Prince Turki tells Davos: ‘Corruption is a disease that has to be rooted out’

Time: January 25, 2018

DAVOS: Prince Turki Al-Faisal, Saudi Arabia’s former ambassador in Washington and London, mounted a strong defense of the anti-corruption campaign in the Kingdom at the World Economic Forum annual meeting in Davos.
Speaking on a panel entitled “Middle East and North Africa Strategic Outlook” with regional business and political leaders, he said that the campaign would not deter foreign investment in the Kingdom.
“I cannot accept the proposition that fighting corruption will drive away investors. It will attract them, because they know they will not have to pay the extra 5 or 10 percent for bribes,” he told Davos delegates.
He also insisted that due process of law was being observed in the campaign, which has led to several prominent business figures being held for investigation of their financial affairs at the Ritz Carlton hotel in Riyadh.
“Those deemed to be innocent have been released. Those who reached a settlement with the government will give back money and they will be set free. Those who chose to go to court will do so. But there is due process. They speak to their lawyers and the families from the Ritz Carlton,” he said.
The campaign is the result of a two-year investigation ordered by King Salman.
Prince Turki said: “This has been a long-running campaign planned by the King for a long time. Corruption is a disease that has to be rooted out. If you don’t deal with it, you’re accused of doing nothing. If you do, people start inventing stories about due process.”
His anti-corruption stance was echoed by another Gulf business leader. Alain Bejjani, chief executive of the UAE-based conglomerate Majid Al Futtaim, said that he had attended the Future Investment Initiative held in Riyadh last October, staged at the Ritz Carlton.
“I was delighted to see the world coming to Riyadh and putting Saudi Arabia back on the map. Since then, we have had the anti-corruption campaign, which I believe is a great thing in our part of the world.
“Let’s acknowledge that being against corruption is a good thing. When there was corruption in there system, nobody worried then about due process, but now some people worry. That is strange. But I do believe the business world needs more communication about what is going on,” Bejjani said.

This article was first published in Arab News

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Saudi Arabia’s Arab Spring, at Last

Time: 13 April, 2018

RIYADH, Saudi Arabia — I never thought I’d live long enough to write this sentence: The most significant reform process underway anywhere in the Middle East today is in Saudi Arabia. Yes, you read that right. Though I came here at the start of Saudi winter, I found the country going through its own Arab Spring, Saudi style.

Unlike the other Arab Springs — all of which emerged bottom up and failed miserably, except in Tunisia — this one is led from the top down by the country’s 32-year-old crown prince, Mohammed bin Salman, and, if it succeeds, it will not only change the character of Saudi Arabia but the tone and tenor of Islam across the globe. Only a fool would predict its success — but only a fool would not root for it.

To better understand it I flew to Riyadh to interview the crown prince, known as “M.B.S.,” who had not spoken about the extraordinary events here of early November, when his government arrested scores of Saudi princes and businessmen on charges of corruption and threw them into a makeshift gilded jail — the Riyadh Ritz-Carlton — until they agreed to surrender their ill-gotten gains. You don’t see that every day.

We met at night at his family’s ornate adobe-walled palace in Ouja, north of Riyadh. M.B.S. spoke in English, while his brother, Prince Khalid, the new Saudi ambassador to the U.S., and several senior ministers shared different lamb dishes and spiced the conversation. After nearly four hours together, I surrendered at 1:15 a.m. to M.B.S.’s youth, pointing out that I was exactly twice his age. It’s been a long, long time, though, since any Arab leader wore me out with a fire hose of new ideas about transforming his country.

We started with the obvious question: What’s happening at the Ritz? And was this his power play to eliminate his family and private sector rivals before his ailing father, King Salman, turns the keys of the kingdom over to him?

The Ritz-Carlton Hotel in Riyadh. Faisal Al Nasser/Reuters

It’s “ludicrous,” he said, to suggest that this anticorruption campaign was a power grab. He pointed out that many prominent members of the Ritz crowd had already publicly pledged allegiance to him and his reforms, and that “a majority of the royal family” is already behind him. This is what happened, he said: “Our country has suffered a lot from corruption from the 1980s until today. The calculation of our experts is that roughly 10 percent of all government spending was siphoned off by corruption each year, from the top levels to the bottom. Over the years the government launched more than one ‘war on corruption’ and they all failed. Why? Because they all started from the bottom up.”

So when his father, who has never been tainted by corruption charges during his nearly five decades as governor of Riyadh, ascended to the throne in 2015 (at a time of falling oil prices), he vowed to put a stop to it all, M.B.S. said:

“My father saw that there is no way we can stay in the G-20 and grow with this level of corruption. In early 2015, one of his first orders to his team was to collect all the information about corruption — at the top. This team worked for two years until they collected the most accurate information, and then they came up with about 200 names.”

