Saudi Arabia scores an own goal in Ritz Carlton hostage rip-off

Saudi investigators estimate they can recover up to $100bn from settlements linked to an anti-corruption crackdown that began two weeks ago, according to reports. Bloomberg cited a senior official as confirming the kingdom could recover between $50bn and $100bn amid wider reports that it was offering arrested businessmen, royals and ministers the option to exchange assets for their freedom. However, as one London analyst told Pat Lancaster, Riyadh’s officially authorised “smash & grab” raid on the assets of some of its wealthiest citizens, is likely to backfire since international investors loose confidence in the integrity of the kingdom’s financial structure.

The business news service Bloomberg said those arrested are being given the option to handover assets to avoid a trial.

Any payments are based on the amounts authorities believe the individual obtained illegally, according to the publication, and not their entire wealth.

The Financial Times previously reported that the government was demanding up to 70 per cent of some individual’s wealth for their release from detention at plush hotels across Saudi Arabia including Riyadh’s Ritz Carlton.

Saudi Arabia’s attorney general indicated in the days after the corruption purge began that 208 people had been arrested and seven had been released without charge.

Sheikh Saud Al Mojeb said at least $100bn of funds had been misused through “systematic corruption and embezzlement over several decades”.

Among those detained is one of the region’s richest businessmen, Prince Alwaleed bin Talal. Others include minister of the national guard Prince Miteb bin Abdullah, Al Tayyar Travel board member Nasser bin Aqeel al-Tayyar, Middle East Broadcasting Centre founder Waleed al-Ibrahim and Saudi Binladin Group chairman Bakr bin Laden.

Bloomberg cited the Saudi official as confirming 14 retired offers at the Ministry of Defence of and two retired National Guard officers had been detained on suspicion of being involved in corrupt financial contracts.

More than 1,700 bank accounts have been frozen as investigations continue, including those of Saudi citizens in the UAE. The crackdown, led by Crown Prince Mohammed Bin Salman, has shaken international investors and seen some Saudis move assets outside of the Gulf Cooperation Council to avoid having them frozen.

In  London a financial analyst confirmed to The Middle East magazine that there was considerable doubt over the veracity of the “corruption and embezzlement” rumours in the international money markets. “This comes at a time when the oil price is down; Saudi Arabia has also made grandiose plans for economic expansion that look unlikely to come to fruition in the present economic climate and, added to those problems,  there has been considerable flexing of political muscle in certain quarters. The financial market thrives best in a climate of stability and, at the moment, Saudi Arabia does not enjoy any sort of stability.

“The whole affair stinks of being nothing more or less than a smash and grab on the assets of the rich. No doubt such a move will find favour in some quarters but the international money market is not among them. To us it says quite categorically that Saudi Arabia is not a safe place to invest funds.”

This edited article first appeared in Gulf Business
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