Surgical Strike In Saudi

Source: The Hitavada      Date: 09 Nov 2017 10:25:23

The crown prince, heading a newly-constituted committee against corruption, also notified a list of 40 people with terrorist links, placing a combined reward of $ 400 million on their heads, for plotting against the kingdom. The Saudi authorities have said that the arrests were only “phase one” of a drive against corruption. It was “merely the start of a vital process” to root out corruption “wherever it exists”.


THE Saudis’ own version of the ‘shock and awe ‘campaign, made famous by Bush Defence Secretary Donald Rumsfeld during the Iraqi war, this time against corruption and crony capitalism by influence peddlers in the royal family and ministers loyal to the Old Establishment, is also an attack against extremist tendencies, including terror funding, as much as it is part of a power struggle to consolidate the position of Crown Prince Mohammed bin Salman.


In a neat surgical strike the new dispensation in the Saudi capital arrested 11 princes including some currently serving as well as former ministers, along with prince Alwaleed bin Talal, the wealthiest Arab investor with stakes in the world’s’ leading companies, including 21st Century Fox, Citigroup, Apple, Twitter, Four Seasons Hotels and many other well-known companies, and is capable of moving global capital and stock markets through his deft actions. The arrests were promptly followed by freezing of their bank accounts.


The crown prince, heading a newly-constituted committee against corruption, also notified a list of 40 people with terrorist links, placing a combined reward of $ 400 million on their heads, for plotting against the kingdom. In one of his first interviews after being named crown prince in June, the prince had warned that no corrupt man, howsoever mighty or connected, will be allowed to go scot free. The crown prince set the tone of moderation in the traditionally conservative Saudi order in whatever the establishment did or thought by overturning a ban on driving by women and curtailing some of the powers of the obnoxious religious police. He also organised a Davos-type economic summit in which $500 billion worth of transformational investments were announced in the presence of the world’s corporate honchos.


The new Saudi dispensation has forged close ties with President Donald Trump’s administration, which were boosted by a special rapport between the crown prince and Trump’s son-in-law Jared Kushner, who, along with a couple of high-ranking officials, reportedly held consultations in the Saudi capital in recent days. In fact, Trump has promptly endorsed the Saudi crackdown and expressed great confidence in the capabilities of King Salman and the crown prince.


The arrest of Alwaleed, in particular, is in a way sweet revenge for Trump, who has had a running feud with the wealthy Saudi investor during and after his presidential campaign. Alwaleed had described Trump as a ‘disgrace not only to the GOP but to all America’ and advised him to withdraw from the presidential race as he believed Trump would never win. To which Trump tweeted: “Dopey Prince @Alwaleed_Talal wants to control our US politicians with daddy’s money. Can’t do it when I get elected”.


To his utter discomfort Donald Trump finally won the election and Alwaleed sought to strike a conciliatory tone by congratulating Trump and he tweeted: “President elect @realDonaldTrump whatever the past differences, America has spoken, congratulations & best wishes for your presidency.” But as the Trump administration was perceived to be moving closer to the new Saudi ruling establishment, confabulations in Riyadh would have caused jitters to the Alwaleed camp. It is even possible that Alwaleed saw it all coming.

But the world woke up in the week-end with the Saudi announcement that Saudi Arabia’s King Salman removed the chief of the National Guard, along with 10 other princes, and replaced the Economy Minister. Al-Arabiya news channel reported that 11 princes and dozens of former ministers were detained in a new anti-corruption probe. Meanwhile, the kingdom’s top council of clerics issued a statement saying it is an Islamic duty to fight corruption essentially giving religious backing to the high-level arrests being reported. The government said the anti-corruption committee has the right to issue arrest warrants, impose travel restrictions and freeze bank accounts. It can also trace funds, prevent the transfer of funds or the liquidation of assets and take other precautionary measures until cases are referred to the judiciary.


The Saudi authorities have said that the arrests were only “phase one” of a drive against corruption. It was “merely the start of a vital process” to root out corruption “wherever it exists”. The suspects will have access to legal counsel and pledged to hold trials “in a timely and open manner,” he said.


Saudi nationals have long complained of rampant corruption in Government and of public funds being squandered or misused by people in power. While the members of the royal family with a life of opulence and overindulgence using the wealth they earned by way of kickbacks and commissions, Alwaleed channelised his money into high-profile acquisitions and wealth creation ideas. He formed his company, Kingdom Establishment for Commerce and Trade, in 1979, and after completing his first major deal, chose to invest the profits into Riyadh real estate – a shrewd decision that, in many ways, proved to be the foundation of the group’s success.


The company was renamed Kingdom Holding in the 1990s, by which time Alwaleed had announced his arrival on the global stage. In 1988, the company acquired a controlling stake in the ailing United Saudi Commercial Bank (USCB). With a change in management and the prince’s guidance, USCB’s fortunes were rapidly transformed, becoming the most profitable Saudi Arabian commercial bank in just one year. With stocks in USCB having multiplied twenty-fold, the prince negotiated a merger with the struggling Saudi Cairo Bank to create the United Saudi Bank (USB). Alwaleed then began to view the dominant Saudi American Bank (SAMBA) as a source of managerial strength and leadership that could add real value to USB.


In 1999, the merger was completed, forming one of the largest banking groups in the region. In the early 1990s it was almost unthinkable that a Saudi Arabian would burst onto the global banking investment scene from seemingly nowhere – but in 1991 that is exactly what happened. Virtually effecting a coup that would catapult him into the global spotlight, he invested heavily in Citibank stocks in a move that surprised many as the institution was going through a rough patch.

That surprise rapidly turned into admiration as the banking giant got nursed back to full health, returning it to its place as the world’s leading financial institution. Alwaleed’s investment in Citigroup has since delivered an extraordinary level of return, and represents the largest proportion of his personal wealth. In due course several other high-profile acquisitions followed, including such formidable names as Twitter, Apple, Four Seasons etc. The crackdown has taken a heavy toll of Kingdom Holding’s stock price, which is continuing to slide.