When all the data was ready, the public prosecutor, Saud al-Mojib, took action, M.B.S. said, explaining that each suspected billionaire or prince was arrested and given two choices: “We show them all the files that we have and as soon as they see those about 95 percent agree to a settlement,” which means signing over cash or shares of their business to the Saudi state treasury.

“About 1 percent,” he added, “are able to prove they are clean and their case is dropped right there. About 4 percent say they are not corrupt and with their lawyers want to go to court. Under Saudi law, the public prosecutor is independent. We cannot interfere with his job — the king can dismiss him, but he is driving the process … We have experts making sure no businesses are bankrupted in the process” — to avoid causing unemployment.

“How much money are they recovering?” I asked.

The public prosecutor says it could eventually “be around $100 billion in settlements,” said M.B.S.

There is no way, he added, to root out all corruption from top to the bottom, “So you have to send a signal, and the signal going forward now is, ‘You will not escape.’ And we are already seeing the impact,” like people writing on social media, “I called my middle man and he doesn’t answer.” Saudi business people who paid bribes to get services done by bureaucrats are not being prosecuted, explained M.B.S. “It’s those who shook the money out of the government” — by overcharging and getting kickbacks.

The stakes are high for M.B.S. in this anticorruption drive. If the public feels that he is truly purging corruption that was sapping the system and doing so in a way that is transparent and makes clear to future Saudi and foreign investors that the rule of law will prevail, it will really instill a lot of new confidence in the system. But if the process ends up feeling arbitrary, bullying and opaque, aimed more at aggregating power for power’s sake and unchecked by any rule of law, it will end up instilling fear that will unnerve Saudi and foreign investors in ways the country can’t afford.

But one thing I know for sure: Not a single Saudi I spoke to here over three days expressed anything other than effusive support for this anticorruption drive. The Saudi silent majority is clearly fed up with the injustice of so many princes and billionaires ripping off their country. While foreigners, like me, were inquiring about the legal framework for this operation, the mood among Saudis I spoke with was: “Just turn them all upside down, shake the money out of their pockets and don’t stop shaking them until it’s all out!”

Men entering Alrajhi Mosque for noon prayer last month. Tasneem Alsultan for The New York Times

This article was first published in The New York Times

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In gilded Saudi royal circles, corruption has long been a way of life

Time: November 08,2017

Behind the walls of one of his many opulent palaces, the king was troubled. He knew all too well that the self-dealing ways and gold-plated lifestyle of the House of Saud — whose princes and princelings numbered in the thousands — had spiraled out of control. Things had to change.

That was a decade ago.

Leaked American diplomatic cables from the time described the attempts of then-King Abdullah bin Abdulaziz to rein in the money-skimming excesses of his fabulously wealthy fellow royals. The Saudi Arabian monarch, already an octogenarian, reportedly told his brothers that he didn’t want to face Judgment Day with “the burden of corruption” on his shoulders, the diplomatic memos said. He died in 2015.

Now the kingdom’s brash young crown prince, 32-year-old Mohammed bin Salman, has proclaimed a new war on corruption. Acting at his behest, Saudi authorities have accused hundreds of people, including a dizzying roll call of prominent princes, of crimes that include graft, bribery and money laundering.

 

Saudi Crown Prince Mohammed bin Salman attends the Future Investment Initiative conference in Riyadh, the capital, on Oct. 24, 2017.
Saudi Crown Prince Mohammed bin Salman attends the Future Investment Initiative conference in Riyadh, the capital, on Oct. 24, 2017. (Fayez Nureldine / AFP/Getty Images)


The arid peninsula’s business lore brims with tales of ambitious infrastructure projects that shimmered like mirages, their cost vastly inflated by blatant bribery demands from royal and VIP patrons, their completion delayed or doomed altogether by brazen high-level malfeasance.

A gleaming subway in the capital, Riyadh, a promised-but-unbuilt sewer system in the port city of Jidda, even the Grand Mosque complex in the holy city of Mecca — all have come under scrutiny over kickbacks and misappropriated funds. In past years, other Saudi deals such as lucrative arms contracts have ensnared foreign partners.

The Jidda case had particularly tragic consequences. A powerful Saudi businessman had accepted a multimillion-dollar payment to build a new sewage and drainage system, but merely pretended to have completed it — a ruse that was widely known among commoners as well as the ruling elite. Later, in 2009, flooding sent torrents of water coursing through the city, killing more than 100 people. The lack of a viable drainage system was a key underlying cause.

To the point of cliche, trappings of the luxe life have become the Saudi royal family’s calling cards the world over: yachts and private planes, an endless array of designer goods, venerable enterprises purchased like baubles, sumptuous apartments in London and Paris, the commandeering of entire wings of the planet’s most exclusive hotels.

