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Saudi crackdown targets up to $800 billion in assets

Authorities detain more prominent businessmen, freeze bank accounts

Margherita Stancati & Summer Said | WSJ 

Saudi Crown Prince Mohammed bin Salman
Saudi Crown Prince Mohammed bin Salman

The is aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite, according to people familiar with the matter. Several prominent businessmen are among those who have been arrested in the days since launched the crackdown on Saturday, by detaining more than 60 princes, officials and other prominent Saudis, according to those people and The country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of “persons of interest” and said the move is “in response to the Attorney General’s request pending the legal cases against them.” The purge is the most extensive of the kingdom’s elite in recent history. Crown Prince Mohammed bin Salman, the son of King Salman, was named heir to the throne in June and has moved to consolidate power. He has said that tackling corruption at the highest level is necessary to overhaul what has long been an oil-dependent economy. The crackdown could also help replenish state coffers. The government has said that assets accumulated through corruption will become state property, and people familiar with the matter say the government estimates the value of assets it can reclaim at up to 3 trillion Saudi riyal, or $800 billion. “They reckon that they could get around 2 to 3 trillion riyals from these people. That’s the number they are talking about,” said a person close to the government. Much of that money is abroad, which will complicate efforts to reclaim it, people familiar with the matter said. But even a portion of that amount could help Saudi Arabia’s finances.

A prolonged period of low oil prices forced the government to borrow money on the bond market and to draw extensively from the country’s foreign reserves, which dropped from $730 billion at their peak in 2014 to $487.6 billion in August, the latest available government data. The arrests were ordered by a newly established anticorruption agency headed by Prince Mohammed. The crown prince “needs cash to fund the government’s investment plans,” political risk advisory firm Eurasia Group said in a note on Monday. “It was becoming increasingly clear that additional revenue is needed to improve the economy’s performance. The government will also strike deals with businessmen and royals to avoid arrest, but only as part of a greater commitment to the local economy.” Spokespeople for the didn’t respond to requests for comment on Tuesday. Saudi Arabia’s minister of commerce, Majid al Qasabi, on Tuesday sought to reassure the private sector that the corruption investigation wouldn’t interfere with normal business operations. The procedures and investigations undertaken by the anticorruption agency won’t affect ongoing business or projects, he said. In its statement on Tuesday, the said that individual accounts had been frozen, not corporate accounts. “It is business as usual for both banks and corporates,” the central bank said. The central bank sent a list of hundreds of names to lenders, asking them to freeze any accounts linked to them, according to people familiar with the matter. “These are just the initial stages of either asset freezes or arrests. More people are expected to be impacted as the investigation unfolds,” said a Saudi official. The government earlier this week vowed that it would arrest more people as part of the corruption investigation, which began around three years ago. As a precautionary measure, authorities have banned a large number of people from traveling outside the country, among them hundreds of royals and people connected to those arrested, according to people familiar with the matter. The government hasn’t officially named the people who were detained. They include billionaire Prince al-Waleed bin Talal, one of the most widely known members of the and a major investor in companies including Apple Inc., Twitter Inc. and Citigroup Inc. He faces allegations of money laundering, bribery and extortion, according to a senior Saudi official. A representative of Prince al-Waleed didn’t immediately respond to a request for comment. According to people familiar with the investigation, those detained over the weekend also include Bakr bin Ladin, the chairman of the construction giant Saudi Binladin Group. A spokesman for Saudi Binladin didn’t respond to request for comment. Saudi Binladin, the biggest construction firm in the Gulf region, flourished as one of the government’s preferred builders during the boom years in the oil-rich country, winning a high-profile contract to expand the grounds of the Great Mosque in Mecca, Islam’s holiest site. The people familiar with the investigation said Mr. bin Ladin faces allegations of bribery in connection with that project.

The Wall Street Journal

First Published: Wed, November 08 2017. 15:12 IST