of them."
After claiming that William and Middleton were planning to announce their engagement later this year, he added: "When the press get you, they kill you. They don't know who I am. I'm under the radar."