“Clearly, they understand they’ve had a corruption problem for decades, and know they have to do something,” said Robert Jordan, a former U.S. ambassador to Saudi Arabia, citing the “shakedown culture” that surrounded the royal family and other elites.

Many veteran Saudi watchers, and more than a few wary investors, are questioning whether the prince’s ostensible cleanup drive is primarily a bid to consolidate power and sideline potential rivals — following a template used by authoritarian leaders such as Chinese President Xi Jinping or Russian President Vladimir Putin, both of whom have jailed potential adversaries on corruption charges.

“There are some concerns that what this is really going to do is centralize oversight of public spending, and the same practices will continue, but among a smaller group of people,” said Allison Wood, an analyst for Control Risks, a London-based global risk and strategic consulting firm.

The “real test” of a serious anti-corruption drive, she said, would be “not just to pursue these people for corruption, but to maintain and set a new standard for transparency.”

Even some of the prince’s many critics, though, acknowledge that he is correctly reading the zeitgeist in the kingdom’s less exalted quarters, especially among less privileged Saudi youth. Popular resentment over royal money grabs poses a potent threat as a new generation of leaders struggles to envision life beyond the petrodollars that fueled Saudi Arabia’s extraordinary transformation from barren desert to a realm of gilded shopping malls and superhighways.

People walk on Tahlia street in the Saudi capital, Riyadh, on Sept. 24, 2017, during celebrations for the anniversary of the founding of the kingdom.
People walk on Tahlia street in the Saudi capital, Riyadh, on Sept. 24, 2017, during celebrations for the anniversary of the founding of the kingdom. (Fayez Nureldine / AFP/Getty Images)


The problem, detractors say, is that the crown prince and his particular branch of the family tree are part of the kingdom’s patronage system, which makes his startling move against his royal brethren even more of a high-wire act.

Critics call it a campaign of selective prosecution waged by an indulged young royal — widely known by his initials, MBS — who reportedly made an on-the-spot purchase of a $500-million yacht while vacationing on the Riviera in 2015, and is tied to business entities that stand to benefit immensely from the removal of some of those arrested.

Prominent whistle-blower Ali Adubisi, a Saudi in self-exile who heads the Berlin-based European-Saudi Organization for Human Rights, called the crown prince’s campaign a “black comedy.”

“This move is more a matter of organizing corruption,” he said, “so that it is in the hands of MBS and his coterie.”

As Saudi investments tighten the once-insular kingdom’s ties to the outside world, head-spinning sums of money are in play. And those are likely to increase exponentially with next year’s expected public offering of shares in Saudi Aramco, the oil behemoth, and moves to privatize other state assets under an economic blueprint known as Vision 2030.

President Trump has openly wooed the Saudis, tweeting just before the wave of weekend arrests that he hoped the Aramco offering would be made on the New York Stock Exchange. And just as openly, the president has taken sides in the crown prince’s crackdown, declaring on Twitter that some of those targeted had been “‘milking’ their country for years.”

The State Department has been more circumspect, with spokeswoman Heather Nauert expressing support for the anti-corruption effort but calling on Saudi officials to carry it out in a “fair and transparent manner.”

True reform would have to go much further than these arrests, many analysts say. With few Western-style regulatory mechanisms in place, very little is made public about the scale and nature of holdings of the royal family and the myriad ways in which the royals’ wealth overlaps with the state budget.

It’s not even clear precisely how many royals there are. Joseph A. Kechichian, a scholar at the King Faisal Center for Research and Islamic Studies, estimates the descendants of founding monarch King Abdulaziz al Saud at about 20,000 men and women, with an influential core of about 200 members.

“No one knows what the collective wealth is,” Kechichian, who has authored a book about the clan, wrote in an email from Riyadh, “but probably in the hundreds of billions.”

Also known for its opacity is the state-run Public Investment Fund, whose holdings are thought to total about $200 billion and could balloon with the Aramco offering and other measures envisaged by the crown prince. In the last two years, the fund’s oversight was transferred from the Saudi finance committee to a council under Crown Prince Mohammed’s control.

In occasional bursts of candor over the years, some prominent Saudis have acknowledged the staggering scale of the royal family’s financial entanglements, but described them as underpinning the country’s emergence as not only a regional power, but also a player on the world stage.

In a memorable 2001 interview with PBS’ “Frontline,” Prince Bandar bin Sultan, who served for years as the Saudi envoy to Washington, said three decades of development had involved an expenditure of about $400 billion, perhaps an eighth of which had found its way into illicit channels.

“If you tell me … that we misused, or got corrupted, with $50 billion, I’ll tell you ‘yes,'” he said. “But I’ll take that anytime. There are so many countries in the Third World that have oil that are still 30 years behind.”

“We did not invent corruption,” the veteran ambassador added. “This has happened since Adam and Eve…. This is human nature.”

This article was first published Los Angeles Times

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