The arrest of Prince Alwaleed bin Talal, the buccaneering face of Saudi capitalism, and dozens of other princes and technocrats as part of an anti-corruption drive has raised questions over the country’s attitude to business under Prince Mohammed bin Salman — even as Saudis lauded the move. The purge led by the powerful Saudi crown prince has triggered uncertainty among investors who fear a campaign against established business leaders.
It has alarmed executives working on Prince Mohammed’s ambitious transformation plan and sent shockwaves through a Saudi business community wondering whether they might be next in line. Bankers say that while the economic downturn and regional geopolitical tumult has already sparked capital flight out of the kingdom over the past few years, these latest developments would speed up the pace of outflows. “The arrest of Prince Alwaleed bin Talal . . . could well dampen international interest in investing in the crown prince’s much-heralded Vision 2030 to make the non-oil private sector the new motor of the economy,” said David Ottaway, fellow at the Wilson Center, a Washington think-tank, referring to Prince Mohammed’s flagship reform programme.
The arrests come at a critical time for Saudi Arabia as it prepares the ground for the sale of shares in Saudi Aramco, the state oil company, in what has been billed the biggest initial public offering in history. The kingdom plans to float about 5 per cent of Saudi Aramco next year as part of the prince’s reform plan. Some analysts think the company could be worth $2tn. They also come just a few days after hundreds of financiers and titans of industry and entertainment travelled to Riyadh a multi-day investment conference. Dubbed “Davos in the desert”, the event was the latest step by Saudi Arabia to attract and encourage foreign capital and private sector collaboration to advance the Gulf state’s economic reforms.
The Saudi government was quick to downplay the potential for unintended negative repercussions from Prince Mohammed’s pursuit of financial wrongdoing. The country’s investment promotion body insisted the anti-corruption committee would create a level playing field for investors.