On the nature of XTE J0421+560/CI Camelopardalis

We present the results of an analysis of RXTE, BATSE, and optical/infrared data of the 1998 outburst of the X-ray transient system XTE J0421+ 560 (CI Cam). The X-ray outburst shows a very fast decay (initial e-folding time si milar to 0.5 days, slowing down to similar to 2.3 days). The X-ray spectrum in the 2-25 keV band is complex, softening considerably during decay and w ith strongly variable intrinsic absorption. A strong iron emission line is observed. No fast time variability is detected (<0.5% rms in the 1-4096 Hz band at the outburst peak). The analysis of the optical/IR data suggests th at the secondary is a B[e] star surrounded by cool dust, and places the sys tem at a distance of greater than or similar to 2 kpc. At this distance, th e peak at 2-25 keV luminosity is similar to 4 x 10(37) ergs s(-1). We compa re the properties of this peculiar system with those of the Be/NS LMC trans ient A 0538-66 and suggest that CI Cam is of similar nature. The presence o f strong radio emission during outburst indicates that the compact object i s likely to be a black hole or a weakly magnetized neutron star.