A few years ago during a discussion about Arafat, I mentioned that I had read that he was homosexual and his wife was just a beard. He told me that he had read an article in the Forward (an old Yiddish/English newspaper that started out socialist, turned neocon and is now back on the left, but always Zionist) that Arafat's rumored homosexuality was a Mossad-planted falsehood to discredit him. The paper said it was disinformation (and they would have no reason to protect him).
I trust the info in the source on this thread (Israel Insider) more than your friend's socialist/leftist source.