There’s never been a housecleaning quite like this one. Dozens of Saudi Arabia’s richest and most influential people, including princes and government ministers, were swept up by authorities beginning in November and detained at the palatial Ritz Carlton in the capital, Riyadh. There, they’ve been presented with evidence of their corruption, officials say, and given a choice: face trial or relinquish ill-gotten riches and go free. That process and the identity of some of the detainees have raised questions: Is the crackdown really a shakedown? Is it aimed at sidelining potential rivals to King Salman bin Abdulaziz’s favorite son and designated heir, Crown Prince Mohammed bin Salman? Some debate is inevitable in a country in which the definition of corruption is muddied by a long-tolerated system of patronage that’s allowed royals and Saudi businessmen to grow wealthy off government contracts and lucrative deals with multinational corporations.
1. What are the allegations?
Saudi authorities say that at least $100 billion has been siphoned from public accounts over decades through corruption and embezzlement. Officials could recover as much as that in settlements, according to Prince Mohammed, 32, who heads the new anti-corruption commission spearheading the crackdown and who essentially runs the country for his 81-year-old father. Authorities have set up an organization to manage assets relinquished by detainees. The prince, who is known as MBS to analysts, has said the majority of those detained have agreed to pay back some of the money they gained illegally in exchange for their freedom. And dozens have been released. Others, like Prince Alwaleed bin Talal, the billionaire investor worth $17.2 billion who is the most famous of the detainees, remain in their gilded prison.
2. Is Saudi Arabia known for corruption?
Transparency International’s Corruption Perceptions Index, which is based on a global survey asking citizens about their direct experience of graft, rates Saudi Arabia similarly to China and India, with a score of 46 out of a possible 100 points. Prince Bandar bin Sultan, a former Saudi ambassador to the U.S., defended corruption as “human nature” in a Frontline interview in 2001 and said that if $50 billion of the $400 billion spent to build the country went to line pockets instead, it was an acceptable amount. In a secret 1996 cable published by WikiLeaks, a U.S. diplomat in Riyadh reported that a handful of the most senior princes enriched themselves by skimming from “off-budget” programs that received 12.5 percent of the country’s oil revenues. The diplomat said some royals used their power to confiscate land from commoners in order to resell it to the government at a profit.
3. Were those arrested reputed to be corrupt?
Some had been previously linked to questionable transactions. Prince Turki bin Nasser, for example, is infamous for his involvement in the so-called Al Yamamah arms deal with the U.K., which led to corruption investigations in the U.K. and U.S. Adel Fakeih, an economic policymaker until his arrest, was Jeddah’s mayor when a flood in 2009 killed scores of people because of infrastructure failures. Dozens of others, but not Fakeih, were convicted of charges including bribery.
4. Is it accepted practice for the accused to buy their freedom?
Settlements in corruption cases aren’t uncommon in other countries. However, Saudi Arabia lacks the transparent legal mechanisms used elsewhere to determine financial penalties. Attorney General Sheikh Saud Al Mojeb said suspects have been granted access to lawyers, but prosecutors have released no details of charges.
5. Is this a shakedown?
That possibility has been raised by contacts in the U.S. and Europe of Prince Alwaleed. People with knowledge of the matter say he is balking at demands that could force him to relinquish control of Kingdom Holding Co., which owns stakes in companies such as Citigroup Inc. and Twitter Inc., and is resisting any suggestion of wrongdoing because of the impact it would have on his reputation.
6. Are the arrests a power play?
Speculation about that scenario was fueled especially by the inclusion among the detainees of Prince Miteb bin Abdullah, 65, the favored son of the late King Abdullah. Until his arrest, Prince Miteb headed the powerful National Guard, which had been the last military branch not under the control of MBS. An official said Prince Miteb, who was released in late November, reached a settlement deal “believed to” exceed the equivalent of $1 billion. However many Saudis argue that Prince Mohammed had already finished consolidating power in June when he sidelined his older cousin, former Crown Prince Mohammed bin Nayef.
7. What does Prince Mohammed say?
The crown prince called the idea that the crackdown was a power grab “ludicrous” in an interview with the New York Times. He told the paper that when his father became king in 2015, he concluded that corruption was impeding economic growth. So, he said, King Salman ordered his subordinates to thoroughly investigate corruption at the top of Saudi society, and when they were done, the attorney general moved on the information. How the probe unfolds will help investors and diplomats decipher the intent.
8. What are the risks of the sweep for MBS?
It represents a big break from the status quo. For decades, the sprawling royal family has shared power by distributing key responsibilities among princes from different branches. With government portfolios concentrated in his hands, Prince Mohammed has already deprived other royals of political power. Now, he is threatening the patronage system that has spread the riches. That risks stirring opposition to his agenda, of moderating religious strictures and weaning the economy off dependence on oil, and to his succession to the throne. Also, economists expect the disruption caused by the investigation to temporarily slow private investment in the kingdom, which is critical to Prince Mohammed’s vision of a diversified Saudi economy.
9. What are the possible benefits?
Deconstructing that patronage system would save the government a lot of money today, and even more in the future. It’s estimated that there are 15,000 Saudi royals, and the number continues to grow. Plus, in the long run, Saudi Arabia would be more attractive to foreign investors if there was less corruption. Saudi coffers certainly could use a boost, too: reduced oil revenues have pressured the budget as well as foreign-currency reserves. Yet the central bank still has more than $480 billion in net foreign assets.
10. How have Saudis reacted to the crackdown?
Official statements about the need to root out corruption have resonated with ordinary Saudis, who complain privately and on social media that the kingdom’s elite have been allowed to act with impunity. MBS has stressed that no one is above the law in Saudi Arabia, and on Jan. 4 security services arrested 11 princes for what authorities said was an unlawful protest over the government’s decision to stop paying their utility bills.
11. Will Saudi royals live more modestly?
Don’t expect comprehensive change. When King Salman visited Moscow in October, he brought 1,500 retainers, his own carpets and a golden escalator for his Boeing 747. MBS spent about $550 million for a 440-foot yacht in the south of France, according to the New York Times. He was also the buyer behind the record $450.3 million spent on a painting in December, a Leonardo da Vinci portrait of Jesus Christ, according to the Wall Street Journal.
12. How do they afford those things?
The Saudi royals have never been transparent about their earnings or wealth. In the same cable published by WikiLeaks, the U.S. diplomat describes visiting the office of the finance ministry responsible for distributing monthly stipends to each member of the royal family. The diplomat reported that, from birth, sons and daughters of Ibn Saud, the kingdom’s founder, received up to $270,000, grandchildren got about $27,000, and so on through the generations, with the most distant royals receiving a minimum of $800. Marriage could bring a bonus payment of up to $3 million to build a palace.
To contact the reporters on this story: Glen Carey in Riyadh at firstname.lastname@example.org, Alaa Shahine in Dubai at email@example.com.
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